Sabine Demangue

Intellectual Property Protectionfor Crop Genetic Resources

A Suitable System for India

This paper has been published by Herbert Utz Verlag GmbH, MunichSeries: Rechtswissenschaftliche Forschung und EntwicklungEditor: Prof. Dr. jur. Michael Lehmann, Dipl.-Kfm.Band/Vol. 735Copyright © Herbert Utz Verlag GmbH, Munich - 2005

Copies of the publication can be ordered at http://www.utzverlag.de/shop.php?bn=40517

The author can be joined at s_demangue@yahoo.de

Inaugural-Dissertationzur Erlangung der Doktorwürde

einer Hohen Juristischen Fakultätder Ludwig-Maximilians-Universität

zu München

vorgelegt von

Sabine Demangue

2005

Für Hervé

Acknowledgements

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ACKNOWLEDGEMENTS

This book came into being as a doctoral thesis paper at the Ludwig-Maximilian-University of Munich. I owe a debt of special gratitude to my supervisor Prof. Michael Lehmann for his continued encouragement, advice, open-mindedness and patience.

My thesis paper could not have been written without the generous financial support by the Max-Planck-Institute for Intellectual Property in Munich. Additionally the Max-Planck-Institute put other resources at my disposal which were just as important: an excellent library and an inspiring international academic atmosphere. I would like to thank Prof. Joseph Straus, former Managing Director of the Max-Planck-Institute, for this support and for his valuable comments on my paper. I also acknowledge my grateful thanks to Dr. Christopher Heath for his generous advice and support in all phases of the elaboration of the thesis paper and this book.

My research on the topic of this book started in 1996, when I had the chance to go to India for a three months research stay in the framework of the ASA-Program of the Carl Duisberg Gesellschaft. During this stay which laid the basis for my interest in the multiple facets of the subject, I enjoyed the support and hospitality of many people. Grateful acknowledgement is made to Dr. Suman Sahai and to Prof. S.K. Verma for their advice and their crucial help in locating important contacts in India. I was privileged to have discussions with the following experts of the academic sector or international organisations and representatives of the private seed industry who shared their valuable knowledge and view points with me: Mr. W.V. Agashe, Mr. R.S. Arora, Dr. S.R. Asokan, Mr. N.K. Bhat, Prof. Madav Gadgil, Prof. Anil Gupta, Mr. John Hamilton, Dr. S. Krishnaswami, Mr. K.R. Narasimhan, Mrs. Devaki Panini, Mr. Peter Rosenegger, Mr. T. Ravi Shankar, Dr. Chhatrapati Singh, Prof. Gurdev Singh, Mr. Harideep Singh, Prof. M.S. Swaminathan, Mr. Mehesh A. Thakkar. Special thanks also go to Ms. Karima Budhwani, Ms. Anitha Ramanna and Mr. Martin Kochen-dörfer for their company and support.

Many of the aforementioned experts and stakeholders supported me also during my second stay in India in 2001. Again, I enjoyed great hospitality wherever I asked for information on the seed sector and seed legislation. Grateful acknowledgement is made to Prof. Biplab Dasgupta, Dr. Harbir Singh Malik, Mr. D. Panwar, Dr. A. Saha,Dr. S. Selvarajan, Sri Sahib Singh Verma and Prof. S.K. Verma. Several officials, experts and stakeholders kindly gave me detailed interviews, which were very important for the elaboration of chapters 5, 6 and 8. I am deeply indebted to Mr. R.S. Arora, Dr. S. Bala Ravi, Dr. Dolly Chakrabarty, Dr. R.C. Jain, Dr. Sudhir Kochhar, Mr. Deepak Mullick and Dr. Suman Sahai. Dr. Jain allowed me to record our conversation, the others kindly took the time to review the minutes to make sure the contents corresponded to their statements.

When I was writing the paper back in Munich, many people gave me valuable support by providing me information/advice and sharing their viewpoints with me. My grateful thanks go to Dr. Sachin Chaturvedi, Dr. A. Damodaran, Mr. Kumar Gopa, Dr. Michael Halewood, Dr. Rolf Jördens, Dr. Arvind Kapur, Dr. Laidig, Dr. Margaret Llewelyn,

Acknowledgements

Prof. E. Melchinger, Dr. Shashank Mauria, Dr. K.K. Narayanan, Mr. Prabhu Ram, Dr. Shyama V. Ramani, Dr. Dwijen Rangnekar, Dr. C.S. Srinivasan, Dr. K.K. Tripathi,Dr. S. Visalakshi, and Mr. Douglas Waterhouse. I would also like to acknowledge my gratitude to Mr. Basile de Bary, Mr. R. Bhandary, Mr. R.K. Bindal Mr. K. Deshmukh,Prof. T.V. Karivaradaraaju, Mr. M.S. Mithyantha, Mr. Deepak Mullick and Dr. M. Rahaman for participating in a seed industry survey on views of seed firms on IP protection for plant related inventions which I had tried to carry out in 2004. Unfortunately, due to the very weak reply, the survey results could not be used in thispaper.

I am grateful to Ms. Birgit Daiber, Dr. Yvonne Podbielski-Schadt, Ms. Anna Rieder and Dr. Eva Willnegger for their valuable comments on different parts of my paper, and to Ms. Margarete Hinkelmann for her technical support - what would this book have looked like without her help? I also wish to thank Ms. Erma Becker, Mr. PatrickDempsey, Ms. Cornelia Hahn and Ms. Jane Osbeldiston for their language assistanceand Ms. Ruth Simma for proofreading. They had no chance against my numerous last minute changes. Remaining mistakes go on my account. And last but not least, I wish to thank my most stalwart and patient supporters: my parents, my brother and my husband.

Executive Summary

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EXECUTIVE SUMMARY

Three types of crop genetic resources will play a crucial role in achieving sustainable development and in increasing the income of farmers in developing countries: (i) modern high yielding varieties, (ii) genetically modified plants, and (iii) farmers' varieties. Their enhancement by breeders, genetic engineers and farmers will, inter alia, depend on economic incentives. Yet, intellectual property (IP) protection for one activity of crop improvement necessarily implies restrictions on the use of the results by the other two stakeholder groups. In this interdependent relationship an appropriate IP system for crop genetic resources can only be framed taking into account the needs of all three stakeholder groups.

In order to provide comprehensive information to stakeholders and policy makers, this paper contains a detailed presentation of the international legal framework, the European system of IP protection for plant varieties and biotechnological inventions, and the structure of the Indian seed sector with its future development needs. A chapter on the principal findings in economics literature on the impact of IP protection provides the necessary background for analysing the arguments set forth in the Indian debate.

For protecting plant varieties this paper recommends a plant breeders' rights (PBRs)regime with a broad farmers' privilege. The author explains in detail the dilemma that developing countries face: either taking the risk of paralysing the informal seed supply system while formal sector extension networks would probably serve only economically interesting markets; or enacting legislation which provides only weak protection and thus economic incentive for the private seed industry. The author highlights why exempting only seed sales by small-scale farmers would not be a solution. Instead, it is suggested to limit the farmers' privilege to seed sales to small-scale farmers.

The rigid definition of the subject matter in PBRs law does not permit to accommodate inventions providing a new genetic component. The patent system is therefore in principle the appropriate form of protection for genetic engineering inventions. However, this paper finds that there are few certainties on how the introduction of patent protection in developing countries affects the upgrading of domestic innovative capacity. Strong arguments for the occurrence of a push towards domestic R&D can only be set forth where local firms have already reached a competitive technological level. From the available evidence no clear picture of the Indian biotechnology competence, especially in genetic engineering, emerges. It seems possible that India has reached the threshold where the introduction of restricted purpose-bound product patent protection for plant genetic components would be worthwhile. This paper stresses that the patent system can be modulated and adapted to the needs of a specific sector and discusses safeguards that could be introduced to mitigate concerns of patent opponents.

With respect to farmers' varieties, two main options available to policy makers in developing countries are discussed: (1) Protecting stable farmers' varieties by a kind of

Executive Summary

PBRs system. This option would, however, limit protection mainly to self-pollinating crops. (2) Protecting genes occurring in farmers’ varieties. This would have the advantage of protecting the subject matter in which breeders are most interested when using traditional germplasm. However, this latter solution would be in conflict with the idea of free availability of germplasm for plant breeding. The author suggests that given the weak protection for plant varieties and plant related biotechnological inventions in India, the current legislative solution is too burdensome for breeders/genetic engineers.

Contents in brief

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CONTENTS IN BRIEF

ACKNOWLEDGEMENTS....................................................................................... IEXECUTIVE SUMMARY..................................................................................... IIILIST OF ABBREVIATIONS.............................................................................. XIXLIST OF TABLES ............................................................................................ XXIIILIST OF FIGURES ...........................................................................................XXIVCHAPTER 1: INTRODUCTION .............................................................................1CHAPTER 2: THE INTERNATIONAL LEGAL FRAMEWORK........................7CHAPTER 3: THE EUROPEAN SYSTEM OF IP PROTECTION FOR PLANT VARIETIES AND PLANT RELATED BIOTECHNOLOGY INVENTIONS ....69CHAPTER 4: ECONOMIC THEORY OF IPRS AND EMPIRICAL EVIDENCE................................................................................................................................183CHAPTER 5: PRESENT STATUS OF THE INDIAN SEED SECTOR AND FUTURE CHALLENGES.....................................................................................231CHAPTER 6: THE DEBATE ON POTENTIAL IMPACTS OF PLANT RELATED IPRS ON THE SEED SECTOR IN INDIA ......................................285CHAPTER 7: IP PROTECTION FOR FARMERS' VARIETIES AND RELATED TRADITIONAL KNOWLEDGE......................................................335CHAPTER 8: ANALYSIS OF THE INDIAN PLANT RELATED IPR LEGISLATION .....................................................................................................401CHAPTER 9: CONCLUSIONS ............................................................................451GLOSSARY ...........................................................................................................459LIST OF CITED EXPERTS AND STAKEHOLDERS CONSULTED ORALLY OR IN WRITING ..................................................................................................465REFERENCES ......................................................................................................467

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DETAILED CONTENTS

ACKNOWLEDGEMENTS....................................................................................... IEXECUTIVE SUMMARY..................................................................................... IIILIST OF ABBREVIATIONS.............................................................................. XIXLIST OF TABLES ............................................................................................ XXIIILIST OF FIGURES ...........................................................................................XXIVCHAPTER 1: INTRODUCTION .............................................................................1CHAPTER 2: THE INTERNATIONAL LEGAL FRAMEWORK........................7

A. OBLIGATIONS UNDER THE TRIPS AGREEMENT .........................................................7I. Interpretation of Art. 27(3)(b) ..............................................................................................7

1. Plants versus microorganisms.............................................................................................8a) Plant cells ......................................................................................................................9b) Plant genes and other DNA molecules..........................................................................11

2. Essentially biological, non-biological and microbiological processes for the production of plants ...................................................................................................................................14

a) Essentially biological processes....................................................................................14b) Microbiological processes............................................................................................16c) Non-biological processes .............................................................................................18

3. Plant varieties...................................................................................................................184. Effective sui generis system .............................................................................................20

II. Minimum patent protection for plant related inventions.................................................251. Patentable subject matter under Art. 27(1) ........................................................................252. Offence against ordre public or morality as ground for exclusion from patentability .........27

a) Necessity to prevent commercial exploitation...............................................................27b) Protection of ordre public or morality ..........................................................................28c) Infringement of national rules on access to biological resources laws as case of Art. 27(2)? .......................................................................................................................31

3. Margin left to the Member States as to the patenting requirements ....................................31a) Novelty, inventive step and industrial application.........................................................31

aa) Novelty ..................................................................................................................32bb) Inventive step ........................................................................................................33cc) Industrial application..............................................................................................34

b) Enabling disclosure......................................................................................................35c) Disclosure of origin and proof of prior informed consent requirements .........................37

4. Margin left to the Member States with respect to the rights conferred, in particular by Art. 28(1)(b).........................................................................................................................39

a) Overview .....................................................................................................................39b) Conflict between Art. 27(3)(b) and Art. 28(1)(b)? ........................................................40c) Product directly obtained by a non-biological or microbiological process .....................41

5. Exceptions and other use without authorization of the right holder....................................42a) Limited exceptions provision .......................................................................................42b) Compulsory licences ....................................................................................................44

III. The revision of Art. 27(3)(b) of the TRIPS Agreement...................................................45IV. Conclusions of part A.......................................................................................................47

B. OBLIGATIONS UNDER THE INTERNATIONAL INSTRUMENTS ON PLANT GENETIC RESOURCES...........................................................................................................48

I. The FAO International Undertaking and its agreed interpretation..................................49

Detailed contents

II. The Convention on Biological Diversity............................................................................511. Objectives and coverage...................................................................................................512. Sovereign rights of States over their biological resources..................................................533. Prior informed consent and benefit sharing .......................................................................54

a) Principles .....................................................................................................................54b) Prior informed consent as patenting requirement ..........................................................55

III. The International Treaty on Plant Genetic Resources for Food and Agriculture .........571. Farmers’ rights .................................................................................................................582. The Multilateral System of Access and Benefit Sharing....................................................59

a) Coverage......................................................................................................................59b) Conditions of access ....................................................................................................61c) Benefit sharing.............................................................................................................63

IV. Conclusions of part B .......................................................................................................64

C. CONCLUSIONS AND OUTLOOK......................................................................................65

CHAPTER 3: THE EUROPEAN SYSTEM OF IP PROTECTION FOR PLANT VARIETIES AND PLANT RELATED BIOTECHNOLOGY INVENTIONS ....69

A. THE PLANT BREEDERS' RIGHTS (PBRS) SYSTEM BASED ON THE UPOV CONVENTIONS ........................................................................................................................70

I. Motives for the introduction of a special form of protection for plant varieties ...............711. Unsuitability of patenting requirements ............................................................................72

a) Living organisms as inventions ....................................................................................72b) Inventive step of conventionally bred varieties .............................................................73c) Impossibility of description and non-reproducibility.....................................................73

2. Unsuitability of the scope of patent protection and the rights conferred .............................76a) The principle of dependence.........................................................................................76b) Farm-saved seed ..........................................................................................................77c) “Monopolies on food”..................................................................................................77

3. Validity of these arguments today.....................................................................................78a) Patenting requirements .................................................................................................78b) Scope of patent protection and rights conferred ............................................................80c) Conclusion...................................................................................................................80

II. Protectable subject matter: Plant varieties.......................................................................811. Definition of plant variety ................................................................................................812. Limitation to certain genera and species under the 1978 Act .............................................82

III. Requirements for protection............................................................................................831. Distinctness......................................................................................................................84

a) Definition.....................................................................................................................84b) Criticism of the low threshold for protection ................................................................85c) The role of chemical and DNA characteristics ..............................................................87d) The reproach of facilitating “biopiracy” .......................................................................87

2. Commercial novelty .........................................................................................................893. Uniformity .......................................................................................................................90

a) Definition.....................................................................................................................90b) Criticism......................................................................................................................90

4. Stability............................................................................................................................91a) Definition.....................................................................................................................91b) Criticism......................................................................................................................92

5. Examination of the application .........................................................................................92IV. Scope of the rights conferred ...........................................................................................94

1. Extent of rights and farmers’ privilege..............................................................................94a) UPOV 1978 Act...........................................................................................................94b) Persisting appropriability problems ..............................................................................94c) UPOV 1991 Act...........................................................................................................96

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2. Breeders’ exemption and essentially derived varieties.......................................................98a) UPOV 1978 Act...........................................................................................................98b) Plagiarized varieties and genetic engineering ...............................................................99c) UPOV 1991 Act.........................................................................................................100d) Implementation difficulties with respect to the concept of “essential derivation” ........103

3. Restrictions for reasons of public interest........................................................................104V. Appreciation of the PBRs system by stakeholders..........................................................104

1. As protection mechanism for plant varieties....................................................................1052. As protection mechanism for plant related biotechnological inventions...........................107

a) Background: Loopholes in the protection by PBRs.....................................................108b) Balancing access to plant material and protection needs .............................................109c) The relationship between right holders and farmers ....................................................111

3. Conclusion .....................................................................................................................111VI. Conclusions of part A.....................................................................................................112

B. PROTECTION OF PLANT RELATED INVENTIONS BY PATENTS...........................113I. Concerns expressed with respect to patents for biological material................................114

1. Patenting of genes in their natural state and of plants already available to farmers and breeders .............................................................................................................................1152. Concerns about undermining the breeders’ exemption ....................................................1163. Patenting products of automatised genome sequencing ...................................................1164. Overly broad patent claims .............................................................................................117

a) Absolute product protection for DNA molecules ........................................................117b) Patent protection for plants defined by characteristics obtainable by alternative approaches .....................................................................................................................118

5. Implications for farmers .................................................................................................1196. Biopiracy .......................................................................................................................119

II. Patentable subject matter: Invention..............................................................................1201. Examples of claimed subject matter................................................................................1202. A priori patentability of biological material ....................................................................1203. Demarcation between invention and discovery ...............................................................122

a) Solution to a technical problem ..................................................................................122b) Patentability of biological material in its original state................................................124c) Absolute product protection for DNA sequences ........................................................126

III. Exceptions to patentability ............................................................................................1291. Inventions contrary to “ordre public” and morality .........................................................129

a) Case by case assessment of ethical and environmental issues......................................130b) The concept of morality applied to genetic engineering ..............................................130c) The concept of ordre public applied to genetic engineering ........................................131

2. Exclusion of plant varieties.............................................................................................132a) Claims directed to plant varieties................................................................................133b) Claims to plants, embracing but not individually claiming plant varieties ...................134c) Genetic components of plants.....................................................................................135d) Plant cells ..................................................................................................................135

3. Exclusion of essentially biological processes ..................................................................1364. Exception to the exception: Microbiological processes and products thereof ...................1375. Summary........................................................................................................................138

IV. Patenting requirements..................................................................................................1391. Industrial applicability....................................................................................................139

a) Indication of a function ..............................................................................................140b) Required technical content of applications..................................................................141

2. Novelty ..........................................................................................................................142a) Defining the state of the art ........................................................................................142

aa) “Making available” ..............................................................................................143bb) “To the public” ....................................................................................................144

Detailed contents

b) Naturally occurring material.......................................................................................145c) Relationship of partial gene sequences and full-length gene........................................147

3. Inventive step .................................................................................................................148a) Reasonable expectation of success..............................................................................149b) Theoretical anticipation in prior art ............................................................................152c) Claims merely formulating the objective technical problem to be solved ....................153d) Inventiveness of gene sequences ................................................................................154e) Inventiveness of proteins............................................................................................156

4. Sufficiency of disclosure, support by description and clarity ...........................................156a) The ratio of the requirements of sufficient disclosure and of support by the description......................................................................................................................................157b) The extent to which the invention must be reproducible .............................................158c) Anticipation of the technical effect at the theoretical level in prior art .........................161d) Defining the invention in functional terms..................................................................163e) Deposit of living material ...........................................................................................165

V. Scope of protection and of rights conferred....................................................................1661. Types of infringing activity ............................................................................................167

a) General rules..............................................................................................................167b) Application in the area of plant biotechnology............................................................168

aa) Innocent infringement by farmers .........................................................................168bb) Use of the genetic background of transgenic plant varieties ..................................169

2. Extent of protection conferred ........................................................................................170a) The role of the claims.................................................................................................170b) Art. 69 EPC ...............................................................................................................170c) EC Biotechnology Directive.......................................................................................171

aa) Inclusion of the progeny of self-reproducing material ...........................................171bb) Extension of protection conferred by a process patent ..........................................172cc) Extension of protection to all material in which the product is incorporated ..........172dd) Overlapping DNA sequences ...............................................................................172

3. Limitations of and exceptions to the rights conferred by a patent ....................................173a) Exhaustion .................................................................................................................173b) Prior use ....................................................................................................................173c) Acts done privately for non-commercial purposes ......................................................174d) Experimental use exemption ......................................................................................175e) Farmers’ privilege under the EC Biotechnology Directive ..........................................176f) Compulsory cross-licensing........................................................................................177

VI. Conclusions of part B .....................................................................................................178

C. CHAPTER CONCLUSIONS ..............................................................................................180

CHAPTER 4: ECONOMIC THEORY OF IPRS AND EMPIRICAL EVIDENCE................................................................................................................................183

A. ECONOMIC THEORY OF IPRS.......................................................................................184I. Intended economic effects .................................................................................................184

1. Incentive for innovation..................................................................................................184a) The appropriability problem of public goods ..............................................................184b) Public good features of plant related biotechnological innovations and plant varieties 185c) Objections against the “innovation inducement” rationale...........................................187d) Alternative public policy interventions .......................................................................188e) Degrees of appropriability depending on the shape of seed IP laws.............................189

2. Dissemination of technology ..........................................................................................1903. Regulation of research allocation....................................................................................191

II. Economic tensions inherent in IP protection ..................................................................1921. The tension between innovators and consumers ..............................................................1932. The tension between first and second-generation inventors .............................................194

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3. Models defining optimal levels of patent length and breadth ...........................................1944. Conclusions....................................................................................................................196

III. Economic models assessing the effects of IPRs in developing countries.......................1971. Static welfare analysis ....................................................................................................1982. Dynamic welfare analysis...............................................................................................1983. Conclusions....................................................................................................................200

B. EMPIRICAL EVIDENCE...................................................................................................201I. Impact studies on patent protection .................................................................................201

1. Innovative activity..........................................................................................................201a) Company views on appropriability of innovations ......................................................201b) Domestic research & development (R&D) .................................................................203

2. Economic growth ...........................................................................................................2053. Trade..............................................................................................................................2064. Foreign direct investment (FDI) and technology transfer.................................................2075. Consumer welfare ..........................................................................................................2096. Firm concentration .........................................................................................................2107. Dissemination of scientific information and follow-on R&D...........................................2118. Conclusions....................................................................................................................214

II. Empirical studies on the impact of plant variety protection ..........................................2151. Impact on R&D..............................................................................................................215

a) US studies carried out in the early 1980s ....................................................................215b) Later US studies.........................................................................................................218c) Evidence from other industrialized countries ..............................................................219d) Evidence from developing countries...........................................................................219

2. Impact on public sector R&D .........................................................................................2213. Firm and market concentration .......................................................................................223

a) Firm concentration .....................................................................................................223b) Seed market shares.....................................................................................................224

4. Implications for farmers .................................................................................................225a) Evidence from the US ................................................................................................225b) Evidence from developing countries...........................................................................226

5. Impact on information flows and germplasm exchange...................................................2266. Impact on genetic diversity.............................................................................................2277. Conclusions....................................................................................................................228

C. CHAPTER CONCLUSIONS ..............................................................................................229

CHAPTER 5: PRESENT STATUS OF THE INDIAN SEED SECTOR AND FUTURE CHALLENGES.....................................................................................231

A. AGRICULTURAL POLICY IN THE LAST DECADES ..................................................231I. Introduction of yield-raising new seed and fertiliser technology.....................................231II. Development of the Indian seed industry .......................................................................233

1. Development of the public sector seed industry ..............................................................2332. Decentralization of seed production................................................................................2333. Liberalisation policy.......................................................................................................234

B. CURRENT STRUCTURE OF THE SEED SECTOR........................................................236I. Informal sector..................................................................................................................237

1. Importance of the informal seed supply system...............................................................2372. Sources of informal seed supply .....................................................................................2423. Types of transactions involved .......................................................................................2424. Types of varieties covered ..............................................................................................243

II. Formal sector...................................................................................................................2441. Varietal development .....................................................................................................244

a) Public sector ..............................................................................................................244

Detailed contents

b) Private sector .............................................................................................................2452. Seed production..............................................................................................................250

a) Public sector ..............................................................................................................250b) Private sector .............................................................................................................251

3. Seed distribution ............................................................................................................253

C. FUTURE CHALLENGES AND STRATEGIES ................................................................253I. Necessity of annual increase in productivity ....................................................................253II. The 9th and 10th Five Year Plans give important role to input intensive agriculture.....255III. Limits of high input technology .....................................................................................256

1. Environmental costs .......................................................................................................2572. Regional limits of the Green Revolution .........................................................................2573. Social disparities ............................................................................................................258

IV. Strategies to overcome these limits ................................................................................2601. Greater research emphasis on rainfed agriculture and poor man’s crops ..........................2602. Enhanced location-specific research ...............................................................................2613. Possibilities and limits of traditional agricultural techniques and landraces .....................262

a) Advantages of diversity in marginal environments......................................................262b) Value of landraces in modern crop breeding...............................................................263c) Complementarity of in situ and ex situ conservation of crop resources ........................264

4. Farmer participatory research .........................................................................................2665. Role of recombinant DNA technology in increasing productivity in a sustainable way....267

a) Potential of genetically modified crops.......................................................................267b) Risks of genetically modified crops............................................................................269

aa) Parallels and differences between conventional and genetic engineering methods .269bb) Health risks..........................................................................................................269cc) Environmental impact of genetically modified crops ............................................271

c) Attitude of the Indian public and stakeholders towards biotechnology ........................2736. Conclusions....................................................................................................................277

V. Need for increased private sector participation..............................................................2771. Shortcomings of public R&D .........................................................................................2782. Financial constraints.......................................................................................................280

D. CHAPTER CONCLUSIONS ..............................................................................................282

CHAPTER 6: THE DEBATE ON POTENTIAL IMPACTS OF PLANT RELATED IPRS ON THE SEED SECTOR IN INDIA ......................................285

A. IMPACT ON THE PRIVATE SECTOR SEED AND PLANT BIOTECHNOLOGYINDUSTRY...............................................................................................................................285

I. Increasing private investment in R&D.............................................................................2851. Probable limits of private sector involvement .................................................................287

a) Self-pollinated crops ..................................................................................................287b) Small farming conditions and high potential rainfed areas ..........................................289c) Marginal and heterogeneous environments .................................................................290d) Low-input agriculture ................................................................................................290e) Conclusion.................................................................................................................291

2. Incentive for local R&D?................................................................................................291a) Patents .......................................................................................................................292

aa) Increased FDI, technology transfer and local R&D of multinational corporations .293bb) Balancing benefits and constraints for domestic firms ..........................................293cc) Need for a sector specific analysis ........................................................................295

b) Plant breeders’ rights .................................................................................................296c) Conclusions ...............................................................................................................297

II. Impact on knowledge dissemination and germplasm exchange.....................................2981. Impact of patent protection .............................................................................................298

a) Constraints created by patent rights ............................................................................298

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b) Positive effect on technology transfer.........................................................................2992. Impact of plant variety protection ...................................................................................300

a) Impediment to free flow of germplasm? .....................................................................300b) Access to elite material and advanced technology from abroad...................................301

3. Conclusion .....................................................................................................................301III. Impact on seed industry structure.................................................................................301

1. Impact of patents ............................................................................................................302a) Recent developments in the plant biotechnology industry in India ..............................302b) Potential future development......................................................................................304

2. Impact of plant breeders’ rights ......................................................................................3053. Conclusion .....................................................................................................................306

IV. Conclusion of part A ......................................................................................................306

B. IMPACT ON PUBLIC SECTOR SEED ORGANISATIONS............................................307I. Patents ...............................................................................................................................307

1. Risk of being priced out of the market for proprietary technology...................................3072. Constraint to reorientate public sector R&D?..................................................................3083. Need for a sector specific analysis ..................................................................................309

II. Plant breeders’ rights ......................................................................................................3091. Plant breeders’ rights as means for rising funds ..............................................................3092. Possibility of focus on specific areas...............................................................................310

III. Conclusion of part B ......................................................................................................311

C. TECHNOLOGICAL CAPACITY OF THE INDIAN CROP BIOTECHNOLOGY SECTOR...................................................................................................................................311

I. Research output ................................................................................................................312II. Research input constraints ..............................................................................................314

1. Research funding............................................................................................................314a) Public sector funding..................................................................................................314b) Private sector funding ................................................................................................317

2. Manpower ......................................................................................................................318III. Views of experts on Indian biotechnology capacity ......................................................319IV. Conclusions.....................................................................................................................321

D. IMPLICATIONS FOR FARMERS ....................................................................................322I. Restrictions on the rights of farmers to use, save, exchange, share, and sell seeds .........322

1. Importance and characteristics of the informal sector ......................................................3232. Activities and varieties concerned by plant variety protection .........................................324

a) Legal scenarios ..........................................................................................................324b) Types of activities concerned .....................................................................................325c) Types of germplasm concerned ..................................................................................326

3. Would exempting merely small farmers be a solution? ...................................................3284. Conclusion .....................................................................................................................329

II. Rise of seed prices............................................................................................................3301. Plant breeders’ rights......................................................................................................3302. Patents ...........................................................................................................................331

III. Access to elite material...................................................................................................331

E. EROSION OF GENETIC RESOURCES ...........................................................................332

F. CONCLUSIONS ..................................................................................................................332

CHAPTER 7: IP PROTECTION FOR FARMERS' VARIETIES AND RELATED TRADITIONAL KNOWLEDGE......................................................335

A. THE GENERAL PROBLEMATIC OF INTELLECTUAL PROPERTY PROTECTION FOR TRADITIONAL KNOWLEDGE ...................................................................................336

B. POLICY OBJECTIVES ......................................................................................................337

Detailed contents

I. Needs and expectations of farmer-breeders .....................................................................3371. Recognition....................................................................................................................3382. Protection against misappropriation of germplasm or TK in the public domain ...............339

a) Misappropriation by claiming unmodified TK and farmers’ varieties..........................340b) "Misappropriation" by claiming innovations based on TK and farmers’ varieties........341

3. Benefit sharing ...............................................................................................................3434. Control over use of traditional knowledge and germplasm ..............................................3455. Relationship between farmer-innovators and their fellow farmers ...................................346

II. Current “market” for landrace germplasm in the formal sector...................................348III. Conclusions of part B.....................................................................................................352

C. PRINCIPAL FEATURES OF FARMERS’ VARIETIES AND CROP MANAGEMENT PRACTICES.............................................................................................................................353

I. Crop development practices .............................................................................................3531. Selection and hybridisation strategies .............................................................................353

a) Maintenance ..............................................................................................................354b) Hybridisation .............................................................................................................355

2. Individual and community knowledge, new and traditional practices ..............................356II. Characteristics of farmers’ varieties...............................................................................357

1. Genetic and phenotypic constitution and evolution of populations used by farmers .........357a) Genetic structure of these populations ........................................................................357

aa) Outcrossing species ..............................................................................................357bb) Inbreeding species ...............................................................................................358

b) The farmers’ concept of variety based on the phenotype.............................................3582. Individual and community development of varieties .......................................................360

III. Conclusions of part C.....................................................................................................361

D. PROTECTION OF FARMERS’ VARIETIES AND GRASSROOT BREEDING PRACTICES BY EXISTING IP PROTECTION SYSTEMS.................................................362

I. Protection of farmers’ varieties by PBRs .........................................................................3621. Requirements for protection ...........................................................................................362

a) Variety.......................................................................................................................362b) DUS testing ...............................................................................................................363

aa) UPOV standards...................................................................................................363bb) Application to farmers’ varieties of self-pollinated crops......................................364cc) Application to farmers’ varieties of cross-pollinated crops....................................365

c) Commercial novelty ...................................................................................................3672. Right-holder ...................................................................................................................3673. Scope of rights conferred................................................................................................368

a) In relation to formal sector breeders ...........................................................................368b) In relation to fellow farmers .......................................................................................369

4. Duration of protection ....................................................................................................3695. Procedural issues, enforcement .......................................................................................3706. Conclusions....................................................................................................................370

II. Protection of plants and of grassroot breeding methods by patents ..............................3711. Patenting requirements ...................................................................................................371

a) Invention....................................................................................................................371b) Industrial applicability ...............................................................................................372c) Novelty......................................................................................................................372d) Inventive step ............................................................................................................373e) Sufficient description and enabling disclosure ............................................................374

2. Right-holders .................................................................................................................3743. Scope of patent protection and of rights conferred ..........................................................375

a) In relation to fellow farmers .......................................................................................375b) In relation to formal sector breeders ...........................................................................375

4. Duration of patent protection ..........................................................................................375

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xv

5. Procedural issues and enforcement .................................................................................3756. Conclusions....................................................................................................................376

E. SUI GENERIS SYSTEM OF IP PROTECTION FOR FARMERS’ GERMPLASM AND RELATED TK..........................................................................................................................376

I. Possible types of subject matter and requirements of protection....................................3771. Subject matter “variety” .................................................................................................377

a) Observations on the criterion “identifiability”.............................................................377b) More stringent description versus broader rights ........................................................378c) Protecting a moving target..........................................................................................378d) Necessity of more input from specialists ....................................................................379

2. Subject matter “plant characteristic” ...............................................................................381a) Implications for the shape of the protection system.....................................................381b) The problem of sufficiently describing the plant characteristic....................................381

3. Subject matter “knowledge about crop characteristics” ...................................................3824. Subject matter “breeding method” ..................................................................................3835. Conclusions....................................................................................................................383

II. Right-holders ...................................................................................................................3841. Individuals, communities or the State?............................................................................385

a) Pros and cons of allocating the rights to the State .......................................................385b) Pros and cons of vesting rights in communities rather than individuals .......................386

2. Registration as pre-condition for the emergence of the right............................................387a) Subject matter “plant characteristic”...........................................................................387b) Subject matter “farmers’ variety” ...............................................................................388c) Registration procedure ...............................................................................................389

III. Scope of rights conferred ...............................................................................................3901. Protection of stable farmers’ varieties .............................................................................390

a) Relationship between farmer-breeders and their fellow farmers ..................................390b) Relationship between farmers and formal sector breeders...........................................391

aa) Exclusive rights to market the same variety and essentially derived varieties ........391bb) General maintenance of the breeders’ privilege ....................................................392cc) Compensation for certain uses in breeding............................................................392

c) Duration.....................................................................................................................3932. Protection of plant characteristics ...................................................................................393

a) Relationship between farmer-breeders and their fellow farmers ..................................393b) Relationship between farmers and formal sector breeders...........................................393

aa) Pros and cons of conferring exclusive rights .........................................................393bb) Entitlement to benefit sharing ..............................................................................395

c) Duration.....................................................................................................................395IV. Enforcement ...................................................................................................................395

F. CONCLUSIONS ..................................................................................................................398

CHAPTER 8: ANALYSIS OF THE INDIAN PLANT RELATED IPR LEGISLATION .....................................................................................................401

A. LEGISLATIVE HISTORY .................................................................................................402I. Patent legislation...............................................................................................................402II. Plant varieties and farmers’ rights legislation................................................................404

B. PATENT PROTECTION FOR PLANT RELATED INVENTIONS.................................407I. The revised invention definition .......................................................................................407II. Exclusions from patentability .........................................................................................408

1. Sec. 3 of the Patents Act, 1970 .......................................................................................4082. Sec. 5 of the Patents Act, 1970 .......................................................................................4093. Sec. 48(b) of the Patents Act, 1970.................................................................................410

III. Disclosure of origin requirement ...................................................................................411

Detailed contents

IV. Compulsory licensing and revocation............................................................................412V. Conclusions ......................................................................................................................413

C. SALIENT FEATURES OF THE PROTECTION OF PLANT VARIETIES AND FARMERS’ RIGHTS ACT (PPV&FR ACT) .........................................................................414

I. Authorities administering the Act ....................................................................................415II. PBRs protection for new varieties...................................................................................416

1. Requirements for protection ...........................................................................................416a) Novelty, distinctness, uniformity, stability, variety denomination ...............................416b) Registration procedure ...............................................................................................417c) Registration of essentially derived varieties ................................................................418

2. Rights conferred and limitations .....................................................................................420a) Rights conferred.........................................................................................................420b) Research exemption ...................................................................................................421c) Breeders’ exemption ..................................................................................................421d) Farmers’ privilege......................................................................................................422e) Compulsory licensing.................................................................................................423

III. Protection of farmers’ rights .........................................................................................4241. Rights of farmers as plant variety users...........................................................................424

a) Liability of breeders ...................................................................................................424b) Innocent infringement ................................................................................................424

2. Rights of farmers as developers and conservers of germplasm ........................................425a) Plant variety protection for farmers’ varieties .............................................................425

aa) Persons entitled to registration..............................................................................426bb) Protection requirements .......................................................................................427cc) Registration..........................................................................................................428dd) Rights conferred ..................................................................................................428

b) Benefit-sharing mechanism........................................................................................429aa) Overview .............................................................................................................429bb) Gene Fund ...........................................................................................................431cc) Establishing the contribution ................................................................................431

IV. Appropriation of varieties in the public domain ...........................................................4331. Overview .......................................................................................................................4332. Requirements for protection ...........................................................................................434

a) Definition of extant variety.........................................................................................434b) Distinctness, uniformity, stability...............................................................................435

3. Registration....................................................................................................................4354. Rights conferred.............................................................................................................436

V. Summary of part C..........................................................................................................436

D. UPOV-CONFORMITY AND COMPLIANCE WITH INTERNATIONAL OBLIGATIONS .......................................................................................................................437

I. Conformity of the PPV&FR Act with the standards of the UPOV 1978 Act ..................4381. Distinctness requirement ................................................................................................4382. Brown-bag sales by farmers............................................................................................4383. Benefit sharing ...............................................................................................................442

a) The principle..............................................................................................................442b) Requirement to indicate the pedigree, especially the use and origin of farmers’ varieties......................................................................................................................................443

4. Compulsory licensing.....................................................................................................4445. Conclusion .....................................................................................................................444

II. Conformity of the PPV&FR Act and the Indian Patents Act with the standards of the TRIPS Agreement ................................................................................................................445

1. Effective sui generis system ...........................................................................................445a) Limitation of protection to certain genera and species.................................................445b) Disclosure of origin requirements...............................................................................445

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c) Brown-bag sales by farmers .......................................................................................4462. Compliance of patent protection for plant related inventions with TRIPS minimum standards............................................................................................................................447

a) Patentable subject matter ............................................................................................447b) Derived product protection for products obtained directly by a protected process .......447c) Disclosure of origin requirement ................................................................................448d) Compulsory licensing ................................................................................................448

III. Conformity with the standards of the PGRFA Treaty .................................................448

E. CONCLUSIONS ..................................................................................................................449

CHAPTER 9: CONCLUSIONS ............................................................................451A. PROTECTION FOR FORMAL SECTOR VARIETIES...................................................451

I. Need for and limits of private sector R&D.......................................................................451II. PBRs protection: In principle the suitable form of protection.......................................452III. Scope of the farmers’ privilege ......................................................................................452

B. PROTECTION FOR FARMERS’ PLANT GENETIC RESOURCES..............................453I. Need for in situ crop conservation and improvement ......................................................453II. Possible types of subject matter and scope of protection ...............................................454III. Right holders ..................................................................................................................455

C. PROTECTION FOR PLANT RELATED BIOTECHNOLOGICAL INVENTIONS ......455I. Need for biotechnology R&D............................................................................................455II. Pros and cons of product patents ....................................................................................455III. Unclear level of biotechnological competence ...............................................................456IV. Modulated patent protection .........................................................................................456

D. OUTLOOK ..........................................................................................................................457

GLOSSARY ...........................................................................................................459LIST OF CITED EXPERTS AND STAKEHOLDERS CONSULTED ORALLY OR IN WRITING ..................................................................................................465REFERENCES ......................................................................................................467

List of abbreviations

xix

LIST OF ABBREVIATIONS

AIBA All India Biotech AssociationAIPPI Association Internationale pour la Protection de la Propriété

Intellectuelle [International Association for the Protection of Intellectual Property]

Art. article(s)ASI Association of Seed IndustryASSINSEL Association Internationale des Sélectioneurs [International

Association of Plant Breeders]BCIL Biotech Consortium India LimitedBGH Bundesgerichtshof [German Federal Supreme Court]BPatG BundespatentgerichtBSLR BIO-Science Law ReviewBt bacillus thuringiensisCBD Convention on Biological DiversitycDNA complementary desoxyribonuclein acidCGIAR Consultative Group on International Agricultural ResearchCGRFA Commission on Genetic Resources for Food and AgricultureCIOPORA Communauté Internationale des Obtenteurs de Plantes

Ornamentales et Fruitières de Réproduction Asexuée [International Communitty of Breeders of Asexually Reproduced Ornamental Varieties]

COGECA General Committee for Agricultural Cooperation in the European Economic Community

COMASSO Association des Obtenteurs de Variétés Végétales de la Communauté Economique Européenne [Association of vegetable breeders of the European Economic Community]

COPA Committee of Agricultural Organisations in the European Economic Community

CPGR Commission on Plant Genetic ResourcesCPVO Community Plant Variety OfficeCSIR Council of Scientific and Industrial ResearchCIMMYT Centro Internacional de Mejoramiento de Maiz y Triogo

[International Maize and Wheat Improvement Centre]DBT Department of BiotechnologyDDS Deccan Development SocietyDNA desoxyribonuclein acidDUS distinctness, uniformity, stabilityEC European CommunityEDV essentially derived varietyEPC European Patent ConventionEPO European Patent OfficeESA European Seed AssociationEST(s) expressed sequence tag(s)et al. et alii [and others]

List of abbreviations

ETC group Action Group on Erosion, Technology, and Concentrationet seq. et sequentes [and the following]EU European UnionFAO Food and Agricultural OrganisationFDI foreign direct investmentFIS Fédération Internationale du Commerce des SemencesGATT General Agreement on Tariffs and TradeGDP gross domestic productGEVES Group d’Etude et de Controle des Varieties Vegetales et des

Semences, FranceGM crops genetically modified cropsGMO genetically modified organismsGNIS Groupement National Interprofessionel des Semences et Plantes

[National Interprofessional Group on Seedsand Plants]GRAIN Genetic Resource Action InternationalGRUR Gewerblicher Rechtsschutz und Urheberrecht (Zeitschrift)GRUR Int Gewerblicher Rechtsschutz und Urheberrecht Internationaler Teil

(Zeitschrift)HCSA Heritage Seed Curators AustraliaHYV high yielding varietyIARC International Agricultural Research CentresICAR Indian Council of Agricultural ResearchICARDA International Center for Agricultural Research in the Dry AreasICRISAT International Crop Research Institute for the Semi-Arid Tropicsid. ibidemIFAP International Federation of Agricultural ProducersIGAU Indira Gandhi Agricultural Univeristy RaipurIP intellectual propertyIPGRI International Plant Genetic Resources InstituteIPR(s) intellectual property right(s)IRRI International Rice Research InstituteISF International Seed FederationJPO Japanese Patent OfficeJWIP The Journal of World Intellectual PropertyLtd. limitedMNC multinational corporationmRNA messenger ribonucleic acidmt million tonsMTA material transfer agreementNCAP National Centre for Agricultural Economics and Policy ResearchNGO non-governmental organisationNISTADS National Institute of Science, Technology and Development

StudiesOECD Organisation of Economic Cooperation and DevelopmentOJ EPO Official Journal of the European Patent Officepara. paragraph

List of abbreviations

xxi

PBR(s) plant breeders’ right(s)PCR polymerase chain reactionPCT Patent Cooperation TreatyPGRFA plant genetic resources for food and agriculturePGRFA Treaty FAO International Treaty on Plant Genetic Resources for Food

and AgriculturePLT Patent Law TreatyPPP purchasing power parityPPV&FR Act Protection of Plant Varieties and Farmers’ Rights ActPSU public sector undertakingPVP plant variety protectionPVPA Plant Variety Protection ActPVR(s) plant variety right(s)R. rule(s)RAFI Rural Advancement Foundation InternationalR&D research and developmentRIS Research and Information System for Developing CountriesRNA ribonucleic acidRs. Indian rupeesSAI Seed Association of IndiaSANFEC South Asia Network on Food, Ecology and CultureSAU(s) State Agricultural University(/ies)Sec. section(s)SIBLE Sheffield Institute for Biotechnological Law and Ethic SICASOV Société Cooperative d’Intérêt Collectif Agricole Anonyme des

Sélectionneurs Obtenteurs de Variétés VégétalesSMTA Standard Material Transfer AgreementSRISTI Society for Research and Initiatives for Sustainable Technologies

and InstitutionsSY(s) scientist year(s)TIFAC Technology, Information, Forecasting & Assessment CouncilTK traditional knowledgeTNC(s) transnational corporation(s)TRIPS Agreement Agreement on Trade-Related Aspects of Intellectual Property

RightsUPOV Union internationale pour la protection des obtentions végétales

[International Union for the Protection of New Varieties of Plants]

US$ United States dollarUSPQ United States Patents QuarterlyUSPTO United States Patent and Trademark OfficeWIPO World Intellectual Property OrganisationWTO World Trade Organisation

List of tables

xxiii

LIST OF TABLES

Table 4.1: Classification of crop species on the basis of their pollination behaviour ........................................................................................... 186

Table 4.2: Innovator’s discounted quasi-rents for different scenarios .................. 190

Table 5.1: Acquisition of major Indian seed companies by foreign companies.... 236

Table 5.2: Formal sector seed supply for field crops in 1996-97 ......................... 238

Table 5.3: Crop-wise supply of certified/quality seeds of major crops from 1990-1991 to 1999-2000 in thousand tons.......................................... 239

Table 5.4: Evolution of formal sector seed supply............................................... 240

Table 5.5: Important biological features of major crop species and need for seedreplacement........................................................................................ 241

Table 5.6: Number of private and public bred hybrids marketed during 1998 ..... 248

Table 5.7: Varieties developed during 1993-1997 as percent of total .................. 248

Table 5.8: Varieties developed by crop group during 1993-1997 as percent of total.................................................................................................... 249

Table 5.9: Varieties produced in 1996/97 as percent of total ............................... 252

Table 5.10: Varieties produced by crop group in 1996-1997 as percent of total .... 252

Table 6.1: Major biotechnology patent applicants ............................................... 313

Table 6.2: Biotechnology applications worldwide filed by applicants from selected countries in IPC class C12N15/00......................................... 313

Table 6.3: Allocations to the DBT under the 10th Five Year Plan (2002-2007).... 315

Table 6.4: Public/Government R&D expenditure in selected industrialized countries ............................................................................................ 316

Table 6.5: Investment of the biotechnology industry in India (millions of US$ PPP adjusted) ..................................................................................... 317

Table 6.6: Venture Capital Disbursement in selected countries (2001)................ 318

List of figures

Table 6.7: Number of employees in the biotechnology industry in India ............. 319

Table 7.1: Sources of germplasm/breeding material for private sector companies. ......................................................................................... 350

LIST OF FIGURES

Figure 6.1: Trend of biotechnology patent applications in India ........................... 312

Figure 6.2: Biotechnology venture capital investment shares in 2001................... 318

Chapter 1: Introduction

1

CHAPTER 1: INTRODUCTION

A primary aim of Indian agricultural policy is food security.1 To keep pace with the annual growth rate of population, which amounted to an average of 2.1% annually in the last decade,2 India has to increase its agricultural production steadily. Since a highpercentage of the country’s geographical area is already under cultivation and possibilities of area expansion are minimal, increases in agricultural production must result from improvement of agricultural productivity per unit of land.3 A crucial input for attaining sustained growth of agricultural production is seed. According to some estimations more than half of the real productivity growth in developing country agricultures can be attributed to crop improvement.4

In the international and Indian discussion on how to achieve growth of agricultural production, sustainable development, and increase of income for small and marginal farmers, three types of crop genetic resources are cited which could potentially play a crucial role in reaching these goals in the future:

(1) modern high yielding varieties (HYV), a variety being defined as population of plants which are largely the same in their characteristics (resulting from a given genotype or combination of genotypes) and remain the same within specific tolerances after every propagation.5

(2) genetically modified plants, i.e. plants modified in their genetic structure by using recombinant DNA technology, and(3) farmers’ varieties or landraces, which can be defined as “heterogeneous crop populations that humans deliberately cultivate [and] that are not products of modern plant breeding or subject to purifying selection.”6

Behind these three types of crop germplasm7 stand different types of breeding activities in the largest sense of the term with very different technical and economical characteristics and carried out by different stakeholders8: HYV are developed by a specialized breeding industry, whose work is principally based on selection and crossing steps but which now uses highly technical and sophisticated tools to control the genetic structure of the resulting populations. Landraces are not, as suggested by early authors in the first half of the last century, the result of natural adaptation to the

1 See GOVERNMENT OF INDIA, Planning Commission, 9th FIVE YEAR PLAN (1997-2002), at para. 4.1.20. See further GOVERNMENT OF INDIA, Planning Commission, 10th FIVE YEAR PLAN (2002-2007), at para. 5.1.2.2 See GOVERNMENT OF INDIA (2003), table 2.3: “Population, Growth Rate – 2001 (Provisional)”.3 See SIDHU/SIDHU (1994), at 77; GOVERNMENT OF INDIA (1997-2002), at para. 4.1.67.4 See EVENSON (2002), at 7.5 A similar definition is used, e.g., by the Enlarged Board of Appeal of the EPOin its decision G 1/98, at point 3.1 of the reasons. For more details on the plant variety definition, see below chapter 3, A.II.1, at 81.6 See BROWN (2000), at 29.7 The term “crop germplasm” can be defined as an array of plant materials, such as landraces, improved varieties or wild relatives, that serves as a basis for crop improvement.8 Stakeholders are understood in this paper as persons or entities with a stake in a particular issue or resource, e.g. in the IP context producers and users of knowledge.

Chapter 1: Introduction

2

local environment,9 but the result of a dynamic interaction between farmers and their crops.10 For this reason, in the following, the term “farmers’ varieties” will be preferred. Finally, genetically modified plants are developed by genetic engineers. The result of their scientific work is a modified plant, not a marketable plant variety.

The development and/or conservation of the above three components of crop genetic resources will, among other things,11 depend on economic incentives to pursue these activities. Yet, improvers of crop germplasm face a significant problem when they attempt to appropriate part of the added value of their improved crops.12 Since plants are capable of self-reproduction and transfer improved characteristics from one generation to the next there is generally no need for the users of the plant innovation to have recourse to the developer for supply. At the same time, the economic return from the sale of the first generation of plant material may not provide sufficient incentive for the private seed developer to invest time and resources in crop improvement. The idea of intellectual property rights (IPRs)13 in crop germplasm is to grant germplasm improvers an exclusive right of exploitation in order to secure a reasonable return on their investments.14 This is one of the “classical” arguments that have lead to the introduction of plant breeders’ rights (PBRs) for plant varieties and patents for genetically modified crops. The same line of thinking is now also increasingly applied to farmers’ varieties.15

For this reason, with respect to all three types of crop germplasm, the introduction of IPRs is discussed as possible part of the solution to ensure increased and yet sustainable agricultural production. Exclusive rights for breeders of modern varieties,

9 See the references given by HALEWOOD et al. (DISCUSSION PAPER of 2003), at 4.10 This interaction will be described in detail in chapter 7.11 Another important element is legislation on seed quality and registration which may, by imposing registration and/or high purity standards on all commercialized seeds, seriously affect the dissemination of farmers' varieties and more generally seed supply by farmers. Although this issue is closely linked to the development and/or conservation of the above three components of crop genetic resources it will not be discussed in detail in this book. The Seed Bill 2004 introduced in the Rajya Sabha on 9 December 2004 is rather unclear, highly controversial and would, if interpreted in a certain way, contradict the spirit of the Protection of Plant Varieties and Farmers' Rights Act. The Bill is available at http://agricoop.nic.in/seeds/seeds_bill.htm. A few aspects of this Bill will be mentioned below in chapter 8. However, a detailed analysis of this piece of legislation which, if passed by Parliament, could have a tremendous impact on the seed sector, would go beyond the scope of this book.12 This problem will be discussed in detail in chapter 4.13 Intellectual property rights can be defined as rights and interests in intangible assets susceptible of being used in commerce.14 On the ‘Need for Legal Protection of Plant Varieties’ see UPOV, The UPOV System of Plant Variety Protection, at 4 of 13, available at http://www.upov.org/en/about/upov_system.htm, last visited on 10.03.03.15 According to the Commission on Plant Genetic Resources (CPGR), “the major factor driving genetic erosion is that traditional farmers, their communities and countries, who develop and conserve agro-biodiversity, are generating externalities as providers of a ‘public good’, that is, they are producing global values for which they obtain no return, and are therefore without incentive to continue them: without appropriate and urgent solutions to this paradox, the loss of agro-biodiversity will accelerate, with irreversible, serious global consequences.” See FAO Doc. CPGR-Ex1/94/Inf. 1 (Sept. 1994), at 21, para. 34, as quoted by GIRSBERGER (1999), at 68.

Chapter 1: Introduction

3

for farmers conserving and improving landraces, and for plant genetic engineers could provide an incentive for increased research and development (R&D) and local conservation and breeding efforts.

On the other hand, critics point out that granting exclusive rights implies imposing restrictions on the use of the relevant germplasm. This necessarily leads to welfare losses which have to be balanced against the benefits of intellectual property (IP) protection. These welfare losses have particular weight in technology imitating countries where the positive dynamic effects of IP on R&D can be partly replaced by technology spillovers from industrialized countries by imitation. Opponents to IP protection in developing countries emphasize that exclusive rights could allow multinational corporations (MNCs) to dominate the seed market and hamper the rising domestic industry which is scaling up its R&D skills by adapting foreign technology. They further fear that these rights could hinder the diffusion of new technology and endanger the existence of small farmers depending on farmer-to-farmer seed sales.

Whereas in Europe the shape of plant related IP legislation is mainly debated in the specialized literature, in India the implementation of Art. 27 of the TRIPS Agreement has been accompanied by a heated public debate. Protest rallies have repeatedly mobilised hundreds of thousands of farmers. In order to understand the passionate controversy about seed related IPR one has to keep in mind the important role agriculture plays in the Indian economy and the crucial role that seed plays in the life of Indian farmers. The agriculture sector has still a vital place in the economic development of India. Although the share of agriculture, including allied sectors of forestry & logging and fishing, in the GDP has declined from 39% in 1983 to 25% in 1999-2000,16 compared with industrialized country economies this share is still significant. Similarly, yet at a slower rate, the share of agriculture in total employment declined from 63% to 59%.17 On an individual level, for many Indians the availability of seed and its performance is still a question of survival. India has overcome its import dependency in the last decades and can now claim to be self-sufficient. Nevertheless, this success of agricultural policy is still very fragile in view of population growth and natural resource degradation.18 Therefore any new policy in the agricultural sector raises concerns about its implications for food security. Any legislation that impacts agricultural development has to be particularly carefully designed.

Experts and commentators in India further criticize that the industrialized country models of plant related IP protection only protect crop improvement activities that take place in the formal sector, i.e. that of specialized plant breeders and of plant genetic engineers.19 They do not recognize and reward the contributions to modern plant

16 See GOVERNMENT OF INDIA (2004), at 20.17 See id., at 124. The total economically active population is estminated at 451 million, 267 million in agriculture.18 See below chapter 5, C.I und III.1.19 Formal sector research/crop improvement/breeding is understood here as research that takes place in public academic or other scientific institutions, as well as in corporate research laboratories, greenhouses, test fields, and is carried out by specialized researchers. It is embedded in a scientific

Chapter 1: Introduction

4

breeding of actors in the informal sector, i.e. of farmers who enhance and conserve crop genetic diversity. There is indeed a permanent exchange of germplasm between the three groups of stakeholders involved in the crop improvement activities described above. Formal sector breeders depend for their work on the availability of genetic diversity, which will stem either from other HYVs, from farmers’ varieties or from genetically modified plants. Farmers, seen as one group,20 are providers of genetic diversity and users of modern crop technology. Finally, genetic engineers use inter alia genetic components of farmers’ varieties and depend on breeders for reaching the end-users of their invention, since the outcome of a biotechnological process is not yet a stable heterogeneous high-yielding plant population. All three groups of stakeholders are at some point users of germplasm improved by another group and at another point providers. “Classical” IP systems in industrial countries subject the use of new seed technology developed by the formal sector to certain restrictions, while the use of heterogeneous populations developed by farmers is free, as they do not meet the requirements of PBRs protection. This has led critics to speak of “one way subsidy”.21

But a careful differentiation between different shapes of IPR systems is necessary. Certain systems permit only a very limited scope for appropriation by formal sector breeders and leave the remaining benefits to farmers. It is indispensable to take a comprehensive approach and discuss costs and benefits for all three groups of different IP protection solutions for HYV, genetically modified crops, and farmers’ varieties in order to find a balance between the different interests involved.

The following paper develops suggestions as to what shape a comprehensive system of crop related IP protection for India should take. In order to arrive at these suggestions, the following structure is adopted: Chapter 2 will highlight the international commitments, which may reduce the scope of action of the Indian legislature in the area of plant genetic resources. These obligations stem from the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)22 which obliges Member States to provide certain minimum standards of protection, from the Convention on Biological Diversity (CBD)23, and from the International Treaty on Plant Genetic Resources for Food and Agriculture (PGFRA Treaty).24 Chapter 3 will give an overview of the European system of plant related IP with its two alternative protection regimes, one for plant varieties, the other for plant related inventions. This

knowledge system which assumes that researchers have the potential to understand the processes of nature, to describe underlying causalities in theory and to harness theory to manipulate the environment. VAN DUSSELDORP/BOX (1993), at 22, term this the “voluntaristic worldview”. In contrast, informal sector research takes place outside this organized environment and is not necessarily based on this voluntaristic wordview.20 Yet, the individual farmer who conserves traditional germplasm may not be the same as the farmer who uses modern seed technology. 21 See SWAMINATHAN (1995b), at 247.22 Agreement on Trade Related Aspects of Intellectual Property Rights of 15 April 1994, available at http://www.wto.org/english/docs_e/legal_e/27-trips.doc, in force since 1 Januar 1995.23 Convention on Biological Diversity of 5 June 1992, available at http://www.biodiv.org/convention/articles.asp, in force since 29 December 1993.24 International Treaty on Plant Genetic Resources for Food and Agriculture, approved through FAO Resolution 3/2001 of November 2001, available at http://www.fao.org/legal/TREATIES/033t-e.htm, in force since 29 June 2004.

Chapter 1: Introduction

5

chapter will thus permit analysing a system in operation which combines patent protection restricted to specific areas of plant related innovation with a protection system specifically adapted to plant varieties. In order to draw lessons from this experience for the Indian legislature, views of experts and stakeholders on the system will be presented. Chapter 4 will discuss the principal findings of the literature on economics with respect to the economic impacts of IP protection in order to provide the necessary background for later analysing the arguments set forward in the debate in India. Since the optimal design of IP legislation depends on the economic situation in a specific sector in a given country, chapter 5 will highlight the present status of the Indian seed sector and the future challenges that agricultural policy will have to respond to in this sector. The Indian debate on the potential impact of PBRs and patents on the seed sector in India will be analysed in chapter 6. Chapter 7 will review the possibilities and implications of protecting farmers’ varieties by a sui generis IP system. Chapter 8 will outline the Indian legislation relating to IP protection for plant genetic resources. Finally, chapter 9 will submit suggestions for the main features of a suitable system of IP protection for plant genetic resources in India.

Before discussing the legal and economic dimensions of the present issue, it should be mentioned that the arguments set forward against PBRs and patents in the agricultural sector go beyond the questions of economic and social impact which are in the focus here. There is, for instance, a school of thought that believes that all knowledge related to agriculture and seed should be part of the public domain or be owned collectively by all Indians or all farming communities, because turning seeds and related knowledge into a commodity is contrary to the beliefs of the farming communitiesconcerned.25 Some examples of traditional customs and beliefs may illustrate this view:

“New seeds are first worshipped and then planted. The new crop is worshipped before being consumed. Both these festivals – planting and harvest – are celebrated in the fields and symbolize people’s intimacy with nature. At the time of planting, the field is seen as mother; worshipping the field is a sign of gratitude towards the earth, who as mother feeds the millions of life forms who are her children. Festivals like Ugadi, Ramanavami, Akshay Trateeya, Ekadashi Aluyana Amavase, Naga Panchami, Noolu Hunime, Ganesh Chaturthi, Rishi Panchami, Navratri, Deepavali, Rathasaptami, Tulsi Vivaha Campasruti and Bhoomi Puja cannot be celebrated without religious ceremonies around the seed. […] According to Hindu mythology, seed is a gift of Srushtikarta (Brahma, the creator), who created seeds in primordial times. […] Seed is also considered and worshipped as Dhanalakshmi (the goddess of wealth).” 26

This raises the questions how widely these practices are spread and to what extent these beliefs are perceived as contrary to any form of IP. These issues and related ethical considerations are beyond the scope of this paper. It is only obvious that within India itself different cultures are clashing. The heterogeneity of beliefs that exists

25 See SHIVA (2001), at 69 et seq.26 See SHIVA (2001), at 70/71.

6

within India in this respect is certainly an immense challenge to the Indian legislator and may have influenced the assessment of political feasibility of certain solutions.

Chapter 2: The international legal framework

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CHAPTER 2: THE INTERNATIONAL LEGAL FRAMEWORK

International treaties in two different fields impacted the Indian legislation process. On the one hand, the fact that a PBRs law passed the two houses of Parliament is probably due to India’s international engagements under the TRIPS Agreement.27 This fundamental treaty in the field of IP protection obliges its Member States inter alia to protect certain products and processes in the area of plant breeding. On the other hand, in reaction to an international trend to restrict the free availability of the results of modern plant breeding, developing countries made a move towards limitation of access to their own plant genetic resources in different international fora. As a result the Convention on Biological Diversity (CBD)28 and the FAO International Treaty on Plant Genetic Resources for Food and Agriculture (PGRFA Treaty)29 now stipulate the principles of sovereignty of States over their plant genetic resources and their authority to determine access. At the same time, these treaties acknowledge the contribution of local communities and farmers to the conservation and enhancement of plant genetic resources. Even though they do not contain concrete provisions on the practical method of rewarding these contributions, the international recognition of their role byintroducing the notion of farmers’ rights and abandoning of the concept of free access to traditional varieties and wild relatives certainly gave an impetus to further thinking about an implementable methodology at the national level for directly rewarding rural communities.

The following chapter will analyse India’s international obligations under these treaties when framing IP laws for the protection of plant genetic resources. Part A will examine what minimum protection India will have to provide in the field of plant breeding in order to comply with its TRIPS obligations. Part B will analyse what standards the CBD and the PGRFA Treaty impose. Finally part C will briefly discussthe relationship between the obligations under the TRIPS Agreement, on the one hand, and the CBD and the PGRFA Treaty, on the other hand, and give an outlook.

A. OBLIGATIONS UNDER THE TRIPS AGREEMENT

The following sections will first look at Art. 27(3)(b) TRIPS Agreement, which deals with the borderline between patent protection and a sui generis protection system in the area of plant breeding. Secondly they will discuss the minimum patent protection that will have to be provided for certain types of subject matter in this technical field.

I. Interpretation of Art. 27(3)(b)

The most important provision for the protection of plant related IPRs is Art. 27(3)(b) TRIPS Agreement, which forms an exception to the general rule established in Art. 27(1) TRIPS Agreement that patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application:

27 See above note 22.28 See above note 23.29 See above note 24.

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“Members may also exclude from patentability: […](b) plants and animals other than microorganisms, and essentially biologicalprocesses for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof.”

The proposal for this exception from patentability was introduced by the member countries of the EC30, advocating a regime compatible with Art. 53(b) EPC. The developing countries had resisted patent protection for plants and animals with particular vehemence and only this compromise introducing significant exceptions from patentability allowed a regulation of this field at all.31 Art. 27(3)(b) of the TRIPSAgreement is obviously modelled after Art. 53(b) of the EPC. Yet, there are two noteworthy differences: Firstly, the TRIPS provision permits broader exclusions from patentability than Art. 53(b) of the EPC. Whereas the latter only relates to “plant varieties”, Art. 27(3)(b) TRIPS permits the exclusion of the wider category “plants”, yet restricting this exclusion again by the terms “other than microorganisms”. Second, the TRIPS Agreement excludes a new category of processes, namely “non-biological processes”, from the exception to patentability. While nothing in the travaux preparatoires suggests that the parties agreed on using the concepts developed in European legal practice, the interpretation that the ‘model’ for Art. 27(3)(b) TRIPSAgreement has found in Europe is certainly an important reference point.32

The interpretation of the following terms will be decisive for the protection to be granted to subject matter in the field of plant breeding:

1. Plants versus microorganisms

In comments on the meaning of “microorganism” it is often implied that, in the area of biological material, the obligation of Member States to provide patent protection only extends to microorganisms.33 Yet, the language of Art. 27 TRIPS Agreement suggests another reading. The general rule is the availability of patents for “any inventions […], in all fields of technology”. The exclusion only refers to “plants and animals other than microorganisms”. Thus, everything that does not fall under the term “plant” is a priori, i.e. if it meets the patenting requirements, patentable, irrespective of whether it fulfils the definition of microorganism.

The TRIPS Agreement provides no definition for any of the three crucial terms of “plants”, “animals” and “microorganisms”. Thus, they have to be interpreted in accordance with the “ordinary meaning to be given to the terms of the treaty in their

30 See GATT Doc. MTN.GNG/NG11/W/26, “Guidelines and Objectives Proposed by the European Community for the Negotiations on Trade Related Aspects of Substantive Standards of Intellectual Property Rights of July 7, 1988”, quoted after ROTT (2002), at 215.31 See STRAUS (1996), at 185.32 In the same vein CARVALHO (2002), at 178, point 27.57.33 See, e.g. THIRD WORLD NETWORK (1998), at 9.

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context and in the light of its object and purpose.”34 The following comments will focus on a few central questions that arise in the context of plant breeding. The patentability of some of the subject matters for which plant innovators seek protection is evident: Without a definition of either term, it can be noted that proteins are neither plants nor microorganisms. Likewise, vectors, in particular bacterial plasmids, used toclone or transfer the foreign DNA, and bacteria in culture used as host organisms for these vectors, or any parts thereof, do not belong to the plant kingdom. There is also no doubt that the crop plants in question here are plants in the ordinary meaning of the term, and there is no need to generally determine which organisms that belong to the plant kingdom are to be considered as microorganisms. In contrast, there could be controversial issues of interest for plant breeders and farmers where not the plant as a whole but parts of it are the subject matter of a patent claim, especially plant cells or smaller units like genes.

a) Plant cells

Can plant cells be considered as “plants” and if this is the case, would they be re-included in the ambit of patent law by the term “microorganisms”? As stated earlier European legal practice is to some extent a reference point. While it has to be kept in mind that European case law focuses on the question what the prohibition of patents in respect of “plant varieties” means for the patentability of plant cells, it is nevertheless interesting to note that the Technical Boards of Appeal of the European Patent Office (EPO) make a distinction between plant cells “which are contained in a plant” and isolated plant cells. Concerning the first category, in “Plant Cells/PLANT GENETIC SYSTEMS”, the competent Board held that

“plant cells contained in a plant are differentiated cells which are morphologically and functionally organised to constitute the plant. Thus, the subject-matter of [the] claim irrespective of the way the latter is drafted, is nothing but a plant […].”35

On the other hand, the Board considered that “plant cells as such, which moderntechnology allows to culture much like bacteria and yeasts, cannot be considered to fall under the definition of a plant or a plant variety”.36 The Board further emphasizes

34 Art. 31(1) of the Vienna Convention on the Law of Treaties (8 ILM 679) states that “[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.” This Article of the Vienna Convention is reflective of customary law. In its case law, the Appellate Body has repeatedly stated that the WTO Agreement and any other covered agreement has to be interpreted in accordance with Art. 31 of the Vienna Convention. See inter alia Report of the Appellate Body, WT/DS50/AB/R (India – Patent Protection For Pharmaceutical and Agricultural Chemical Products), at para. 45/46; Panel Report, WT/DS79/R (India - Patent Protectionf or Pharamaceutical and Agricultural Chemical Products), at para. 7.64; Panel Report, WT/DS114/R (Canada – Patent Protection for Pharmaceutical Products), at para. 7.13; Report of the Appellate Body, WT/DS170/AB/R (Canada – Term of Patent Protection), at para. 53 with further references to other rulings of the Appellate Body in note 39.35 See T 356/93 (Plant Cells/PLANT GENETIC SYSTEMS), reasons, point 23. In a similar vein, T 579/01 (Cytoplasmic male sterile plants/ENZA ZADEN), point 11 of the reasons.36 See id., reasons, point 23.

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that isolated plant cells are considered to be “microbiological products” under thecurrent practice of the EPC.37

Transferred to Art. 27(3)(b) of the TRIPS Agreement this approach would mean that isolated plant cells could be patented either because they do not fall under the plant definition or if they do, because they can be considered as “microorganisms” in the sense of the provision. Consequently, the following acts would be caught by the exclusive right of a patent holder whose claim refers to isolated plant cells: The manipulation of a cell or tissue culture would infringe the patent, probably also the regeneration of the cells into a plant. Moreover, the genetic component by which the plant cell is defined in the claims could not be used in processes of genetic engineering, as the isolation and transfer of the genetic component always requires the use of isolated cells. However, once the cells are again differentiated and morphologically and functionally organized as part of an entire plant they fall without the scope of the patent.

However, the view expressed in the cited case law that isolated cells “cannot be considered to fall under the definition of a plant” is not a compelling interpretation. Regarding the ordinary meaning of the term “plant”, it can be observed that there exists a narrow everyday meaning referring to a green plant with leaves, stalk and roots,38 and a larger meaning comprising every organism that belongs to the plant kingdom.39 From the context of the provision it can be deduced that an overlap with the term microorganism was at least considered possible. This suggests that the TRIPSAgreement has adopted the second meaning. Furthermore, the principle of treaty interpretation saying that an exception may not be interpreted in a way to deprive it of its meaning and effect has to be observed.40 Accordingly, plants in all their life stages have to be embraced by the concept of “plant”, including in particular seed. Otherwise the provision would be easily circumvented and finally emptied of its contents.41 One could argue, that the same must apply to plant cells, which can be a stage in the life of

37 See id., reasons, point 34.38 See LE ROBERT ILLUSTRE D’AUJOURD’HUI EN COULEUR (1996), defining “plante” as “végétal (surtout végétal à racine, tige, feuilles [excluant les champignions, les mousses…], de petite taille [opposé à l’arbre])”; see also WEBSTER’S NINTH NEW COLLEGIATE DICTIONARY (1983), stating as one possible meaning “a young tree, vine shrub, or herb planted or suitable for planting”.39 See WEBSTER’S NINTH NEW COLLEGIATE DICTIONARY (1983): “1b: any of a kingdom (Plantae) of living beings typically lacking locomotive movement or obvious nervous or sensory organs and possessing cellulose cell walls.” According to the LIFE SCIENCE DICTIONARY (undated), the members of the Plant Kingdom are “multicellular, eukaryotic organisms that (usually) conduct photosynthesis.”40 A corollary of the general rule stated in Art. 31(1) of the Vienna Convention is that “interpretation must give meaning and effect to all the terms of the treaty. An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.” See Report of the Appellate Body, WT/DS2/AB/R (United States – Standards for Reformulated and Conventional Gasoline), at point IV, with reference to the case law of the ICJ in note 45; see also Report of the Appellate Body, WT/DS170/AB/R (Canada – Term of Patent Protection), para. 51 and 59 and Panel Report, WT/DS114/R (Canada – Patent Protection for Pharmaceutical Products), at 7.21.41 See also LESKIEN/FLITNER (1997), at 19.

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a plant, at least with the advent of modern microbiological breeding methods.42

Therefore, there are good arguments for concluding that, what is actually excluded from patentability by the terms “plants and animals” are two whole kingdoms of living organisms, the plant kingdom and the animal kingdom, including all life stages of members of these kingdoms and including plant and animal cells.

Interestingly, in the Enlarged Board of Appeal noted in “Transgenic Plant/NOVARTIS II” that “[m]icro-organisms are different from the parts of living beings used for genetic modification of plants.”43 While the Enlarged Board finally considered it “justified” to treat cells and parts thereof like microorganisms,44 its reasoning confirms that the ordinary meaning of “microorganism,” as found in dictionaries is a possible interpretation of the concept in the TRIPS Agreement. Even though there is no one single agreed definition in dictionaries, most have in common that single cells of a multicellular organism are not included in the enumerated examples.45

b) Plant genes and other DNA molecules

The second important question in the area of plant breeding refers to the patentability of plant genes, or more generally plant DNA. Again two cases should be distinguished, namely DNA which is an integral part of a plant and isolated DNA (including DNA synthesized outside a plant). Restrictions caused by product patents relating to isolated plant DNA would neither concern practices of farmers nor classical breeding steps of hybridisation and selection or even techniques of cell fusion and mutagenesis. But they would impact genetic engineering programs as well as techniques of analysing plant germplasm, such as methods using molecular markers and DNA profiling.46

Pursuant to Art. 27(3)(b) of the TRIPS Agreement, does plant DNA contained in a plant have to be patentable? In its effects, a claim to a recombinant or other DNA sequence contained in a plant amounts to claiming a plant characterised by the DNA sequence. The acts of users, be it farmers or breeders, that would need the authorisation of the patent holder would be exactly the same. In Europe, the admissibility of a claim to “a transgenic plant and the seed thereof comprising recombinant DNA sequences encoding [anti-pathogenically effective enzymes]” has been at issue in the leading case “Transgenic Plant/NOVARTIS II”.47 Claims of this type have been finally admitted provided the technical feasibility of the invention is not confined to a particular plant variety.48 According to the relevant case law and

42 See also LESKIEN/FLITNER (1997), at 20.43 See point 5.2 of the reasons.44 See id.45 For examples, see ADCOCK/LLEWELYN (2000), at 4 of 17; and the LIFE SCIENCE DICTIONARY (undated).46 Yet, this impact would be limited by the possibility to exclude discoveries from patentability and the fact that patent protection anyway has to be provided for plant related biotechnological processes (with the exception of essentially biological processes for the production of plants). 47 See the decision of the Enlarged Board of Appeal of the EPO, G 1/98 (Transgenic plant/NOVARTIS II).48 See id., point 3.10. See also Art. 4(2) of the Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the Legal Protection of Biotechnological Inventions, O.J. L213/13

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legal comments, the non-patentable “plant varieties” are defined by a specific genotype or combination of genotypes, whereas a plant is eligible for patent protection if it is characterized by one gene or a few genes. There is no doubt that the Contracting Parties of the TRIPS Agreement by using the language of Art. 27(3)(b) have opted for a broader exception.49 Consequently, Art. 27(3)(b) leaves TRIPS Members the option to exclude not only plant varieties in the above sense from patentability, but also plants characterized by one single gene. Furthermore, obligation to provide protection restricting the use of plants in conventional plant breeding programs would deprive the exception of its intended meaning and effect.

As concerns isolated plant DNA, the answer is more difficult, and the solution suggested here is certainly challengeable. Above it has been argued that the term “plant” has to be understood in a broad sense, including all organisms belonging to theplant kingdom in all their life stages. Yet, a plant DNA molecule cannot be considered as an organism, i.e. a living thing.50 Consequently the question is whether even a larger sense could be given to the term “plant” in the light of its context.51 It is submitted here that the phrase in Art. 27(3)(b), saying that “members may exclude [plants] from patentability”, could have the meaning that Member States may preclude not only claims referring to an entire organism, but also claims referring to components thereof, especially components which determine the characteristics of the organism as a whole. This should not contradict the ordinary meaning, as the context permits the understanding that the term “plant” refers to a category or field of inventions.52

If one accepts that one of the possible ordinary meanings of the relevant phrase covers components of plants and especially hereditary information, there are valid arguments

30.7.98, available at http://www.europa.eu.int/com/internal_market/fr/indprop/invent/index.htm or reproduced in NOTT (1998), at 114 et seq.49 See also STRAUS (1996), at 184. This conclusion is confirmed by a systematic interpretation of sentence one in the context of sentence two, that introduces an exception for a particular classification (“plant varieties”). See CORREA (1994), at 327/328.50 LIFE SCIENCE DICTIONARY (undated); see also LE ROBERT ILLUSTRE D’AUJOURD’HUI EN COULEUR (1996), which defines organisms as “Etre vivant organisé”. One of the major properties of living matter is that it is an autocatalytic system which is able to reproduce itself (See ALBERTS et al. (1998), at 237), whereas DNA is replicated by a complex machinery of enzymes in the cell.51 ROTT (2002), at 175, with reference to the EC-Hormones case, rightly points out there is no general principle in the interpretation of international treaties saying that exceptions to a general principle, here the patentability in all fields of technology pursuant to Art. 27.1, have to be construed narrowly. Such a principle could only be derived from the objectives of the treaty. The intent on the part of the Members to provide a high standard of IPR protection in all fields of technology cannot be deduced from the objectives of the Treaty as expressed in the Preamble and Art. 7 of the TRIPS Agreement. See also Appellate Body, WT/DS26/AB/R (EC Measures Concerning Meat and Meat Products (Hormones)), at para. 104.52 The reasoning in terms of “fields of technology” is suggested by the context. The general rule in Art. 27(1) provides that “patents shall be available for any invention, whether products or processes, in all fields of technology”. This connection is also made by GERVAIS (1998), at 24, 1.31, who resumes the content of the second “Draft Final Act Embodying the results of the Uruguay Round ...”, saying that the drafters had chosen to “impose patentability of inventions in all fields, with a possible exlusion for plants and animals”.

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for this broader interpretation of the exclusion from patentability. The drafting history suggests that the Negotiating Parties had plant related biotechnological inventions in mind, when drafting the present provision. This was the area where the limitations of the exclusion merely of “plant varieties” as under European law had become relevant.Moreover, the Draft Text of July 23, 199053 and the Brussels Draft54 had contained as one option a second sentence in Art. 27(3)(b) after the exclusion from patentability of plants and animals, stating that “[a]s regards biotechnological inventions, furtherlimitations should be allowed under national law”.55 What is actually of interest in plant biotechnology is not the entire plant, even though a transformed plant may be an aspect of an invention in this field, but its microbiological components, in particular plant DNA. A limitation of the exception merely to entire plants would therefore be rather surprising. Furthermore, the Preamble of the TRIPS Agreement, which permits to identify object and purpose of the Agreement, not only mentions the desire to“promote effective and adequate protection of intellectual property rights”, but also recognizes “the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives” and “the special needs of least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base”.56 Consequently, anarrow meaning of exclusions from patentability may not be automatically assumed. This would contravene the in dubio mitius principle.57

It needs to be mentioned, however, that the aforementioned Brussels Draft also contained the option to exclude explicitly not only “plant and animals”, but also “parts thereof”. Yet, from the mere omission of this explicit statement no definite conclusion as to the meaning of the exclusion of “plants” under Art. 27(3)(b) can be drawn. The Draft Text of July 23, 1990 contained also an explicit exclusion of “scientific theories, mathematical methods, [and] discoveries” which was finally abandoned, without precluding Member States from providing for these exclusions.58 Where the Contracting States agreed that patent protection should be available, they have

53 Document MTN.GNG/NG11/W/76, dated 23 July 1990, “Status of Work in Negotiating Group: Chairman’s report to the GNG”, as quoted in GERVAIS (1998), at 146. 54 Document MTN.TNC /W/35/Rev. 1, dated 3 December 1990, “Draft Act Embodying the Results of the Uruguay Round of Multilateral Trade Negitiations - Revision”, as quoted in GERVAIS (1998), at 145.55 Emphasis added by the author.56 See Preamble.57 See ROTT (2002), at 174. In the EC-Hormones case, the Appellate Body pointed out that “[w]e cannot lighty assume that sovereign states intended to impose upon themselves the more onerous, rather than the less burdensome obligation [...]. To sustain such an assumption and to warrant such a far-reaching interpretation, treaty language far more specific and compelling than that found in Art. 3 of the SPS Agreement [Agreement on the Application of Sanitary and Phytosanitary Measures] would be necessary.” See Report of the Appellate Body, WT/DS26/AB/R (EC Measures Concerning Meat and Meat Products (Hormones)), para. 165. In footnote 154, the Appellate Body acknowledges that the interpretative principle of in dubio mitius, that is applied in deference to the sovereignity of States, is widely recognized in international law as a “supplementary means of interpretation” and quotes the relevant ICJ case law.58 See below point II.1.

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explicitly included the concerned subject matter.59 That this did not happen in the present context, leaves the door open for a broader interpretation of the exclusion, but it is acknowledged here that there are valid counter-arguments and that a Panel might decide differently.

2. Essentially biological, non-biological and microbiological processes for the production of plants

Commentators have pointed out that the terms “essentially biological processes for the production of plants”, “non-biological processes” and “microbiological processes” pose significant difficulties and may also lead to controversy among WTO member States.60 It seems indeed not possible to find a totally consistent and therefore convincing interpretation.

The delimitation of these different concepts and thus of the availability of patent protection is important not only for the use of the concerned processes, but also of the resulting products. Pursuant to Art. 28(1) TRIPS Agreement, the protection conferred by a process patent shall extend to “the products obtained directly by [the patented] process”. Whether or not plant related products remain within the ambit of patent protection as products directly obtained by a patented process will depend on both, the definitions of “essentially biological processes for the production of plants”, “non-biological processes” and “microbiological processes,” and the relationship between the exclusion from patentability of plants under Art. 27(3)(b) and the extension of the process patent protection under Art. 28(1)(b).

a) Essentially biological processes

Starting with its ordinary meaning,61 “biological” could be defined as “related to living organisms.”62 But this definition would apply to any step in a process for the production of plants. The term “essentially” would have no possible meaning. Alternatively, “biological” could be understood to mean “making use of natural mechanisms”63 or “making use of biological forces that are at the basis of reproduction.”64 Most steps in any breeding process would still be “biological” in this sense, because they are almost all based on the natural mechanisms of replication of DNA and cell division.65 Some counter-examples, such as cell fusion or the transfer of DNA into a plant cell by microprojectile bombardment could explain the term “essentially”. A process involving such a non-biological step could be qualified as

59 This is the case for microorganisms, microbiological and non-biological processes.60 See LESKIEN/FLITNER (1997), at 20. 61 See above note 34. 62 See LE ROBERT ILLUSTRE D’AUJOURD’HUI EN COULEUR (1996): “Qui a rapport à la vie, aux organisms vivants.”63 See, e.g. 1054/96 (Transgenic plant/NOVARTIS I), point 24 of the reasons, considering this as one possible interpretation but finally rejecting it.64 See, e.g. NEUMEIER (1990), at 196. In his view, the fact that the regeneration of plants from callus is based on the biological forces that are also at the basis of vegetative propagation speaks in favour of the qualification of in-vitro propagation as essentially biological.65 See also NEUMEIER (1990), at 185, for methods using chemical or physical mutagens.

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“essentially biological”. Yet this would mean that any process for the production of plants would be biological or essentially biological, which would obviously not correspond to the concept adopted by the provision.

A Dispute Settlement Panel or Appellate Body would probably seek guidance in the interpretation developed by EPO case law.66 In the decision T 320/87, the Board of Appeal held that “purely biological” means that a process occurs in nature, and “essentially biological” processes refer to processes comprising minor human interventions in the natural processes of mating, such as selection and human guided crossing.67 This reading has been confirmed by the decision T 356/93.68 There seems exists thus a consensus in EPO case law as well as the legal literature69 that the exception of Art. 53(b), 1st half-sentence, of the EPC opposes “classical breeding”, involving selection and crossing with minor human intervention, on the one hand, and modern techniques for the manipulation of plant germplasm, on the other. According to CORREA this corresponds also to the intentions of the Contracting States of the TRIPS Agreement.70

Yet, where exactly should the line between both types of breeding processes be drawnif the process combines conventional and other breeding steps is an issue of controversy.71 In the referral decision T 1054/96, which deals with a multistep process including “steps of preparing a transgenic plant” and “crossing said plants using conventional breeding techniques” the Board enumerates three different approaches to the “value judgment of the extent to which [a process] should be non-biological before it loses the status of ‘essentially biological process’”.72 However, it does not adhere to any of them.73 The first approach draws a parallel to Art. 52(4) EPC relating to methods of treatment by surgery or therapy. According to relevant case law in this field “a method claim falls under the prohibition of Article 52(4) EPC if the administration of one of the substances is a treatment by therapy, and the administration of this substance is a feature of the claim.”74 This approach, transferred to Art. 53(b), would mean that a claimed process would be considered as “essentially biological” as soon as it comprises one “essentially biological” step. The second approach that had been adopted by the decisions T 320/87 and T 356/93 requires that the process comprises at least one essential technical, i.e. non-biological step, which

66 It is also suggested in the legal literature that the interpretation of the term „essentially biological processes“ may be facilitated by EPO case law. See, e.g. STRAUS (1996), at 185.67 See T 230/87 (Hybrid plants/LUBRIZOL GENETICS), point 6 of the reasons.68 See T 356/93 (Plant cells/PLANT GENETIC SYSTEMS), point 25 et seq. of the reasons.69 See, e.g. NEUMEIER (1990), at 189 et seq.; SINGER/STAUDER (2000), Artikel 53 point 46 et seq.70 See CORREA (1994), at 328. 71 See NEUMEIER (1990), at 189, who observes that the approach to draw the line between traditional and modern breeding processes does not provide a solution for multi-step processes.72 See T 1054/96 (Transgenic plant/NOVARTIS I), reasons, point 25 et seq.73 See id., reasons, point 23 et seq. Regrettably, the Enlarged Board of Appeal did not answer this question, considering that “the relevance to the application having given rise to the referral of the question […] has not yet been clarified.” See G 1/98 (Transgenic plant/NOVARTIS II), at point 6 of the reasons.74 See decision T 820/92, as quoted by the referral decision.

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has a decisive impact on the final result.75 The third approach considered by the Board is the one taken in Art. 2.2 of the EG Biotechnology Directive, according to which one single non biological step, i.e. any step which does not consist of “entirely natural phenomena such as crossing or selection”, is sufficient to make the process lose its essentially biological character. This approach would allow any number of “essentially biological steps” which would be carried into patentability by one “non-biological” process step.

It is uncertain which of the three approaches described above would be taken by a Panel or Appellate Body. LESKIEN/FLITNER, emphasizing that nothing in the TRIPS Agreement suggests a narrow approach to the term “essentially biological process”, conclude that

“[i]t would […] seem to comply with Article 27(3)(b) TRIPS Agreement if multistep processes consisting of the genetic modification of plant cells, the subsequent regeneration of plants and, finally, the propagation of these plants, are treated as ‘essentially biological’ and, consequently, refused patent protection.”76

It seems doubtful that a simple propagation step at the end of a genetic engineering and regeneration process could confer the character of an essentially biological process to the overall process given the fact that a propagation step leads to a result differing only in generation not in properties. But, it is a valid possible viewpoint to say that patentable multi-step processes are not allowed to include the selection and hybridisation steps which follow the regeneration of the transformed plant in order to develop a plant variety. The genetic constitution of the final product of a process involving hybridisation and selection steps is essentially determined by these steps. Further, it could be argued that the inclusion of breeding steps, which follow those steps that represent the technical contribution of the invention to the art and have no relationship to this contribution, circumvents the prohibition to patent “essentially biological processes”.77 The in dubio mitius principle also speaks in favour of this interpretation.78

b) Microbiological processes

In Europe, two alternative approaches to the term “microbiological” have been discussed:79 The first one limits the scope of the term to processes involving microorganisms in a narrow “traditional” sense, i.e. mainly bacteria and yeasts. The other approach extends the concept to “all activities in which an integrated use is

75 See T 1054/96 (Transgenic plant/NOVARTIS I), reasons, point 28.76 See LESKIEN/FLITNER (1997), at 21.77 In the “Onco-Mouse II”-case, the Examining Division took the position that by artificially combining a non-biological and a breeding process the applicant was seeking to circumvent the exclusion under Art. 53(b), 1st half-sentence, EPC, particularly since the two processes would give rise to two different products. See T 19/90, point 4.9.2 of the reasons.78 See above note 57.79 See T 356/93 (Plant Cells/PLANT GENETIC SYSTEMS), reasons, point 31 and 35.

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made of biochemical and microbiological techniques, including genetic and chemical engineering techniques, in order to exploit the capacities of microbes and cultured cells”. Both viewpoints find support in the European legal literature.80 The first approach is favoured by the Enlarged Board of Appeal in “Transgenic Plant/NOVARTIS II”, which notes that the “term micro-biological processes in the provision was used as synonymous with processes using micro-organisms. Micro-organisms are different from the part of living beings used for the genetic modifications of plants.”81 For these reasons, the Enlarged Board of Appeal concludes that “processes of genetic engineering […] are not identical with micro-biological processes.”82

If one follows the opposite approach, again the question arises of how to deal with multi-step processes. Should a process for the production of plants, which includes at least one microbiological step, be considered to represent a “microbiological process”as a whole? In “Plant Cells/PLANT GENETIC SYSTEMS”, the Board answered this question in the negative. It argued inter alia that “the second half-sentence of Article 53(b) EPC refers merely to ‘microbiological processes’, and not to ‘essentiallymicrobiological processes’. In the Board’s view, this indicates that the historical legislator did not want the concept of ‘microbiological processes’ […] to be extended to include such technical processes either.”83

In the context of the TRIPS Agreement, both approaches, the one including the manipulation of plant cells and the one restricted to the transformation and use of micro-organisms in the narrow sense, would be tenable.84

80 See, e.g. R. LUKES (1987), in support of the appellants view, and F.K. BEIER et al., “Biotechnologie et protection par brevet. Une analyse internationale” (1985), in particular page 75, as quoted by the Board in “Plant cells/PLANT GENETIC SYSTEMS”, reasons, point 31, in support of the respondents view.81 See G 1/98 (Transgenic plant/NOVARTIS II), reasons, point 5.2. On the other hand the Enlarged Board of Appeal considers the treatment of plant cells as micro-organisms to be “justified since modern biotechnology has developed from traditional microbiology and cells are comparable to unicellular organisms.” Id. 82 See id., reasons, point 5.2. The second approach had been adopted by the Technical Board of Appeal in the case “Plant Cells/PLANT GENETIC SYSTEMS”. See T 356/93, reasons, point 32 et seq.. Neither “Hybrid Plants/LUBRIZOL GENETICS” nor “Onco-Mouse II/HARVARD COLLEGE” take a position on this question. The referral decision “Transgenic Plant/NOVARTIS I” only refers to the question whether a genetically engineered plant variety could be considered a product of a microbiological process (reasons, point 30).83 See T 356/93, reasons, point 38. It has to be noted, however, that the above statement of the Board does not advocate the exclusion of multi-step processes including biotechnological steps from patentability. On the contrary, the Board points out that “in principle, Article 53(b) EPC, first half-sentence, does not exclude from patentability modern multistep processes for producing plants involving genetic engineering techniques. In fact, whenever such processes are shown to be of a technical nature, they are patentable under the EPC without limitation.” See reasons, point 38. What makes the Board take this differentiated position are the implications for product protection under Art. 53(b), 2nd half-sentence, EPC.84 See LESKIEN/FLITNER (1997), at 22, hold that “the initial step of transforming the plant cell would have to be treated as micro biological”. In contrast they reject the qualification of a process

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c) Non-biological processes

Regarding the meaning of “non-biological” process STRAUS predicts that “interpretation skills will fail completely in the face of [this] term […], for which there are no models.”85 CORREA rightly wonders how a plant can be produced by a process which is not at least in part biological.86 “The source and grounds of this text are untraceable.”87 Indeed the phrase “essentially biological processes […] other than non-biological processes” has no consistent ordinary meaning.88 Yet, even the 2nd half sentence of Art. 53(b) EPC was often not understood as an exception to the exception, but as a clarification that processes involving the use of micro-organisms in the narrow sense, which are of particular importance in the food industry and the pharmaceutical industry, do not fall under the exception of “essentially biological processes.”89

Likewise the term “non-biological processes” was possibly included to avoid that a broad concept of “essentially biological processes” and a narrow concept of “micro-biological processes” would lead to an interpretation where certain non-conventional breeding steps in a multi-step process would be excluded from patentability as part of an “essentially biological process.”90

3. Plant varieties

The general definition of plant variety does not seem to be a controversial issue.91 A Dispute Settlement Panel or Appellate Body would probably have recourse to the existing concept in the UPOV Convention,92 as “plant variety” has only a legal meaning developed in the framework of the UPOV regime, but no ordinary, e.g. biological or botanical, meaning. The precise definition of plant varieties has changedover time in the UPOV Acts and national provisions, but a few characteristics are

consisting of an initial transformation step and the subsequent regeneration and propagation of plants, as a whole, as “micro-biological process.”85 See STRAUS (1996), at 185. 86 See CORREA (1994), at 328.87 See, id.88 This is also pointed out by ROTT (2002), at 217.89 See NEUMEIER (1990), at 189; see also T 356/93 (Plant cells/PLANT GENETIC SYSTEMS), reasons, point 29.90 CORREA (1994), at 328, also suggests that the aim of the Contracting States of the TRIPS Agreement was to limit the exclusion of patentability to traditional breeding methods, while preserving the possibility to obtain patent protection, for instance, on developments based on cell manipulation or the transfer of genes. Yet, he includes processes of cell manipulation and gene transfer in the term “microbiological processes” rather than in the term “non-biological processes”.91 The relevant provision, Art. 2(y), of the Indian “Protection of Plant Varieties and Farmers’ Rights Act” is modelled after the definition in the UPOV 1991 Act. 92 International Convention for the Protection of New Varieties of Plants, done at Paris on December 2, 1961 (UNTS vol. 815 p. 89), revised at Geneva on 10 November 1972, on 23 October 1978 and on 19 March 1991, in the following referred to as the 1961, 1978 Act and 1991 Act respectively. All Acts are available at http://www.upov.org. The ancronym UPOV is derived from the French name of the organisation established by the convention, that is the “Union Internationale pour la Protection des Obtentions Végétales”. The Member States to the Convention undertake to create a system for the grant of PBRs, whithin their domestic laws, in accordance with internationally agreed and uniform principles.Recourse to the UPOV definition is also suggested by ROTT (2002), at 300.

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present in all definitions. Firstly, a plant variety is a grouping of plants within a single botanical taxon of the lowest known rank.93 Secondly it can be considered as a unit, because it can defined by a set of characteristics, which are displayed within certain limits of variation by all component individuals and which are retained from one generation to the next. Thirdly, the plant grouping must be distinguishable from anyother plant grouping by at least one of the characteristics used to identify it.94

In contrast, it has been controversially discussed, in the legal literature as well as in the TRIPS Council, whether the obligation under Art. 27(3)(b) means that plant varieties of all genera and species have to be protected.95 LESKIEN/FLITNER conclude from the fact that the Agreement does not define the expression plant variety nor specifies how many species or genera have to be protected that the protection applies to all species and genera.96 Yet, this argument does not seem convincing. Art. 27(3)(b) requires that WTO Members “provide for the protection of plant varieties”. “Plant varieties” in this context does not necessarily mean “all plant varieties”. Interpreted in accordance with its ordinary meaning in the context of the phrase, the term may just designate a certain category of subject matter. Neither can it be concluded from the absence of a provision similar to Art. 4 of the 1961 or 1978 version of the UPOV Convention,97 that protection has to be provided for all genera and species.98 On the contrary, the transitional arrangements in the different Acts of the UPOV Convention, even in the 1991 Act,99 illustrate that it would have been nearly impossible for developing countries to establish a sui generis protection system for all genera and

93 Plant taxonomy is “a study aimed at producing a system of classification of plants which best reflects the totality of their similarities and differences.” In this system, species are generally taken to be the basic unit of classification. See MC GRAW-HILL (1989), at 1441. This means that the “taxon of the lowest rank” refers to species and that a plant variety is a sub-unit within a species.94 For more details on the evolution of the variety definition in the UPOV system, see below chapter 3, A.II.1.95 See IP/C/W/369, para. 40, with further references. In IP/C/W/162, at 4 point V., the US take the view that all plant varieties have to be protected.96 LESKIEN/FLITNER (1997), at 27/28, point 2.1; see also REPETTO/CAVALCANTI (2000), point 7.3.2. 97 Available at http://www.upov.org/en/publications/conventions/1961/content.htm and http://www.upov.org/en/publications/conventions/1978/content.htm98 Art. 4.2 stipulates that “[t]he member states of the Union undertake to adopt all measures necessary for the progressive application of the provisions of this Convention to the largest possible number of botanical genera and species.” But Art. 4.3 provides for a progressive extension of the protected minimum numbers: on the entry into force the UPOV provisions have to be applied to at least five genera or species, within three years following the entry into fore of the Convention for the concerned member State this number has to be extended to at least ten genera and species in all, within six years to at least eighteen genera or species in all; within eight years, to at least twenty-four genera or species in all.99 Available at http://www.upov.org/en/publications/conventions/1991/content.htm. Art. 3 of the 1991 Act ultimately aims at the protection of all genera and species. Yet, pursuant to Art. 3.1, only States that are already members to the Union have to apply the provisions of the new Convention “at latest by the expiration of a period of five years after [they become bound] by it, to all plant genera and species.” New members of the Union “shall apply the provisions of [the 1991] Convention (i) at the date on which it becomes bound by [it], to at least 15 plant genera or species and, (ii) at the latest by the expiration of a period of 10 years from the said date, to all plant genera and species.”

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species within the transition period as provided by the TRIPS Agreement.100 To assume that countries, that so far had no organisation in place for DUS-testing (distinctness, uniformity and stability testing) of varieties,101 agreed to impose upon themselves such an onerous, probably even impracticable obligation would be contrary to the before-mentioned in dubio mitius principle.102

4. Effective sui generis system

In contrast to all other types of IPR, as regards the effective sui generis system that has to be provided “for the protection of plant varieties”, the TRIPS Agreement does not specify any minimum standards of substantive or procedural law, nor does it contain any explicit reference to an existing international agreement setting such standards. The “ordinary meaning” of “effective” and “sui generis” does not advance the interpretation of this provision very far. “Sui generis” means “of its own kind”,103

adapted to a specific subject matter, and is often used in the context of IPR for regimes which do not fit into the traditional categories, i.e. patents, copyright, trade mark, trade secret. The ordinary meaning of “effective” is “having an effect”,104 “able to bring about the result intended”,105 “producing a decided, decisive, or desired effect”,106 and thus leads back to the question what the intended effects are.

The recourse to the other means of interpretation contributes several further elements to mark out the meaning of “effective sui generis system [provided for the protection of plant varieties].” First of all, the drafting history and the circumstances of conclusion permit to clarify, to some point, the relationship between the standards to provide under a sui generis system and the standards of the different versions of the UPOV Convention. In fact, the only existing sui generis system at the time of negotiation of the TRIPS Agreement, was the plant breeders’ rights (PBRs) system developed in industrialized countries,107 in accordance with the UPOV Convention,

100 According to Art. 65 of the TRIPS Agreement, developing country Members are entitled to delay the date of application of the provisions of the TRIPS Agreement for a period of four years in addition to the normal transitional period of one year from the date of entry into force of the Agreement establishing the WTO. The same view is taken by RANGNEKAR (undated), at 37, who observes that “it appears unreasonable that the TRIPS obligation is interpreted as requiring immediate and maximum coverage.”101 “Determination of DUS is made with the help of an elaborate list of plant […] attributes assessed across few locations over at least two seasons in the case of annual crops and possibly for more seasons in cases of vine or perennial crops.” See KOCHHAR/BALA RAVI (2001), at 8.102 See above, note 57. On the difficulties of putting a DUS testing system into place, see also KOCHHAR/BALA RAVI (2001), at 8, who observe that “[a]lthough, India is having the institutional capacity for developing and conducting DUS tests, there is an obvious lack of infrastructure and legal capability in this respect. It is expected to take few initial years to master these capabilities and put in place the required infrastructure for DUS testing of crop varieties of many genera and species.”103 See, e.g. WEBSTER’S NINTH NEW COLLEGIATE DICTIONARY (1983), giving also “unique” or “peculiar” as possible meanings. 104 See OXFORD ADVANCED LEARNER’S DICTIONARY OF CURRENT ENGLISH (1974).105 Id.106 See WEBSTER’S NINTH NEW COLLEGIATE DICTIONARY (1983).107 The initial signatory States as well as the Member States which joined the Convention before 1994 where exclusively industrialized countries. However with the obligation to implement Art. 27(3)(b),

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which was concluded by a group of European States in 1961 in Paris and revised three times in 1972, 1978 and 1991.108 The 1991 Act came into force on April 24, 1998,109

but in parallel the 1978 Act continues to exist and until recently was even open for new candidates.110 As compared to the 1978 Act, the 1991 Act strengthens protection by introducing the principle of “essentially derived varieties”, extending protection to end products in certain cases and limiting the farmers’ privilege. As stated above, there is no reference in the TRIPS Agreement to either version of the UPOV Convention. But it appears from the negotiating history that a sui generis system corresponding to the standards of the UPOV 1978 Convention has been accepted by the Contracting Parties as consistent with the obligations under Art. 27(3)(b) of the TRIPS Agreement. The version in operation by the time of the TRIPS negotiations and the entry into force of the TRIPS Agreement was the 1978 Act.111 At the 1991 Diplomatic Conference for the revision of the UPOV Convention, i.e. after the term of effective sui generissystem had been introduced into the TRIPS negotiations, the UPOV Member States112

decided to give freedom to developing countries to join the older version until 31 December 1995.113 This period was later even extended.114 Moreover, when the impact of PBRs of the 1991 UPOV type became a hotly debated issue in developing countries, especially India, Peter Sutherland, at that time Director General of GATT, wrote two articles published in the Indian daily The Times of India, stating that “[…] while the TRIPs provisions on plant variety protection do not refer to any international convention, it is clear that, if the standards of protection of UPOV 1978 were to be followed, it would be reasonable to claim that an effective sui generis protection had been provided.”115 The most important argument, however, is again the in dubio mitiusprinciple. If the Negotiating Parties had a more stringent protection in mind than the only possible reference regime in force at that time, they would have had to expressly state this. Hence, it should be difficult for any WTO Member to challenge the sui generis system of another Member which complies with the standards of the 1978 version. Of those legal commentators who take position, a majority agrees that a

2nd sentence in view, and the imminent closing of the 1978 Act, which was initially scheduled for December 1995, many developing countries decided to become Members of the UPOV Convention, mostly of the 1978 Act. See UPOV (2004).108 In the following referred to as the 1961 Act, 1978 Act and 1991 Act respectively.109 See UPOV (1998).110 See UPOV Document C/34/2, at point I.111 The TRIPS Agreement entered into force on January 1, 1995.112 The UPOV Member States included, at that time, Australia, Belgium, Canada, Denmark, France, Germany, Hungary, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Poland, South Africa, Spain, Sweden, Switzerland, United Kingdom, USA. See UPOV (2004).113 See Art 37.3 of the 1991 Act.114 See UPOV Document C/34/2, at point I.115 The Times of India, 15 March 1994, as quoted by RANGNEKAR (undated), at 42, Box 6. CARVALHO (2002), at 179, note 486 refers to the same article and even quoted Sutherland with the statement that the negotiating parties on the TRIPS Agreement had worked on the understanding that both the 1978 and the 1991 texts of the UPOV Convention were deemed as effective protection for the purposes of the TRIPS Agreement. However CARVALHO also reports that India had proposed to add a footnote to Art. 27(2)(b) clarifying that the availability of the farmer’s exemption and/or researcher’s exemption in national law could not be challenged on the grounds of lack of effectiveness, but that this proposal was not accepted.

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system according to the standards of UPOV 1978 is TRIPS conform.116 This view has been endorsed by the European Commission.117

This is an important signpost. Beyond that, many commentators118 and TRIPSMember States,119 including the EC countries and India, hold that the TRIPS Agreement does not oblige developing countries to adopt a sui generis system in accordance with the standards of either version of the UPOV Convention, but allows them to create sui generis protection according to their own concepts. An important argument for this view is that the UPOV Convention is not mentioned in either version anywhere in the TRIPS Agreement, whereas in other contexts there are explicit references to international agreements.120 The conclusion that “effective sui generissystem” cannot simply be equated with a system in conformity with the 1978 UPOV Convention is confirmed by the in dubio mitius principle.121 It should also be mentioned that the large number of accession to the UPOV Convention cannot be considered as subsequent practice in the application of the TRIPS Agreement establishing the understanding of all parties regarding its interpretation in the sense of Art. 31(3)(b) of the Vienna Convention. The practice is neither uniform nor can it be

116 See, e.g. CARVALHO (2002), at 180 and 184; REPETTO/CAVALCANTI (2000), at 4 of 19, point 7.3.1; CORREA (2000), at 68; ROTT (2002), at 302/303; VERMA (1995), at 289. For contrary views see PACÓN (1995), at 881, who holds that the question is open, which version of the UPOV-Convention Art 27.3 (b) aims at; see also GERVAIS (1998), at 151, who states “that it is safe to assume that such a UPOV(1991)-compatible system would enjoy a presumption of the effectiveness required by this Article.” 117 See EUROPEAN COMMISSION (2002), at 4.118 See, e.g. VERMA (1995), at 289; CORREA (1994), at 327; REPETTO/CAVALCANTI (2000), 4 of 9, point 7.3.1; TANSEY (1999), at 9; CARVALHO (2002), at 184, 27.67; FOSTER, George K., “Opposing Forces in a Revolution in International Patent Protection: The U.S. and India in the Uruguay Round and its Aftermath”, 3 UCLA J. Int. L. & Foreign Aff (1998), 283 (291), quoted after ROTT (2002), 303, note 1671; LESKIEN/FLITNER (1997), at 27, stating, however, that in certain cases the implementation of one of the UPOV Acts may not satisfy the requirements of Art. 27(3)(b), probably referring to the limitation of UPOV 1978 to certain genera and species.119 For the position of the EC countries, see EUROPEAN COMMISSION (2002), at 4: “The absence of a definition of this concept [of effective sui generis protection of plant varieties] means that Members have a considerable degree of flexibility in determining how their legislation meets the standards of effectiveness, thus allowing them to design a protection regime that is appropriate to their specific national situation. Although the UPOV Convention meets the standard of effectiveness in Article 27.3(b), other protection models may be equally effective. […] Farmers’ exemptions (i.e. exceptions to plant variety rights or patents allowing farmers to save, use, exchange or, as the case may be, sell seed of protected varieties or seeds) can, under certain circumstances, be justified underArticle 27.3(b) of the TRIPs Agreement, or under Article 30 of the TRIPs Agreement. The special situation of least developed or developing countries could be addressed by specific exceptions allowing subsistence farmers or small farmers to save, replant, exchange, share and resell seed, provided they do not use the commercial denomination of the variety. Farmers with significant commercial interests should remain subject to more stringent rules”. Less surprisingly, many developing countries have also expressed the view that TRIPS Members are not obliged to use UPOV as a model, even though UPOV may be an important point of reference. See as quoted by IP/C/W/369, para. 50, note 131, with references to statements of Brazil (IP/C/M/30, para. 183, IP/C/M/25, para. 94), India (IP/C/W/161, page 4), Malaysia (IP/C/M/29, para. 206, IP/C/M/25 para. 83), Mexico (IP/C/M/26, para. 76), Zambia (IP/C/M/28, para. 147).120 See, e.g. Art. 9 “Relation to the Berne Convention” and Art. 25 “Relation to the IPIC Treaty”.121 See above, note 57.

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automatically assumed that the States acceding to UPOV did so in order to comply with their obligations under the TRIPS Agreement.

It has been suggested that the only minimum requirements the system would have to comply with are the following: (i) the sui generis system has to be an IPR system, i.e. it has to confer “legally enforceable rights either to exclude others from certain acts in relation to the described subject-matter and/or to obtain a remuneration in respect of certain uses of the described subject-matter”; (ii) it has to be effective, i.e. enforceable; (iii) it has to observe the principle of national treatment (Art. 3 of the TRIPSAgreement); (iv) it has to accord most-favoured-nation treatment to nationals of all Member States.122 While the use of the terms “adequate” and “effective” in other provisions of the TRIPS Agreement123 indeed suggests that “effective” relates to enforcement rather than to substantial standards124 it is suggested here that Member States are nevertheless not totally free in determining the standards of availability and scope of IPR for plant varieties. A simple right to remuneration in case of commercialisation of a protected variety by a competitor seed firm, for instance, would certainly not be sufficient to “provide for protection of plant varieties” read in the light of the objective as set out in the preamble, which is to promote “adequate protection of intellectual property rights.” IPRs, at least in principle, have to give the holders a property right, i.e. a right to exclude others from the use of the protected plant variety.125

On the other hand, it is clear that Member States may provide for exceptions to and limitations of these rights.126 This follows not only from the circumstances at the time of negotiation history, i.e. the “reference point” UPOV 1978, but also from the object

122 See LESKIEN/FLITNER (1997), at 27 et seq., REPETTO/CAVALCANTI (2000), p. 4 et seq. of 19, point 7.3.2. All four additionally require that the sui generis system be applicable to plant varieties of all genera and species.123 The Preamble states that the Members “taking into account the need to promote effective and adequate protection of intellectual property rights”, recognize the “need for new rules and disciplines concerning: […] (b) the provision of adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights;” and “(c) the provision of effective and appropriate means for the enforcement of trade-related intellectual property rights […].” (emphasis added) The term “effective” is also used in the context of Part III of the TRIPS Agreement on Enforcement of Intellectual Property Rights. Pursuant to Art. 41(1), 1st sentence “Members shall ensure that enforcement procedures as specified in this Part are available under their national laws so as to permit effective protection against any act of infringement of intellectual property rights covered by this Agreement including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements.” Yet, many legal commentators understand “effective” as relating to availability and scope of protection; see e.g. GERVAIS (1998), at 151. In the end this should not make a difference for the interpretation, as “effective” does not imply more stringent standards than the phrase “protection of plant varieties by a sui generis system” read in the light of the objectives of the Agreement.124 This view is also taken by BLAKENEY (1998/1999), at 146.125 See also EUROPEAN COMMISSION (2002), at 18, para. 77.126 On the discussion in the TRIPS Council in regard to the exceptions to the rights conferred, i.e. the scope of farmers’ privilege and breeders’ exemption, see also IP/C/W/369, at 43 et seq. Again reference is made to the two versions of the UPOV Convention, but the issue of whether exceptions may go beyond UPOV 78 is not explicitly addressed. Interesting in this respect is the European Commission concept paper, as above, at 4.

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and purpose of the TRIPS Agreement.127 The Preamble underlines that the TRIPSAgreement follows a double objective: On the one hand, it stresses the “need to promote effective and adequate protection of intellectual property”.128 On the other hand, the Members recognize “the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives” and also “the special needs of the least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base.”129 These ideas are taken up again and elaborated in Art. 7 entitled “Objectives” and Art. 8 stating the “Principles”.130

This possibility is in Art. 8 subject to the condition that such measures are consistent with the provisions of the TRIPS Agreement.131 Thus, in most cases, the freedom of the Member Countries to legislate in their national interests is strictly limited by the express standards prescribed in the TRIPS Agreement, especially in the area of patent law.132 Yet, where the Agreement itself uses flexible terms such as “sui generis” and “effective”, these have to be read in the light of this search for a balance between the interests of “producers and users of technological knowledge”133 which is “conducive to social and economic welfare”.134 On the other hand, the freedom of Member States is limited by the idea that the advantage has to be “mutual”. The breeder must receive “adequate” protection and it is doubtful whether this is the case if the compensation for the breeders’ contribution to public welfare is in fact so weak that protection loses its interest. The question whether a system still respects both purposes of the Agreement would have to be answered individually with respect to each regulation and the context of each country. Provisions deviating from UPOV have to be considered on a case by case basis. It is suggested here that the more a regime departs from the standards of UPOV 1978, which was apparently accepted by the WTO Member States as a balance between the interests of users and producers, the greater the need to justify this deviation by arguments pertaining to “developmental objectives”,135 “social and

127 The important role of Art. 7 and 8 in the interpretation of “effective sui generis system” is also pointed by MANGENI (2000), at I.4, and by ROTT (2002), at 301; see also WT/DS114/R (Canada –Patent Protection of Pharmaceutical Products), at 7.26, where the panel acknowledges that the goals and limitations stated in Art. 7 and 8.1 must be borne in mind when defining the three limiting conditions attached to Art. 30.128 See Preamble of the TRIPS Agreement.129 See Preamble, Recitals 4 and 5.130 Pursuant to Art. 7 “[t]he protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.” Art. 8.1 provides that “Members may, in formulating or amending their national laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interests in sectors of vital importance to their socio-economic and technological development […]”.131 Art. 8.1, 1st sentence, 2nd half-sentence.132 See STRAUS (1996), at 161. 133 Art. 7, see citation in footnote 130 above.134 Id.135 See Preamble.

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economic welfare”,136 “public nutrition”137. The compatibility of certain crucial provisions in the Indian “Protection of Plant Varieties and Farmers’ Rights Act, 2001” (henceforth PPVFR Act, 2001) with the TRIPS Agreement will be examined in chapter 8.

II. Minimum patent protection for plant related inventions

An innovation in the field of plant biotechnology has various aspects that the inventor may seek to protect, such as a new method for the preparation of a genetically modified plant, a new vector, the effect of a particular bacterial gene in a plant. As outlined in the previous section, not all plant related inventions fall under the exclusion from patentability under Art. 27(3)(b) of the TRIPS Agreement. According to the interpretation of Art. 27(3)(b) developed earlier, TRIPS Member States will have to provide for product patents for proteins, vectors, microorganisms (used, for instance, as hosts for cloning vectors), parts thereof, including genes (unless the latter are contained in a plant), and for process patents for processes for the production of plants by non-conventional breeding techniques including genetic engineering and mutagenesis, whereby the process claims may comprise regeneration steps, but not the subsequent conventional breeding steps. Therefore, even if a Member State chooses the sui generis option, a complete picture of its obligations under the TRIPSAgreement with respect to the work of plant breeders and plant genetic engineers necessitates an analysis of the provisions on patent protection.138

1. Patentable subject matter under Art. 27(1)

Art. 27(1) of the TRIPS Agreement stipulates the obligation of TRIPS Members to make patents available for both product and process inventions “in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.”139 Patent rights may be exercised “without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”140 This principal extension of patentability to inventions in all fields of technology may be deemed to be the most important concession of developing countries in TRIPS.141

Accordingly, biological matter is a priori patentable. A general exclusion of living matter on the ground that it would not fall under the definition of invention is precluded, as there can be no doubt in view of Art. 27(3)(b) that biotechnology and plant breeding were regarded as fields of technology by the Contracting Parties.142

However, since the TRIPS Agreement contains no definition of invention, the long-

136 See Art. 7.137 See Art. 8.138 The following comments focus on issues related to protection of plant related inventions. For a detailed analysis of patent protection under the TRIPS Agreement, see STRAUS (1996), at 178 et seq.; ROTT (2002), esp. 200 et seq. with a focus on public health issues.139 Art. 27(1), 1st sentence.140 Art. 27(1), 2nd sentence.141 See PACÓN (1995), at 879.142 See also STRAUS (1996), at 187; LESKIEN/FLITNER (1997), at 7 and 10.

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standing distinction made in national laws of many Member States between patentable invention on the one hand and non-patentable “discoveries” on the other is TRIPSconform. The crucial question in the context of plant biotechnology is therefore where to draw the borderline between inventions and discoveries. The patentability of natural substances, including amino acid molecules and DNA segments, has been the subject of controversial debates in Europe. As will be seen below, European case law has recognized the patentability of isolated natural substances if they have been made available by technical means and if a function or property has been disclosed. The argument is that the discovery in this constellation leads to new, inventive and enabling technical teaching.143 Yet other concepts of discovery put more emphasis on the common usage of the term which refers to acquisition of knowledge of an already existing fact, whereas invention refers to something which was created by the inventor.144

Many legal commentators hold that the TRIPS Agreement does not stipulate any mandatory rules on the delimitation between “discoveries” and “inventions” and that it remains for the lawmakers of the Member States to decide whether or not they provide for patenting of biological material of natural origin.145 Thus, it would seem possible, for instance, to exclude naturally occurring microorganisms and genes, even in their isolated form.146 On the other hand, it has to be kept in mind that many biotechnological inventions produce DNA sequences and organisms that do not exist in nature. This kind of engineered biological material has to be patentable, unless it falls under the exception of Art. 27(3)(b).

It is further suggested here that it would be TRIPS conform to consider the question of industrial applicability of the claimed subject matter already within the framework of the invention concept. This is considered by some authors147 and is ultimately148 the

143 See VOSSIUS (1997), at 7.144 See below, chapter 3, B.II.3.a). The Argentine patent law of 1996 refers in its definition of patentable inventions to “human creation”. See HASSEMER (2000), at 32.145 See CORREA (1994), at 329; Study of the Secretariat of UNCTAD (prepared with the assistance of Correa/Maskus/Reichman/Ullrich), “The TRIPs Agreement and Developing Countries”, Geneva 1996, No. 145 at p. 34, as quoted by STRAUS (2000), at 154, note 51; LESKIEN/FLITNER (1997), at 9; THIRD WORLD NETWORK (1998), at 6; see also ROTT (2002), 203, who points out that there is no one single agreed concept of invention. For an opposite view point, see STRAUS (2000), at 155, who argues that “if micro-organisms are mandatorily declared subject matter eligible for patent protection, then naturally-occurring biochemical substances, such as sequences of nucleotides (DNA), per argumentum a maiore ad minus are also to be regarded as subject matter for which WTO members must offer patent protection. Thus, information embodied in genetic resources can be excluded from patent protection only under the conditions set out in Art. 27(2) and (3) of the TRIPS Agreement.” Yet, a defendable interpretation would be that Art. 27(3) only refers to genetically engineered microorganisms.146 The question whether a claim directed to isolated genetic material has to be purpose-bound does not arise if this material is anyway considered as discovery. But such a requirement should be likewise TRIPS conform. On the European discussion on purpose-bound claim, see below chapter 3, B.I.4.a) and II.3.c). 147 See below footnotes 730 and 750. 148 It should be noted that where purpose-bound protection is only provided for inventions concerning material isolated from the human body, it is often explained by “ethical grounds”. See e.g.

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legal approach behind the obligation of applicants to frame claims directed to DNA as purpose-bound claims, as this is now the case in some European States.149

2. Offence against ordre public or morality as ground for exclusion from patentability

The exclusion from patentability under Art. 27(2) of the TRIPS Agreement150 is subject to two conditions: the prevention of commercial exploitation on the national territory has to be necessary and the ground for this necessity has to be the protection of ordre public and morality.

a) Necessity to prevent commercial exploitation

The first condition means that the “commercial exploitation” of the invention within the national territory has to be prohibited.151 To be able to preclude the patenting of inventions on grounds of infringement of ordre public or morality, TRIPS Member States have to refrain from the commercial exploitation of such inventions. The term “commercial” leaves some margin to States which wish to use certain technologies merely for non-commercial purposes. One possible meaning of “commercial” is indeed “viewed as a mere matter of business; looking toward financial profit.”152

EUROPEAN COMMISSION, COM(2005) 312 final, “Development and implications of patent law in the field of biotechnology and genetic engineering”, at point 2.1. But the Commission also observes that there is a second argument relating to the balance between investment and potential reward for the first innovator in a field compared to subsequent innovators (see id). The industrial application identified by the inventor is an important element of the invention which needs to be taken into account in order to arrive at this balance.149 In Germany, purpose-bound claims have been introduced for inventions, the subject matter of which are sequences (or partial sequences), whose structure corresponds to the structure of the sequence (or partial sequence) of a human gene. Only in this case, has the function to be specified in the claim itself. See “Gesetz zur Umsetzung der Richtlinie über den rechtlichen Schutz biotechnologischer Erfindungen”, BGBl. 2005 Teil I, at 146 et seq., introducing a new § 1a(4) into the German Patent Act. The French law seems to go even farther, as it limits the scope of protection of a patent in respect of gene sequences from all types of organisms. Art. L. 613-2-1, 2nd paragraph of the French Intellectual Property Code reads as follows: “Les droits crées par la délivrance d’un brevet incluant une séquence génétique ne peuvent êtres invoqués à l’encontre d’une revendication ultérieure portant sur la même séquence si cette revendication satisfait elle-même aux conditions de l’article L. 611-18 et qu’elle expose une autre application particulière de cette séquence.” This implies that the patent claims have to be purpose-bound. Debates in the Europeam Parliament indicate that this approach will probably be accepted (see http://www.europarl.eu.int/news/expert/infopress_page/052-1721-299-10-43-909-20051021IPR01698-26-10-2005-2005--false/default_en.htm, last visited 31.10.2005), even though the Directive itself is ambigous on this point.150 Art. 27(2) of the TRIPS Agreement allows Member States to “exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by domestic law.”151 See STRAUS (1996), at 182; see also CARVALHO (2002), at 172, 27.45.152 THE OXFORD ENGLISH DICTIONARY (1989), definition A5. This meaning of “commercial” in the context of Art. 27.2 is advocated by ROTT (2002), at 221/222; ACKERMANN, Timothy G., “Dis’ordre’ly Loopholes: TRIPS Patent Protection, GATT and the ECJ”, 32 Texas International Law Journal (1997), 489 (509) and MAYER, Christopher S., “The Brazilian Pharmaceutical Industry Goes

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Art. 31(c) refers to “public non-commercial use”, thus using “commercial” in the above sense.153 But the practical relevance of this possibility in the area of plant breeding should not be over-estimated. It would not be possible, for instance, to declare that the patenting of a certain biotechnological breeding step is against ordre public on the ground that giving an exclusive right for the use of this method slows down progress in this area which is vital for food security and to allow for public non-commercial use in a public breeding program.154 In this case, it would not be the commercial exploitation as such which endangers human lives or public health, but the lack of additional public supply of the resulting product that may have an impact on food security.155 As LESKIEN/FLITNER rightly observe, “[Art. 27(2)] does not seem to allow exclusion where the mere patent itself could have adverse effects.”156 The classical instrument for cases, where the general availability of a particularly valuable invention has to be secured, is compulsory licensing.157 This conflict of public and private interests has been regulated in detail158 after much debate159 in Art. 31 of the TRIPS Agreement.

b) Protection of ordre public or morality

The second requirement for exclusion from patentability under Art. 27(2) of the TRIPS Agreement is that the prohibition of the exploitation has to be “necessary to protect ordre public or morality”. This means that not just any prohibition of commercial exploitation is sufficient as basis for the exclusion from patentability.160

According to GATT and WTO panel case law on Art. XX of the GATT 1994 a measure is “‘necessary’ […] only if there were no alternative measure consistent with

Walking from Ipanema to Prosperity: Will the New Intellectual Property Law Spur Domestic Investment?”, 12 Temple International & Comparative Law Journal (1998), 377 (383), as quoted by ROTT (2002), note 1182.153 ROTT (2002), at 222. He further argues, that the term “commercial” would otherwise be superfluous. Id., at 221.154 It has to be emphasized that a non-commercial use of the invention implies that not only the technique is available free of charge for breeding, but also the seed produced by exploitation of this technique is distributed at cost. 155 See ROTT (2002), at 233, comes to the same conclusion: “Allerdings müsste weiter dargelegt werden, warum es eines Verbots der gewerblichen Verwertung bedarf, anstatt diese zusätzlich zur nichtgewerblichen Verwertung zuzulassen. Letzteres ist bei Erfindungen, deren Verwertung wünschenswert ist, kaum denkbar.“156 LESKIEN/FLITNER (1997), at 17 with reference to the argument that “patents could adversely affect genetic diversity by accelerating genetic erosion (Crucible Group 1994; Cameron and Makuch 1995).” See also CORREA (1994), at 328, note 6, who explains that the decision 85 of the Andean Group authorised the member countries not to patent inventions for reasons related to their economic development and points out that this type of exclusion will no longer be permitted.157 In contrast, the rationale behind ordre public and morality exclusions is rather to “help ascertain the nec plus ultra, the invisible line beyond which human research should never go.” See CARVALHO (2002), at 168, 27.42. A similar approach is taken by ROTT (2002) at 230.158 See below, at point II.5.b). Here, it may already be mentioned that Art. 31 stipulates 12 conditions that have to be observed when a compulsory licence is granted.159 For the drafting history, see, e.g. PACÓN (1995), at 879.160 See GERVAIS (1998), at 149, 2.135, who points out that the change to the Brussels draft which read “including to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement”, confirms this view.

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the General Agreement, or less inconsistent with it, which [the Member State] could reasonably be expected to employ to achieve its health policy objectives.”161 The alternative measure has to be considered only if it is able to achieve the same end.162 It is important to note that the Appellate Body emphasizes the “right [of the WTO Members] to determine the level of protection of health that they consider appropriate in a given situation.”163 Additionally, the Appellate Body observes that “[t]he more vital or important [the] common interest or values pursued, the easier it would be to accept as ‘necessary’ measures designed to achieve those ends,” thus leaving a margin of appreciation to the Member States.164 The same concept of “necessity” should also be applicable in the framework of Art. 27(2) of the TRIPS Agreement.165 Art. 27(2) is completed by a non-exclusive list of possible grounds which may necessitate the prevention of commercial exploitation, namely “to protect human, animal or plant life or health or to avoid serious prejudice to the environment.”

The terms “morality” and “ordre public” were introduced into the Chairman’s text at the proposal of the EC,166 and at least ordre public clearly refers to an existing legal concept. Consequently, even more than for other terms, the European approach will be taken as a point of reference for the interpretation of these concepts.167 According to the Technical Board of Appeal in Plant Cell/PLANT GENETIC SYSTEMS, “the concept of morality is related to the belief that some behaviour is right and acceptable whereas other behaviour is wrong, this belief being founded on the totality of the accepted norms which are deeply rooted in a particular culture.”168 GERVAIS gives a good summary of the concept of ordre public when he explains that “ordre public concerns the fundaments from which one cannot derogate without endangering the institutions of a given society”.169 This idea is specified by the Technical Board of Appeal in the just mentioned case, where the Board observes that “it is generally accepted that the concept of ‘ordre public’ covers the protection of public security and

161 See Panel Report, WT/DS2/9 (United States – Standards for Reformulated And Conventional Gasoline), para. 6.26 and 6.28, as quoted in the Report of the Appellate Body, WT/DS135/AB/R (European Communities – Measures Affecting Asbestos and Asbestos-Containing Products), para. 170. In the latter case the Appellate Body also refers to the Appellate Body Report, WT/DS161/AB/R, WT/DS169/AB/R (Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef), adopted 10 January 2001, para. 159 et seq., using a similar definition.162 See WT/DS135/AB/R, supra note 161, para. 172; in this Asbestos-Case, Canada had asserted that “controlled use” of asbestos-containing products would have been a reasonably available alternative to the complete halt imposed by France. The Appellate Body refuted this argument, as France could not be reasonably expected to employ this alternative to achieve its chosen level of health protection. See id. para. 164 et seq.163 See WT/DS135/AB/R, supra note 161, para. 168.164 See WT/DS135/AB/R, supra note 161, para. 172; The Appellate Body quotes and confirms this finding of the Korea-Beef case, supra note 161, para. 166 and 163.165 See also ROTT (2002), at 230 with further references; LESKIEN/FLITNER (1997), at 15; and GERVAIS (1998), at 150.166 See LESKIEN/FLITNER (1997), at 16, referring to the “Draft Agreement on Trade-Related Aspects of Intellectual Property Rights” proposed by the European Communities in 1990, MTN.GNG/NG11/W/76. See also STRAUS (1996), at 181.167 In the same vein, CARVALHO (2002), at 170, 27.44.168 See T 356/93 (Plant cells/PLANT GENETIC SYSTEMS), point 6 of the reasons.169 See GERVAIS (1998), at 149, 2.134.

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physical integrity of individuals as part of society.”170 It further states that “this concept encompasses also the protection of the environment.”171 The list in Art. 27(2)thus confirms the reference to the European concept. However, this does not mean that a Dispute Settlement Panel interpreting the provision would follow the assessment of the Technical Boards of Appeals as to when a threat to health or the danger of a serious damage to the environment is established. It has to be kept in mind that Art. 27(2) is addressed to Member States, whereas Art. 53(a) is a standard to be taken into account by the European Patent Office.172 The reason, why the Technical Board of Appeal has been reluctant to exercise its ordre-public control with respect to inventions involving genetic engineering was the limited role of the patent offices. The Board found that it was the prerogative of the competent administrative and legislative institutions to decide on the potential risks of exploitation of a new technology.173

Likewise, when the Enlarged Board of Appeal rejected the view that genetic engineering as such could be considered contrary to morality it referred to the attitude of the European legislator as reflected in the Directive of the European Parliament and of the Council on the Legal Protection of Biotechnological Inventions.174 Hence it cannot be deduced from the fact that the EPO did not find the genetic engineering inventions at issue in its case law contrary to ordre public or morality, that Member States would be barred from doing so.

In summary, if the society of a TRIPS Member State arrives at a consensus, expressed by a parliamentary law, that genetic engineering techniques as such, or certain applications thereof, are contrary to morality or endanger public health or the environment the exclusion from patentability of related inventions should be perfectly in line with Art. 27(2) of the TRIPS Agreement, provided the State prohibits at the same time the commercial exploitation of these techniques.175 India, for instance, has prohibited the commercial marketing of genetic use restriction technologies (GURTs), known as “terminator technologies”.176 Processes for the production of plants that

170 See T 356/93 (Plant Cells/PLANT GENETIC SYSTEMS), at point 5 of the reasons.171 See id.172 The case law of the Boards of Appeal would therefore only offer guidance where a State introduces a provision similar to Art. 53(a) EPC. Art. 27(2) TRIPS Agreement indicates that the decision to prevent exploitation and patentability, in principle, lies with the legislator and thus limits the role of the patent offices. This was precisely the approach chosen by the Boards of Appeal.173 T 356/93, points 18.1 – 18.4 of the reasons. 174 G 1/98 (Transgenic plant/NOVARTIS II), point 3.9 of the reasons. 175 See also ROTT (2002), at 232. ROTT draws the attention to the fact, that the exclusion of genetic engineering techniques from patenting could be problematic as neither health risks nor a negative impact on the environment are scientifically proven. But he observes that the precautionary principle is increasingly taken into consideration in WTO law, especially in the framework of the Agreement on the Application of Sanitary and Phytosanitary Measures. The outcome of the dispute settlement procedures DS291, DS 292 and DS 293, “European Communities: Measures affecting approval and marketing of biotech products”, brought in May 2003 by the U.S., Canada and Argentina respectively will be important in this respect.176 Personal correspondence from Dr. SUDHIR KOCHHAR, Principal Scientist (Plant Breeding/IPR), Indian Council of Agricultural Research (ICAR), dated 21 April 2004.

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incorporate this technology can therefore be excluded from patentability on grounds that it is contrary to morality without infringing the TRIPS Agreement.177

c) Infringement of national rules on access to biological resources laws as case of Art. 27(2)?

In contrast, there are doubts that a State may preclude patenting for protection of ordrepublic or morality in the following case: In the legal literature it has been suggestedthat national rules obliging patent applicants to disclose the origin and the provider of biological material that is at the basis of an invention and to prove the prior informed consent of the country of origin and the concerned local community belong to “ordre public” or “morality” in the sense of Art. 27(2).178 While not every legal norm forms part of the ordre public, but only the fundamental principles of a law system, valid arguments could speak in favour of such a principle nature of rules on access to and ownership of plant genetic resources.179 Yet, it may be recalled again that it has to be the commercial exploitation of the invention which has to be contrary to ordre publicor morality, not the acts leading to its development or its patenting.180 The patenting of inventions based on biological material obtained without observing the relevant access and benefit-sharing rules can only be precluded if the TRIPS Member State prohibitsthe commercial exploitation of such inventions. A State could further possibly argue that the prevention of the commercial exploitation of an invention that was obtained by infringing access rules was necessary to protect morality, i.e. a norm that is deeply rooted in the concerned culture.181 But again, it is not the patenting of such an invention that has to go against the collective beliefs of large parts of a society, but the commercial exploitation of this invention.182

3. Margin left to the Member States as to the patenting requirements

a) Novelty, inventive step and industrial application

As mentioned above, Art. 27(1) of the TRIPS Agreement provides that patents have to be available for inventions that are “new, involve an inventive step and are capable of industrial application.” The definition of the terms “novelty”, “incentive step” and “industrial applicability” or “usefulness” remains, to some extent, at the discretion of

177 See also GOPALAKRISHNAN (2001), at 161.178 See, e.g. ROTT (2002), at 232.179 For a more cautious view, see CARVALHO (2002), at 171, 27.44: “[I]t seems that the TRIPs concept of ordre public contains a notion of protection against physical damage, and not a general and abstract idea of general or collective interest.”180 For a contrary view, see DOLDER (2003), at 360 et seq. who invokes the necessity for unity and coherence of the whole legal system of a society [“Einheit und Widerspruchslosigkeit der Gesamtrechtsordnung”], but does not solve the problem of the clear wording of Art. 27(2) of the TRIPS Agreement.181 This argument is also suggested by LESKIEN/FLITNER (1997), at 18, who conclude, however, that a panel might be reluctant to accept this sort of argument.182 In the same vein, ROTT (2002), at 222.

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the Member States.183 As the third chapter will show there is a number of controversial issues with respect to novelty, inventive step and industrial applicability in the field of patenting of biotechnological inventions. Several authors suggest that Members wishing to apply a restrictive approach to IPR protection of living material might choose to introduce a higher threshold for protection in respect of this material by issuing guidelines as to the meaning of the above patenting criteria.184 In the following the margin left to Member States for such legislative fine-tuning will be discussedbriefly.

aa) Novelty

TRIPS Members may certainly apply a broad concept of prior art including everything made available to the public in any country in any language by means of a written or oral description, by use or in any other way. European law takes this approach.185 They can also consider “knowledge made available within a local or indigenous community in any country” as public in the above sense.186

A more complex question however is whether the TRIPS Member States may define novelty with respect to previous existence of the subject matter rather than previous availability to the public.187 The common understanding in most patent systems seems

183 See STRAUS (1996), at 196. To illustrate the extent of possible differences in the definition of patent requirements, STRAUS refers to the example of the US concept of novelty as compared to the concept of absolute novelty under European Law: “US patent law not only recognizes a one-year so-called grace period for novelty, but also defines the state of the art in a manner according to which, as applied under the ‘Hilmer II doctrine’, patent applications claiming foreign priority do not belong to the state of the art until after the date of the subsequent application in the US.” Id. at 196; See also ROTT (2002), at 205 and 209 on novelty and inventive step respectively; CARVALHO (2002), at 152, 27.17; LESKIEN/FLITNER (1997), at 12. The scarce Panel case law, that mentions these issues, but did not have to deal with disputes relating directly to Art. 27(1), reflects only a minimum consensus. In “India – Patent Protection for Pharmaceutical and Agricultural Chemical Products”, the Panel briefly states that “[i]n accordance with the normal meaning of these conditions, an invention is new and involves an inventive step if, at the filing date or, if applicable, the priority date of the application in which patent protection is claimed, the invention did not form part of the prior art and required an inventive step to be deduced from that prior art by a person skilled in the art.” See WT/DS79/R, at para. 7.39.184 See especially ADCOCK/LLEWELYN (2000), at 13 et seq. They argue that “raising the threshold or protection can be justified on the basis that it will ensure that those inventions which deserve protection are protected and that this protection is less likely to be subsequently challenged in court. This can only result in greater predictability and certainty for the bioscience industry as a whole.” Id., at 15. See also THIRD WORLD NETWORK (1998), at 6 et seq., which also formulates model provisions.185 See Art. 54(2) and the explanation in EUROPEAN PATENT OFFICE (2003a), “Guidelines for Examination in the European Patent Office”, C.IV.5.1.186 Such a rule is suggested by THIRD WORLD NETWORK (1998), at 12. It should be noted however, that such knowledge could only be taken into account in opposition procedures unless it is also made available by a written description.187 This seems to be the interpretation proposed by ADCOCK/LLEWELYN (2000), at 13 of 17, who suggest a rule for developing country laws saying that “[a]n invention […] will not be regarded as novel if: […] b) the invention merely replicates biological material, or the function of biological material, which already occurs naturally”. It may be added that there is no need to test out the limits of

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to be that “novelty” means that the subject matter is not anticipated by the prior art.188

Prior art refers to available technical knowledge. Yet, the broad interpretation of the term “discovery”, as discussed above, would probably arrive at the same result.

bb) Inventive step

There seems to be a general agreement that “the invention is regarded to involve an inventive step if it is not obvious to a person ‘skilled in the art’ based on the knowledge available on the date of filing [or, as the case may be, the priority date]”.189

It is therefore submitted here that the TRIPS Agreement does not permit a Member State to generally deny the inventiveness of inventions which “merely identifies the natural function of the biological material”.190 The natural function of the concerned biological material may require significant research to be established by a person skilled in the art. It also seems doubtful that national patent laws may require for an inventive step a “significant technical application of an identified function of the biological material”, which technical application “must go beyond a mere simple replication of the natural function of biological material […]”.191 If the technical problem to be solved is, for instance, the provision of a further gene producing a certain polypeptide with an insecticidal effect, it would be difficult to justify that finding a solution which has required intensive scientific research not only routine operations should not be inventive.

Legislative guidelines on inventive step would have to be drawn up in a more detailed manner. The following rules could be examples of such TRIPS conform criteria:

- DNA sequences obtained by a non-inventive process which have the expected biological function are not inventive.192

- The use of an unobvious starting material in a known process, or the production of an unobvious product by using a known process, does not necessarily make the process as such unobvious.193

the novelty definition as innovations which, for instance, merely replicate available biological material or its function will regularly lack inventiveness.188 For the novelty definition in patent laws of the Mercosur States see HASSEMER (2000), at 36; for European States, see Art. 54(1) of the EPC; for the US, see CHISUM/JACOBS (1992), at 2-52/53. On Indian law, see NARAYANA (2003), at 13, also referring to “prior public knowledge of the alleged invention”. See also the definition in WIPO (1997), at 125 and the definition given by the Panel in WT/DS79/R, at para. 7.39, as quoted above, note 183.189 See PATENT FACILITATING CENTRE (1999), at 11; for Indian law see NARAYANA (2003), at 13; for European law, see Art. 56 EPC; for the law in the Mercosur States, see HASSEMER (2000), at 40; for US law, see CHISUM (1992), at 2-56. See also WIPO (1997), at 126 and LESKIEN/FLITNER (1997), at 13.190 For a contrary view, see ADCOCK/LLEWELYN (2000), at 13. 191 For a contrary view, see id.192 See LESKIEN/FLITNER (1997), at 13.193 See In re Durden (226 USPQ 359), where the Court of Appeal for the Federal Circuit had confirmed established case law stating that “each statutory class of claims should be considered independently on its own merits”. In the case at issue the process claim was, in spite of the unobvious starting material and product, predictable and obvious to those skilled in the art from prior art. See also LESKIEN/FLITNER (1997), at 13, suggesting a similar rule.

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- A technical solution is obvious if it has already been anticipated theoretically in prior art literature and the applicant has encountered no major difficulties in putting this solution into practice.194

cc) Industrial application

It becomes clear from Art. 27(1) and (3) TRIPS Agreement and the drafting history that “industry” has to be understood in a broad sense, including the sectors of activity relevant for the life science industry, i.e. agriculture and plant breeding as well as the medical and pharmaceutical sectors. The standard definitions of “industrial applicability”, such as being “made or used in any kind of industry”195 or “[made or used] by technical means on a certain scale”196 are quite broad.197

It has already been mentioned and will be discussed in detail in chapter 3 that a substance found in nature passes the threshold from a mere discovery to an invention only if it is shown to produce a technical effect and thus adds to human capacity, not only to knowledge.198 Yet, human capacity is also enlarged if the teaching makes a new material available, which can be repeatedly obtained. In these cases, in Europe, it is the industrial applicability requirement, which prevents an isolated and purified molecule to be patented without the disclosure of a function.199 It should be TRIPSconform to require a specific function, not merely a routine function. A statement of the EPO in the framework of the trilateral cooperation of EPO, USPTO and JPO is interesting in this context. With respect to the term “industrial” in Art. 57 EPC the EPO observes that “it could be argued that the right question to ask under this provision is whether ‘one would indeed make ESTs in any kind of industry if a specific usefulness is not known for them and therefore there is no motivation at all to make them’.”200 This approach could possibly also provide an argument for the TRIPScompatibility of patent laws which require not only the description of the function of the claimed DNA, but also the definition of a distinct diagnostic and therapeutic application for the particular DNA segment.201

194 This rule draws on EPO Boards of Appeal case law. For details, see below chapter 3, B.IV.3b).195 See Art. 57 EPC.196 See WIPO (1997), at 125.197 It should therefore not be possible to insert in the industrial applicability definition a reference to a use conducive to public health and to social, environmental and economic welfare. For a contrary view, see ADCOCK/LLEWELYN (2000), at 14 of 17. 198 See below chapter 3, B.II.2.199 See below chapter 3, B.IV.1.200 See EPO/JPO/USPTO (2000), follow link “answers of the EPO”, Case A. Expressed sequence tags (ESTs) are cDNA molecules which correspond to the coding parts of the genes active in a particular cell type at a given time. (Complementary DNA is produced in vitro by converting back mRNA molecules into double-stranded DNA molecules.) ESTs can therefore be used to “tag” or “label” the genes concerned by permitting a hybridisation reaction between the complementary nucleotide sequences. 201 See IP/C/W/369, para. 30, p. 9, quoting IP/C/M/26 para. 64.

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b) Enabling disclosure

Art. 29(1), 1st half-sentence of the TRIPS Agreement202 contains the requirement of enabling disclosure, thus recognizing and requiring explicitly the quid pro quo of patent protection.

A stringent application of this requirement permits prevention of applicants from “claim[ing] results which [the patent] does not enable” or to “claim every way of achieving a result when [the patent] enables only one way and it is possible to envisage other ways of achieving that result which make no use of the invention”.203

However, TRIPS Member States should not push the requirements of proof too far. It is generally recognized that if an invention discloses a principle capable of general application, the claims may be in correspondingly general terms even if the patentee has not shown that he has proved its application in every individual case.204 But it might be TRIPS conform to state in a legislative provision that the subject matter may not be defined merely in terms of the desired result without indicating any structural technical feature.205 This is important especially in the context of product claims, as the patentee who first arrives at a new thing obtains protection for this product irrespective of the way of producing it, even if the product had been envisaged by others and could possibly be obtained by other methods.206 The Indian legislator could, however, also trust the British courts in this respect which have pointed the way to avoiding overbroad patent claims with reasonable precedents.207

With respect to inventions involving biological material, it is also important to note that the TRIPS Agreement is silent on whether and how an applicant may be able to meet this requirement if a written description does not suffice. This is particularly relevant in the case of inventions that consist of, or are based on, microorganisms for which a reproducible way to produce them cannot be described, which cannot be fully described and which are not publicly available. In the context of plant breeding this could be, e.g., a particular bacterial strain that contains plasmids particularly useful for plant transformation. This issue generally does not concern proteins or DNA/RNA molecules since they can be chemically described and synthesized on the basis of

202 The relevant part reads as follows: “Members shall require that an applicant for a patent shall disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art […].”203 These two constellations are distinguished in the very instructive decision of the House of Lords, Biogen Inc v. Medeva PLC, decision of 31 October 1996, 1997 RPC 1, point 12.204 See, e.g. id, point 11; on EPO case law, see EUROPEAN PATENT OFFICE (2001), at 149 et seq., and below chapter 3, B.IV.4.b). For more recent decisions on the burden of proof, see T 363/00 (Beer adsorbent/PQ) , at point 10 of the reasons; T 787/00 (Erythropoietin/KIRIN-AMGEN), at point 10 et seq. of the reasons; T 579/01 (Cytoplasmic male sterile plants/ENZA ZADEN), at point 16 of the reasons; T 1006/02 (Selection of transformed cells/SYNGENTA), at point 37 of the reasons; T 843/03 (Human papillomavirus/THE UNIVERSITY OF ROCHESTER) , at point 5 et seq. of the reasons205 See also THIRD WORLD NETWORK (1998), at 15 et seq., suggesting not to admit a purely functional description.206 There is no doubt that TRIPS Member States are obliged to provide product protection in all areas, except for those excluded under Art. 27. See Art. 28 on the “Rights conferred”.207 See House of Lords, Biogen Inc v. Medeva PLC, decision of 31 October 1996, 1997 RPC 1.

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sequence information. In industrialized countries the difficulty of teaching the skilled person how to reproduce the claimed microorganism has led to the development of a deposit mechanism. The disclosure of the process leading to the microorganism in a way that allows repetition is replaced by the reproduction of the microorganism from a culture of the same strain. According to STRAUS

“it may be inferred from the obligation to patent microorganisms or microbiological processes pursuant to Art. 27(3)(b), TRIPs Agreement, that the Members must take into account the special nature of these inventions and must accept the deposit of microorganisms and other biological material such as plasmids, viruses etc. as supplements to the written description. The details of regulation of the deposit requirements and of access to deposited material are left to each Member country […]”208

In contrast, CORREA derives from Art. 29(1) only a possibility to provide for a deposit mechanism, not an obligation.209 Two principles of treaty interpretation could play a role here: On the one hand, “interpretation must give meaning and effect to all the terms of the treaty.”210 On the other hand, an interpreter may not “lightly assume that sovereign states intended to impose upon themselves the more onerous, rather then the less burdensome obligation”.211 The crucial question therefore is whether the obligation to provide patent protection for microorganisms and for microbiological and non-biological processes loses its effect, if a State decides not to allow for replacing or supplementing the description by deposit of certain types of biological material. This is rejected by LESKIEN/FLITNER,212 who point out that in Germany, for instance, the Federal Supreme Court accepted for the first time only in 1987 the deposit of a reproducible sample of the claimed micro-organism to substitute the possibility of reproducing the new microorganism as such.213 Prior to this decision, product claims to microorganisms had been allowable only “if the inventor shows a reproducible way to produce the new microorganism”.214 It would seem that now, with the refined tools of genetic engineering available, many processes for producing a new microorganism are so tightly controlled and monitored that the reproduction of the invention should be possible with sufficient prospect of success.

208 See STRAUS (1996), at 196/197.209 See CORREA (1994), at 330.210 This principle of interpretation is a corollary of the general rule of interpretation in Art. 31(1) of the Vienna Convention on the Law of Treaties. It has been applied already in WTO case law. See Reportof the Appellate Body, WT/DS2/AB/R (United States – Standards for Reformulated and Conventional Gasoline), at point IV, with reference to the case law of the International Court of Justice in note 45; Report of the Appellate Body, WT/DS170/AB/R (Canada – Term of Patent Protection), para. 51, 59; and Panel Report, WT/DS114/R (Canada – Patent Protection for Pharmaceutical Products), at 7.21. 211 See Report of the Appellate Body, WT/DS26/AB/R (EC Measures Concerning Meat and Meat Products (Hormones)), para. 165.212 See LESKIEN/FLITNER (1997), at 11 and 13/14.213 See LESKIEN/FLITNER (1997), at 11, referring to the decision of the German Federal Supreme Court (BGH) of 12.02.1987 – “Rabies Virus”(Tollwutvirus), GRUR Int. 1987, 357.214 See official headnote of the Federal Supreme Court decision “Baker’s Yeast”, of 11.03.1975, 6 IIC 1975, 207. Yet, deposition of the microbiological starting material used in the process to produce the new micro-organism to disclose the process was accepted. See id. at 212, point C.b).

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c) Disclosure of origin and proof of prior informed consent requirements

It is often suggested that an additional patenting condition should be introduced requiring applicants to disclose the origin of the biological material or traditional knowledge from which the invention has been derived and give evidence of prior informed consent of the concerned local community and competent authorities, i.e. of compliance with national access rules that implement the CBD.215 Yet, legal commentators have doubted the compatibility of these requirements with the TRIPSAgreement for several reasons:216 First, it has been argued that Art. 27 clearly states that patents “shall be available for any invention” that meets the requirements of this provision. Therefore, indeed the TRIPS Agreement leaves no room for additional substantive patenting conditions.217 Second, even if it was framed as a requirement of the patent application, opponents of such a compulsory condition rightly hold that the conditions on patent applicants, in particular the disclosure requirements are regulated in a self-contained manner in Art. 29 of the TRIPS Agreement.218 Information about the origin of the material, the providing local community and prior informed consent is not covered by the enabling disclosure requirement, since it is, in most cases, not necessary for the invention to be carried out by a person skilled in the art.219 Further, it has to be concluded e contrario from the two additional conditions permitted by Art. 29 that the TRIPS Agreement permits Member States to introduce further requirements only where this is stipulated in the TRIPS Agreement. Art. 62(1)provides that:

“Members may require, as a condition of the acquisition or maintenance of the intellectual property rights provided for under [inter alia Sec. 5 on patents], compliance with reasonable procedures and formalities. Such procedures shall be consistent with the provisions of this Agreement.”

215 A number of countries have called for the international recognition of these requirements. See for India, TRIPS COUNCIL Docs. IP/C/M/24, para. 81, IP/C/M/29, para. 165, IP/C/W/195, IP/C/W/196, IP/C/W/198, as quoted by IP/C/W/368 which gives a good overview of the discussion on the disclosure requirement in the TRIPS Council. It is interesting to note that the disclosure of the geographical origin of biological material of plant or animal origin is recommended, but “without prejudice to the processing of patent applications or the validity of rights arising from granted patents” pursuant to Recital 27 of the EC Directive on the legal protection of biotechnological inventions of July 6, 1998, (1998) O.J. L213/13.216 For references, see DOLDER (2003), at 364, note 75.217 See, e.g. CARVALHO (2002), at 153/154, 27.20; ROTT (2002), at 211 with references in footnote 1117.218 Besides laying down the enabling disclosure requirement, Art. 29 further allows the Member States to “require the applicant to indicate the best mode for carrying out the invention known to the inventor at the filing date or, where priority is claimed, at the priority date of the application. Under Art. 29.2 “Members may require an applicant for a patent to provide information concerning his corresponding foreign applications and grants.” 219 See DOLDER (2003), at 359; LESKIEN/FLITNER (1997), at 14. The availability of the original biological material which is at the basis of the invention being only necessary for the initial development, it does not have to be disclosed if the self-reproducing subject-matter of the invention is available to the public.

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“Reasonable procedures and formalities” include certainly “those formal conditions that help patent offices assess whether the three substantive requirements of Art. 27(1)have been met.”220

The origin of the used biological material or traditional knowledge may be necessary to help patent examiners assess novelty and inventiveness.221 A disclosure of origin requirement therefore is comparable to the requirement to list prior art and therefore TRIPS conform.222

Moreover, conditions requiring information linked to the question of ownership of the invention or even related consent requirements are present in national patent laws. 223

They are also reasonable formalities in this sense as they serve the determination of the right holder. DOLDER suggests that national legislation could stipulate that the right to a patent belongs not only to the inventor, but also to the provider of the biological material on which the invention is based.224 He compares this situation to the community of interests of employer and employee. In the specific case he has in mind, i.e. that a clearly defined holder of bio resources provides access for the future inventor and possibly even provides information on the characteristics of the resources exploited in the invention, this might indeed be possible without infringing the TRIPS Agreement. The TRIPS Agreement does not expressly regulate the question of who has a right to the patent. On the other hand, the Preamble and Objectives would certainly put limits to such a concept, where the relationship between provider of biological material and inventor is less straightforward than in the above case. Only where such a co-ownership has been introduced within the limits set implicitly by the TRIPS Agreement, would a proof of prior informed consent requirement be compatible with the TRIPS Agreement. In other cases, there are at least strong doubts

220 See CARVALHO (2002), at 155221 The fact that the possibility to require the declaration of the source would facilitate the determination of prior art is also emphasized by Switzerland in its communication to the TRIPS Council, IP/C/W/400/Rev. 1, dated 18 June 2003, at 7, point 9. See also the Communication from the European Communities and their Member States to the TRIPS Council, IP/C/W/383, dated 17 October 2002, at 2.222 See HEATH/WEIDLICH (2003), at 81. This is also the viewpoint of Switzerland which proposes to enable the national patent legislation to require a declaration of the source of genetic resources and TK in patent applications. According to this proposal, national law may forsee that, in the national phase, the application is not processed any further until the patent applicant has furnished the required declaration. See the communication by Switzerland to the TRIPS Council, IP/C/W/400/Rev. 1, at 6/7, point 7, and 9, point 15. It is also interesting to note that the EC and its Member States in their proposal to WIPO (received 16 December 2004), apparently do not consider it necessary to amend the TRIPS Agreement in order to be able to introduce a mandatory disclosure requirement, which would lead to non-processing of the application in cases of failure to make a declaration, and to sanctions outside the field of patent law in cases of incorrect or incomplete information. According to the communication by the US to the TRIPS Council, IP/C/W/449, dated 10 June 2005, the US has not yet considered the issue of whether the provisions of the TRIPS Agreement permit Members to require patent applicants to disclose the source and/or country of origin. See id., at 4, note 11.223 For German law, which requires the indication of all inventors and, if the applicant is not the inventor or only co-inventor, evidence on his right to the patent, see § 37 PatG read together with § 7 PatV.224 See DOLDER (2003), at 354.

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that conditions requiring proof of the compliance with access rules would be TRIPS consistent.225 From the point of view of equity, access laws have a strong link to the patent grant, but from a legal perspective they serve neither to establish the fulfilmentof the patenting requirements nor to define the inventor. The recourse to other "relevant rules of international law applicable in the relation between the parties”226

does not change this result. The CBD, to which the US by the way is still not a Party,227 does not contain any obligation to implement the prior informed consent requirement as part of the patent procedure.228

It has to be pointed out that nothing in the TRIPS Agreement would prevent a Member State from establishing a separate procedure which subjects marketing approval to the above conditions. This would mean that the patent right would protect the right holder against exploitation of his invention by third persons, but force him to comply with the above conditions before marketing his invention. This could lead to unsatisfactory situations where the winner of a tight patent race blocks the exploitation of a technology that he has developed while infringing access rules or sui generis property rights. An interesting solution is pointed out by CARVALHO, who suggests that the compliance with the requirement to disclose origin and prove prior informed consent could be implemented as a condition of enforcement without infringing the TRIPSAgreement.229 He backs up his view by drawing a parallel to the “fraudulent procurement doctrine”, as developed by US courts. This doctrine is also applied to cases where a misrepresentation by the applicant is not regarded essential to the grant or rejection of the patent. In these cases fraud does not lead to the invalidation of the patent, but bars its enforcement. “Only after a patentee abandons its unlawful practice and the effects of the misuse are completely dissipated may [he] sue infringers.”230

4. Margin left to the Member States with respect to the rights conferred, in particular by Art. 28(1)(b)

a) Overview

The obligations under Art. 28231 and 33 of the TRIPS Agreement referring to the rights conferred to the patentee and to the term of protection respectively have led to a number of amendments in the Indian Patent Act. Inter alia, the term of protection has

225 See also CARVALHO (2002), at 155, 27.22; ROTT (2002), at 211, suggests that such a requirement could be TRIPS compatible where Art. 27(2) TRIPS Agreement applies.226 See Art. 31(3)(b) and (c) of the Vienna Convention on the Law of Treaties.227 See http://www.biodiv.org/world/parties.asp, last visited 19 September 2005.228 On details, see below, at B.II.3a).229 See CARVALHO (2000), at 394 et seq.230 See CARVALHO (2002), at 158, 27.24. 231 Art. 28 reads as follows: “1. A patent shall confer on its owner the following exclusive rights: (a) where the subject matter of a patent is a product, to prevent third parties not having his consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product. (b) where the subject matter of a patent is a process, to prevent third parties not having his consent from the act of using the process, and from the acts of: using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process. 2. Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.”

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been extended to 20 years,232 the rights conferred by the patent have been extended to cover the importation right,233 and a rule shifting the burden of proof in process patent infringement proceedings has been introduced.234 Yet, none of these obligations seem to pose any special problem in interpretation in the context of patenting of living material.235

More interesting to the present subject is the requirement anchored in Art. 28(1)(b) of the TRIPS Agreement. India, Brazil and Peru strongly opposed conferring owners of process patents rights in the “product obtained directly by that process.”236 In the field of plant breeding, according to the interpretation proposed earlier, Member States are required to provide patents for processes for the production of genetically modified plants by non-conventional breeding techniques, whereby the process claims may comprise regeneration steps, but not subsequent conventional breeding steps. If the rule of Art. 28(1)(b) was applied, depending on the interpretation, at least the regenerated plant produced by the process would enjoy derived patent protection, if not even all progeny of these plants. The question arises whether this result would not collide with the exclusion from patentability of plants under Art. 27(3)(b). The significance of the interpretation of the relationship between Art. 27(3)(b) and Art. 28(1)(b) becomes even more obvious when Art. 28(1)(b) TRIPS Agreement is read together with Art. 34 providing for a reversal of the burden of proof in the case of the infringement of a process patent under certain conditions.237

b) Conflict between Art. 27(3)(b) and Art. 28(1)(b)?

Hence, the first question is whether there is a contradiction between the statements of the two provisions. Art. 27(3)(b) states that “plants” may be excluded “from patentability”. This means merely that plants as such (in all stages of their life and parts thereof) cannot be the subject matter of a product patent claim. Art. 28(1)(b), on the other hand, sets out that exclusive rights have to extend in certain cases to plants as products directly obtained from a patentable process. It has to be noted that according to dispute settlement case law, different terms are assumed to mean something

232 See Sec. 53 of the Patents Act, 1970 as amended by the Patents (Amendment) Act, 2002, No. 38 of 2002.233 See Sec. 48 of the Patents Act, 1970 as amended by the Patents (Amendment) Act, 2002, No. 38 of 2002.234 See Sec. 104A of the Patents Act, 1970 as amended by the Patents (Amendment) Act, 2002, No. 38 of 2002.235 For a detailed analysis of the criterion “importing”, see ROTT (2002), at 239 et seq., for the criterion of “offering for sale”, id. at 253 et seq. On the relationship between the different elements of the exclusive rights see the Panel Report, WT/DS114/R (Canada – Patent Protection of Pharmaceutical Products), para. 7.33 et seq. On the consistency of government controls on technology transfer agreements with Art. 28.2, see CARVALHO (2002), at 213, 28.5 et seq.; on the application of Art. 6 to Art. 28, see id. at 215, 28.8.236 See STRAUS (1996), at 198, referring to Doc.MTN.GNG/NG11/W/32/Rev. 2, at 90-95.237 Member States have to provide for the reversal of the burden of proof where either of the two circumstances in sub-paragraph (a) or (b) is met: “(a) if the product obtained by the patented process is new; (b) if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through reasonable efforts to determine the process actually used.” On the reasons of b) see STRAUS (1996) at 210.

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different, or else there would be redundancy.238 “Patentability” and “rights conferred” clearly refer to different issues. Consequently there is no conflict between the two provisions.

c) Product directly obtained by a non-biological or microbiological process

The second question is then, what has to be understood by a “product obtained directly by [a non-biological or microbiological] process”. Is it only the product of different steps of a plant genetic engineering process, such as a plasmid constructs, a modified plant cell and a regenerated plant, possibly including the progeny obtained by simple multiplication? Or is it also any plant of a new variety subsequently obtained from the transformed plant in a conventional breeding program? Even in the context of manufactured products, the question of what is a “direct” product of a process is complex.239 This is all the more the case when it comes to living material which can be easily propagated without having recourse to the initial production process. At this point the exclusion of conventional breeding steps from the allowable process claims may become relevant. Earlier in this paper, it was argued that only regeneration and multiplication steps have to be protected by TRIPS Member States as part of a microbiological or non-biological process. Can new plant varieties nevertheless be regarded as directly obtained products? The ordinary meaning of the terms “product obtained directly by that process” leaves little room for the inclusion of a product that results normally several seasons, if not years, later from a conventional breeding program and that has considerably changed its genetic constitution.240 It is acknowledged here that this interpretation indeed reduces the effect of Art. 28(1)(b) in practice to zero in the area of plant genetic engineering where a TRIPS member chooses to give only minimal protection to processes in this area. The material which becomes vulnerable to the acts enumerated in Art. 28(1) is the progeny of the initially transformed plant that will be put on the market as seed of a new plant variety. According to the interpretation above breeders are free to use this new variety and the genetic components that make its value. Consequently the only compensation the inventor of the patented genetic engineering process receives for his considerable investments is a lead time of some years, i.e. the time it takes to develop an essentially derived variety containing the new technology.241 But since Art. 28(1)(b) has a wide range of possible applications this does not reduce the provision to redundancy or inutility.

238 See, e.g. WT/DS114/R (Canada - Patent Protection of Pharmaceutical Products), at para. 7.21.239 See e.g. RUSSELL/HURDLE (1995), at 249 et seq.; KRAßER (2004), at 800 et seq.240 The fact that the European legislator saw a need to explicitly state that the protection conferred by a patent on a “process that enables a biological material to be produced possessing specific characteristics as a result of the invention” extends to “any other biological material derived from the directly obtained biological material through propagation or multiplication in an identical or divergent form and possessing the same characteristics” suggests that a contrary reading of the term “product directly obtained by a process” is at least possible. See below chapter 3, B.V.2c)bb).241 It has to be kept in mind that it often takes some ten years to make a gene related invention work in a particular species and another decade may be necessary to develop a new variety, or at least several years to cross the relevant gene into an existing variety.

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5. Exceptions and other use without authorization of the right holder

The exclusive rights laid down in Art. 28 may be limited only in exceptional cases and subject to the conditions stipulated in Art. 30 and 31 of the TRIPS Agreement.242 The following comments will focus again on issues that arise in the context of plant innovations.

a) Limited exceptions provision

Under Art. 30,243 which allows for statutory exceptions to the exclusive rights of the patentee three cumulative criteria must be met in order to qualify for an exception: (1) the exception must be “limited”; (2) the exception must not “unreasonably conflict with the normal exploitation of the patent”; (3) the exception must not “unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.”244 The EC countries had advocated the incorporation of specific exceptions into the TRIPS Agreement, namely for acts done in the private sphere and for non-commercial purposes, for acts undertaken for experimental purposes relating to the subject matter of the patented invention and for the direct preparation of individual medicines in pharmacies on the basis of medical prescriptions.245 Yet, their position found no unanimity among the other negotiating parties.246 STRAUS rightly observes that the compromise solution finally arrived at constitutes little more than flexible guidelines for the legislature and courts of the member countries.247 These guidelines have been specified to some extent by the Panel in the case “Canada – Patent Protection for Pharmaceutical Products”, which, after some general reflections on the purpose of the provision,248 did not hesitate to measure the Canadian “regulatory review exception”249 and “stockpiling exception”250 against

242 For more details, see CARVALHO (2002), at 220 et seq. and 230 et seq. respectively. On Art. 30, see further the Panel Report WT/DS114/R (Canada – Patent Protection of Pharmaceutical Products). 243 According to Art. 30, “Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.”244 See Panel Report WT/DS114/R (Canada – Patent Protection of Pharmaceutical Products), at para. 7.20.245 See STRAUS (1996), at 202.246 See STRAUS (1996), at 202; on the negotiating history see also CARVALHO (2002), 226, 30.11.247 See STRAUS (1996), at 203.248 “In the Panel’s view, Article 30’s very existence amounts to a recognition that the definition of patent rights contained in Article 28 would need certain adjustments. On the other hand, the three limiting conditions attached to Article 30 testify stronlgy that the negociators of the Agreement did not intend to bring about what would be equivalent to a renegociation of the basic balance of the Agreement. […] Both the goals and the limitations stated in Articles 7 and 8.1 must obviously born in mind when [interpreting these conditions] as well as those of other provisions of the TRIPS Agreement which indicate its object and purposes.” See Panle Report, as above note 244, at point. 7.26.249 Under Sec. 55.2(1) of the Canadian Patent Act third parties may without the authorisation of the patent owner “make, construct, use or sell the patented invention solely for uses reasonably related tothe development and submission of information” required for obtaining regulatory marketing approval.

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the three requirements of Art. 30, leaving surprisingly few margin of appreciation to the Member States.251

In the scenario of minimum protection of plant innovations, keeping basically only non-conventional methods of plant manipulation, modified microorganisms and parts thereof in the ambit of patent law, the question whether Art. 30 would cover a farmer’s exemption does not arise.252 Where patent rights neither extend to plant varieties, nor genetic components integrated in the plants of this variety this issue is of no relevance. Assuming, a developing country would opt for patent protection for plants or a combined system, this country should still be free to provide for the same exemptions as in the plant breeder’s rights system under UPOV 1978, as its legislation could be seen as an effective sui generis system closely modelled after the patent system.

A few comments on the research exemption seem necessary. In “Canada – Patent Protection of Pharmaceutical Products”, the Panel “takes as an illustration [of the sense of ‘legitimate interests’] one of the most widely adopted Article 30-type exceptions in national patent laws – the exception under which use of the patented product for scientific experimentation, during the term of the patent and without consent, is not an infringement”. Yet, “the Panel draws no conclusion about the correctness of any such national exceptions in terms of Article 30 of the TRIPS Agreement.”253 Notwithstanding this caution of the Panel, one should be on firm ground arguing that a research exemption, at least one permitting acts relating to the subject matter, is consistent with Art. 30.254 Permitting research during the patent term would “mak[e] only a small diminution of the rights in question”, as required by the Panel.255 Without the authorization of the patent holder no commercial use can be made of dependent inventions prior to the expiry of the patent. Furthermore, research on the subject matter of the invention cannot be considered as “a form of competition that could detract significantly from the economic returns anticipated from a patent’s grant of market exclusivity”,256 and thus does not conflict with the “normal exploitation of the patent”. It is not the scientific progress possible through the

250 Under Sec. 55.2(2) “it is not an infringement for any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) to make, construct or use the invention, during the applicable period provided for by the regulations, for the manufacture and storage of articles intended for sale after the date on which the term of the patent expires.”251 The stock piling exception was declared contrary to Art. 30 even though it was limited to the last six month of the patent term (see esp. para. 7.33 et seq.). Only in the context of the third requirement did the Panel observe that there may be normative policy issues that are still obviously a matter of unresolved political debate and which can therefore not be decided by means of Art. 30 (see para. 7.82).252 The farmers’ exemption refers to the possibility of farmers to save grains from their previous harvest as seeds for the next seasons without infringing the IPRs normally attached to the propagating material. For more details on the farmers’ privilege, see below chapter 3, A.IV.1.253 See WT/DS114/R, at point 7.69.254 Many European legislations, including the German patent law, limit the research exemption to acts done for experimental purposes relating to the subject matter of the patented invention. The reason for this restriction is that otherwise devices that are mainly used as tools for experiments would de factolose their patent protection.255 See WT/DS114/R, at point 7.30.256 See id., at point 7.55.

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research exemption that limits the economic returns, but the principle that competitors are free to use the technology after the patent term.257 Concerning the issue of “legitimate interest”, the Panel itself cites good arguments, yet without endorsing them:

“It is often argued that this exception is based on the notion that a key public policy purpose underlying patent laws is to facilitate the dissemination and advancement of technical knowledge and that allowing the patent owner to prevent experimental use during the term of the patent would frustrate part of the purpose of the requirement that the nature of the invention be disclosed to the public. To the contrary, the argument concludes, under the policy of the patent laws, both society and the scientist have a ‘legitimate interest’ in using the patent disclosure to support the advance of science and technology.”258

b) Compulsory licences

The compulsory licensing issue remained at the top of the agenda of the TRIPSNegotiating Group until the end of the Uruguay Round.259 Developing countries attached particular importance to the obligation of the patentee to work the patented invention in the country of grant and to the possibility to consider failure to work as an abuse of the exclusive rights permitting the grant of non-voluntary licenses.260 Their view did not however prevail.261 The outcome of the negotiations is a detailed provision with a dozen cumulative conditions that have to be observed when a compulsory license is attributed. These conditions include, inter alia, the requirement to consider each authorisation on its individual merits (a), the principle that the proposed user of the patent must have made efforts to obtain a licence from the right holder “on reasonable commercial terms and conditions”, subject, however, to a waiver in case of national emergency, other circumstances of extreme urgency or in cases of public non-commercial use (b), non-exclusivity of the compulsory license (d), the limitation of the authorisation to use predominantly for the supply of the domestic market (f), adequate remuneration of the right holder (h). It is also noteworthy that,

257 It may be observed, however, that the arguments used by the Panel could be very well turned to come to another conclusion. The Panel includes additional periods of de facto market exclusivity obtained after the patent term in the concept of “normal exploitation”. (7.52 et seq.) The additional period created by the requirements of a regulatory process if the patent holder could preclude submissions for regulatory authorization, was only excluded on grounds that in this situation the additional period of market exclusivity is not a natural or normal consequence of enforcing patent rights, but the unintended consequence of the conjunction of the patent laws with product regulatory laws. Does this mean that the de facto period of exclusivity that would result for certain know-how intensive technologies if use of the invention for experimental purposes could be precluded would have to be considered as “a normal consequence of enforcing patent rights”? The Panel probably did not intend to give rise to this conclusion, which, in the light of negotiating history and Art. 7, 8.1 would seem develop an interpretation away from the intentions of the Contracting Parties.258 See WT/DS114/R, at para.7.69.259 See GERVAIS (1998), at 21, 23, note 91, and 23.260 See GERVAIS (1998), at 20, quoting document MTN.GNG/NG11/27261 India till the very last minute pushed for amendments, as she was concerned about restrictions on compulsory licensing, in particular where a patent was not “worked” in a country. See GERVAIS (1998), at 23.

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according to sub-paragraph (k), “Members are not obliged to apply the conditions set forth in sub-paragraphs (b) and (f) above where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive”. Furthermore, “the need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases”.

Additionally, Art. 31 has to be read together with Art. 2(1) of the TRIPS Agreement, which provides that in respect of, inter alia, the scope and use of patent rights Members shall comply with certain provisions of the Paris Convention, including the principles on compulsory licensing laid down in Art. 5A(2) to (4). Art. 5A(2) provides that “[e]ach country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of exclusive rights conferred by the patent”. The scope of this provision is controversial. It has been concluded e contrario from its wording that the grant of a compulsory license is subject to the condition that it serves the prevention of abuses.262 However, the preparatory work of the treaty and the circumstances of its conclusion show that the provisions in Art. 5A(2) to (4) do not deal with measures other than those whose purpose is to prevent the abuses referred to.263 Art. 5A(4) prohibits applying a compulsory license “on the ground of failure to work or insufficiently working before the expiration of a period of four years from the date of filing of the patent application or three years from the date of grant of the patent, whichever period expires last”. This paragraph also imposes that “it shall be refused if the patentee justifies his inaction by legitimate reasons”.

III. The revision of Art. 27(3)(b) of the TRIPS Agreement

After the entry into force of the TRIPS Agreement some commentators predicted that the definition of the term “effective sui generis system” would always remain a theoretical problem for developing countries, since Art. 27(3) was the only provision in the TRIPS Agreement that was subject to an early revision, only four years after the entry into force of the WTO-Agreement,264 which was even before the 5 year transitional period conceded to developing countries expired.265 Art. 27(3)(b) is indeed under revision since 1999, but no new consensus has been found so far. In industrialized countries legal experts and certainly some of the negotiators had hoped that “the mandatory review of the – currently permissible – discrimination against inventions in the field of plants and animals anchored in Article 27(3)(b), third sentence, should alleviate this situation somewhat owing to better appreciation of the matter.”266 Yet, many developing countries, in particular India, are determined to resist any strengthening of the IP protection for plants and biological processes for the

262 See STRAUS (1996), at 204.263 See BODENHAUSEN (1969), at 69 et seq; BGH, decision dated 5 Dec. 1995 - "Polyferon", GRUR 1996, 190, 192, with further references.264 Art. 27(3)(b), 3rd sentence. The WTO Agreement entered into force on 1 January 1995. 265 See Art. 65(2) of the TRIPS Agreement. 266 See STRAUS (1996), at 215.

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production of plants267 and to direct the debate to new issues related to the recognition of informal knowledge systems.268 The public in these countries, sensitized to these issues by the heated debate on the implications of the TRIPS Agreement on the seed sector, has obviously become an efficient counter-pressure.269

This background does not make compromise very likely. If any direction to the debate can be discerned so far, it is rather towards a questioning of the concessions made by developing countries in the Uruguay Round and towards the inclusion of new issues relating to biodiversity and traditional knowledge.270 The Doha Ministerial Conference in 2001 definitely expanded the mandate of the TRIPS Council to include in its work programme “the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore […]”.271 It is noteworthy that it was further stated that “[i]n undertaking this work, the TRIPS Agreement shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension.”272

With respect to the provisions of Art. 27(3)(b) four positions, not necessarily mutually exclusive, can be identified on the further action that should be taken by the WTO.273

The first position is that the exceptions to patentability authorized by Art. 27(3)(b) are unnecessary and should be removed. Not surprisingly this position has, for instance, been taken by the US.274 The second position advocates that Art. 27(3)(b) should be maintained as it is, with no lowering of the level of protection. The EC, Australia, Canada, Korea, for instance, have advocated this solution.275 A third view requires definitions of certain terms used in Art. 27(3)(b) to clarify the differences between plants, animals and microorganisms,276 and between “essentially biological”, “non

267 This was emphasized, e.g., in the communication from India to the TRIPS Council, IP/C/W/161, “Review of the Provisions of Article 27.3(b)”, of 3 November 1999, at 4, para. 14.268 See, e.g. IP/C/W/161, at 2, para. 6, bringing up the issue that “[i]nternational IPR regimes recognize formal systems of knowledge only. Informal systems e.g. the shrutis and smritis in the Indian tradition and grandmothers’ potions all over the world get scant recognition.” On this shift of focus of the review, putting industrialized countries rather on the defensive, see also CHAKRAVARTHI (2000). 269 For a brief report on a parliamentary debate in the Rajya Sabha in the wake of the review of 27(3)(b) and the new WTO Round, see REDIFF ON THE NET (1998). 270 The documents submitted to the TRIPS Council by the Member States in 2004/05 show the importance of these new topics in the negotiations. See the web-site of the WTO, http://www.wto.org/english/tratop_e/trips_e/art27_3b_e.htm, last visited 11 September 2005. 271 Doha Ministerial Declaration, para. 19, as quoted by WTO, “Annual Report (2002) of the Council for TRIPS”, IP/C/27, para. 18. 272 Id., at para. 19. 273 See especially WTO, IP/C/W/369, “Review of the provisions of Article 27.3(b) – Summary of issues raised and points made”, 8 August 2002, at para. 9 et seq., with further references.274 See, e.g., US, IP/C/W/162, at point II and III.275 See EUROPEAN COMMISSION (2002), at 2, and IP/C/W/369, para. 9, with references to Australia, IP/C/M/28, para. 152, Canada, IP/C/M/25, para. 91, and Korea, IP/C/M/26.276 See IP/C/W/369, para. 9, note 15, with references to Brazil, IP/C/M/30 para. 156 and 183, IP/C/M/25 para. 94, India, IP/C/M/26, para. 55, Peru, IP/C/M/29, para. 175, Thailand, IP/C/M/25, para. 78.

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biological” and “microbiological processes”,277 and to remove uncertainties about the meaning of the term “effective sui generis system”.278 India has suggested that it should be made clear that parts of plants and animals are excludable from patentable subject matter.279 Concerning the clarification of the meaning of “effective sui generissystem” different propositions have been made: The EC has suggested a reference to the UPOV Convention.280 Other delegations have suggested inserting provisions stating that any Member State can provide for farmers’ rights, in particular to sow and share harvested seed of a protected variety281 and for compulsory licensing where plant varieties are not available on reasonable commercial term, in times of national emergency and in cases of public non-commercial use.282 Finally, India and Kenya on behalf of the African Group have suggested that Art. 27(3)(b) should be amended to prohibit the patenting of all life forms and their parts, including genes, as well as natural processes that produce plants, animals and other living organisms.283 India has further suggested amending Art. 27(3)(b) to prohibit the patenting of inventions based on traditional knowledge or those that violate Art. 15 of the CBD.284

Given the public opinion in many developing countries, a strengthening of IP protection in the area of biotechnology and plant breeding innovations seems very unlikely, even if industrialized countries should propose a package deal including concessions on biodiversity and TK issues. The most probable outcome of the review process seems to be basically maintenance of the status quo.

IV. Conclusions of part A

In the area of conventional plant breeding (methods based merely on mating) the TRIPS Agreement leaves a considerable margin to its Member States to shape their legislation according to their needs. States may exclude essentially biological processes, plants and according to the interpretation suggested here also parts of plants including genes from patentability. There is a wide consensus that the sui generisprotection which has to be provided for plant varieties alternatively to patent protection can be considered “effective” within the meaning of Art. 27(3)(b) if it corresponds to the standards of the UPOV 1978 Act. Moreover, there are valid arguments for the interpretation that a protection system different from the UPOV model may nevertheless be “effective”. Yet, TRIPS Members are obliged to give breeders an IPR in their variety. It is further suggested here that the more a sui generissystem departs from the standards of the UPOV 1978 Act, the greater the need to

277 See, e.g., Brazil, IP/C/M/29, para. 146, as quoted by IP/C/W/369, para 17, note 42.278 See IP/C/W/369, para. 35, note 90, with references to Brazil, IP/C/W/228, India, IP/C/M/25 para. 70, Kenya, IP/C/M/28 para. 146, Kenya on behalf of the African Group, IP/W/163, Thailand, IP/C/M/25, para. 78 and EC, IP/C/M/35, para. 214.279 See IP/C/W/369, para. 11, note 22, with reference to India, IP/C/W/161.280 See id., at para. 36, note 91 with reference to EC, IP/C/M/25, para. 74.281 See id., at para. 36, notes 93/94, with reference to Kenya on behalf of the African Group, IP/C/W/163 and Thailand, IP/C/M/25, para. 78.282 See id., note 94, with reference to Thailand, IP/C/M/25, para. 78.283 See id., para. 9, note 16, with reference to India, IP/C/M/29, para. 163, IP/C/W/161 and Kenya on behlaf of the African Group, IP/C/W/163.284 See India, IP/C/M/25 para. 25, as quoted in IP/C/W/369, para. 9, note 19.

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justify this deviation by arguments pertaining to the values referred to in Art. 7 and 8(1) of the TRIPS Agreement.

In the area of non-conventional breeding, TRIPS Member States have to provide for patent protection for non-conventional process steps (such as genetic engineering). They may, however, exclude claims directed to multi-step processes which include crossing and selection steps that have a decisive impact on the result. Consequently plant varieties would not be protected as products directly obtained by a non-biological or microbiological process. Breeders using conventional breeding techniques would generally not be concerned by the mandatory patent protection under the TRIPSAgreement. States wishing to exclude plant cells from product protection, whether or not isolated from the plant, can rely on good arguments.285 Similarly, it is suggested here that plant genes may be excluded from patentability. Moreover, States are free to integrate an element of industrial applicability into their invention definition and consequently permit only purpose-bound claims to DNA.

The absence of a definition of the patenting requirements again means that Member States have a considerable degree of flexibility. However, where patent protection has to be provided, i.e. in the area of plant breeding where non-conventional breeding processes, engineered plant DNA or microorganims and parts thereof are claimed, this protection may not be annulled by an interpretation of the eligibility requirements which does not take into account the consensual standard definitions used in the major patent systems. Only the exclusion of discoveries from patentability permits theexclusion of certain types of subject matter from the ambit of patent law that do not already fall under Art. 27(3)(b).

The positions taken by the TRIPS Member States in the review process of Art. 27(3)(b) makes future amendments of this provision rather unlikely.

B. OBLIGATIONS UNDER THE INTERNATIONAL INSTRUMENTS ON PLANT GENETIC RESOURCES

In order to give a complete picture of India’s international commitments that should impact the law making process the presentation of obligations of Member States under the TRIPS Agreement needs to be complemented by an analysis of a number of international instruments referring specifically to the ownership, access and exploitation of plant genetic resources. We have seen earlier that Member States are now internationally obliged to provide for proprietary rights that may to a certain degree restrict access of farmers to cultivated varieties (cultivars). This obligation is the culmination of a trend at the national level to confer exclusive rights with regard to cultivars and other elite germplasm. If the concerned State chooses so, even access of breeders to proprietary germplasm of other breeders may be restricted by IPRs. This privatisation of certain types of crop genetic resources has provoked a counter-reaction from developing countries, who are traditionally rather providers of “raw material” for plant breeding than of new cultivars or elite breeding lines. It was largely felt in these

285 CARVALHO (2002), at 178, point 27.58 also takes the view that WTO Members may exclude from patentability “parts of plants”.

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countries that free access to their genetic resources became a “one way subsidy of the poor, but plant genetic resource rich countries, to the rich, but plant genetic resource poor countries.”286 Claims on wild crop relatives conserved and landraces developed and enhanced by farmers were raised by developing countries at the international level and were eventually taken into account in two binding treaties, namely the Convention on Biological Diversity287 (CBD) and the International Treaty on Plant Genetic Resources for Food and Agriculture (PGRFA Treaty).288 What is of interest in the present context is whether the provisions of the CBD and the PGRFA Treaty set binding standards that are relevant when framing IP laws for the protection of plant genetic resources for food and agriculture, be it cultivars, genetically engineered plants or farmers’ varieties. Two issues are of particular relevance and will be in the centre of the following analysis: The first is to what extent the international framework provides for IPRs of farmers over the plant genetic resources which are the results of their conservation and development efforts. The second is, what the international rules under these treaties on the status are, i.e. the access to and the use of germplasm, be it public domain germplasm or proprietary germplasm. The continuing development towards access restrictions raises in particular two questions crucial for the future availability of germplasm for plant breeding: How is the exchange of germplasm organised in order to assure continued access to breeding material? And how can IPRs be employed with respect to this germplasm? A short historical overview given in the first part will make it easier to understand the two treaties that will be analysed in part two and three respectively.

I. The FAO International Undertaking and its agreed interpretation

In 1983, the FAO Conference adopted a non-binding International Undertaking on Plant Genetic Resources declaring, among other things, that “plant genetic resources are a heritage of mankind and consequently should be available without restriction”.289

This declaration gave rise to protest by industrialized countries, because, according to the definitions in Art. 2, plant genetic resources included reproductive and propagating material of cultivars in current use and newly developed varieties, as well as special genetic stocks, including elite and current breeders’ line and mutants.290 Industrialized

286 See SWAMINATHAN (1995b), at 247.287 Convention on Biological Diversity, adopted on 22 May 1992, in Nairobi, signed by over 150 nations, on 5 June 1992, at the UN Conference on Environment and Development in Rio de Janeiro, and entered into force on 29 December 1993. See GLOWKA et al. (1994), at 1. GLOWKA et al. also provide a detailed commentary on every provision. The treaty text is available at http://www.biodiv.org/convention/articles.asp.288 International Treaty on Plant Genetic Resources for Food and Agriculture, approved by the FAO Conference at its Thirty-first Session (November 2001), through Resolution 3/2001, available at http://www.fao.org/ag/cgrfa/itpgr.htm.289 Art 1 of the International Undertaking on Plant Genetic Resources – FAO, Res 8/83 of the Twenty-Second Session of the FAO Conference, Rome, 5-23 November 1983, link at http://www.fao.org/ag/cgrfa/IU.htm, last visited 17.06.03.290 Art. 2 reads in its relevant parts as follows: “2.1 In this Undertaking: (a) ‘Plant genetic resources’ means the reproductive or vegetative propagating material of the following categories of plants:

i. cultivated varieties (cultivars) in current use and newly developed varieties;

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countries argued that this provision was inconsistent with their national laws and international commitments on the protection of PBRs.291 Many did not adhere to the Undertaking or adhered with reservations.292

The conflict was settled, in 1989, by an Agreed Interpretation of the International Undertaking and a Resolution on farmers’ rights, both again soft law.293 FAO Resolution 4/89 states that “Plant Breeders’ Rights, as provided for under the UPOV […] are not incompatible with the International Undertaking.”294 While this interpretation retains, at least according to its language, the common heritage of mankind approach,295 the initial idea of availability without restrictions of all categories of propagating material, including improved varieties, to all technology users was thus abandoned. In parallel to the recognition of PBRs, the concept of farmers’ rights was adopted.296 Farmers’ rights are defined as

“rights arising from the past, present and future contributions of farmers in conserving, improving, and making available plant genetic resources, particularly those in the centres of origin/diversity. These rights are vested in the International Community, as trustee for present and future generations of farmers, for the purpose of ensuring full benefits to farmers, and supporting the continuation of their contributions, […].”297

While this concept was born to counter-balance the grant of IPRs over a certain category of plant genetic resources to individuals, the definition of farmers’ rights clarifies that such exclusive rights have not been allocated to the farmers who conserve and improve plant germplasm. Nevertheless, for the first time, the “enormous contributions that farmers of all regions have made to the conservation and development of plant genetic resources, which constitute the basis for plant production throughout the world” have been recognized.298 As concerns the legal consequences

ii. obsolete cultivars;iii. primitive cultivars (land races);iv. wild and weed species, near relatives of cultivated varieties;v. special genetic stocks (including elite and current breeders’ lines and mutants); […]

2.2 This Undertaking relates to the plant genetic resources described in para. 2.1(a), of all species of economic and/or social interest, particularly for agriculture at present or in the future, and has particular reference to food crops.”291 See FAO Res. 4/89 of November 29, 1989, Agreed Interpretation of the International Undertaking, adopted at the Twenty-Fifth Session of the FAO Conference, Rome, 1989, where this is recognized in Recital (b). The Resolution is available at http://www.fao.org/ag/cgrfa/IU.htm, last visited 17.06.03.292 Id.; see also footnote 1 to Res. 8/83 stating that “[t]he delegations of Canada, France, Germany (Federal Republic of), Japan, Switzerland, United Kingdom and the United States of America reserved their positions […].”293 FAO Res. 4/89 as above, note 291 and FAO Res. 5/89 of 29 November 1989, Twenty-fifth Session of the FAO Conference, Rome, 11-29 November 1989, link at http://www.fao.org/ag/cgrfa/IU.htm, last visited 17 June 03.294 See Sec. 1 of the FAO Res. 4/89, as above note 293.295 See id., 1st recital.296 See id. and FAO Res. 5/89, as above note 293.297 See id. 298 See Res 4/89, Sec. 3.

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and the implementation of the concept of farmers’ rights remains very vague. Sec. 4 of Resolution 4/89 states that

“the best way to implement the concept of Farmers’ Rights is to ensure the conservation, management and use of plant genetic resources, for the benefit of present and future generations of farmers. This could be achieved through appropriate means, including in particular the International Fund for Plant Genetic Resources, already established by FAO. […] Special priority should be placed on intensified educational programmes for biotechnology specialists, and strengthening the capabilities of developing countries in genetic resource conservation and management, as well as the improvement of plant breeding and seed production.”

This shows that the concept of farmers’ rights, in its practical effect, was limited to payments at the international level, from industrialized to developing countries, the latter being free to use it for any purpose in connection with the use of plant genetic resources without an obligation to directly support rural communities. However, the International Undertaking was an important landmark in the emergence of the idea that farming communities should be compensated for their conservation and breeding activities.299

II. The Convention on Biological Diversity

1. Objectives and coverage

Alarmed by the significant loss of biological diversity and conscious of its “ecological, genetic, social, economic, scientific, educational, cultural, recreational and aesthetic” value,300 the Contracting States of the Convention on Biological Diversity301 take a commitment to conserve biological diversity, to use its components sustainably and to share equitably the benefits arising from the use of genetic resources.302 By encompassing issues such as access to genetic resources,303 sharing of benefits from the use of genetic material304 and access and transfer of technologies that are relevant to the conservation and sustainable use of biological diversity or make use of genetic

299 The concept of farmers’ rights in the sense of the FAO Resolution 4/89 and 5/89 has been affirmed several times within the FAO forum. See, e.g. International Code of Conduct for Germplasm Collecting and Transfer, adopted by the FAO Conference at its 27th session in November 1993, link at http://www.fao.org/biodiversity/CCPGCT_en.asp, especially Art. 1(7), 1(8) and 14. But while the idea of compensation is restated a concrete mandatory method of implementation has not been provided. Art. 14 of the Code of Conduct only provides that users should “consider providing some form of compensation for benefits derived from the use of germplasm.” The enumerated examples of compensation include facilitating access to new, improved varieties, training to enhance lokal skills in genetic resource conservation and support for research of relevance for conservation and utilization of plant genetic resources.300 See Preamble of the Convention.301 See above note 287. 302 This commitment is expressed, for instance, in Art. 1 “Objectives”.303 See Art. 15.304 See Art. 15(7) and Art. 19(1) and (2).

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resources,305 including biotechnology, and the provision of additional financial resources306 the Convention tries to strike a balance between rights and obligations of biodiversity rich and biodiversity poor Contracting States.307

The scope of the Convention covers plant genetic resources for food and agriculture.308

Yet, it should be noted that three provisions of the CBD, that are of particular interest here, namely Art. 15, 16 and 19 on “Access to Genetic Resources”, “Access to and Transfer of Technology” and “Handling of Biotechnology and Distribution of its Benefits” respectively, are limited to genetic resources provided by the country of origin or by a Party that has acquired the genetic resource in accordance with the Convention.309 This basically means that genetic resources placed in gene banks or other ex-situ facilities before the entry into force of the Convention outside the country of origin are excluded from the scope of the Convention.310 Consequently, neither Contracting Parties hosting pre-existing ex situ collections have claims under the CBD to benefit sharing,311 nor do the States of origin of the stored resources. The Nairobi Conference in May 1992, which adopted the CBD, recognized in its Resolution 3

“the need to seek solutions to outstanding matters concerning plant genetic resources within the Global System for the Conservation and Sustainable Use of Plant Genetic Resources for Food and Sustainable Agriculture,[312] in particular:(a) Access to ex-situ collections not acquired in accordance with this Convention; and

305 See Art. 16.306 See Art. 20.307 Since the conservation of biodiversity imposes a havier burden on the South and, at the same time, the genetic resources in these biodiversity rich countries are of global importance, the Convention provides for alleviation of this burden by additional contributions from the industrialized North and through increased partnership between both developed and devloping countries. See GLOWKA et al.(1994), at 1.308 Art. 2 defines “biological diversity” as “variability among living organisms from all sources […]”, “biological resources” as including “genetic resources, organisms or parts thereof, populations, or any other biotic component of ecosystems […]” and “genetic material” as meaning “any material of plant, animal, microbial or other origin containing functional units of heredity”. 309 See Art. 15.3.310 See GLOWKA et al. (1994), at 6; GIRSBERGER (1999), at 68.311 See STRAUS (2000), at 147.312 The Global System designates the current organisation of global germplasm management and exchange and comprises a body of international agreements, codes of conduct and international standards, technical mechanisms and networks, and international institutions established with the objective to ensure the safe conservation, and promote the availability and sustainable use of plant genetic resources. The development of the Global System on Plant Genetic Resources began in 1983 with the establishment of the Commission on Plant Genetic Resources (now Commission on Genetic Resources for Food and Agriculture – CGRFA). One of the key elements of the Global System is the international network of ex situ collections. In 1994 the twelve centres of the Consultive Group on International Agricultural Research (CGIAR) placed most of their collections (some 500.000 accessions) under the auspices of FAO in the International Network of Ex Situ Collections. For details and for links to the relevant instruments, see http://www.fao.org/ag/cgrfa/PGR.htm, last visited 27.06.03.

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(b) The question of farmers’ rights.”313

The reason for this Resolution is to be found in the special nature of PGRFA. Both developed and developing countries rely on crops that originated elsewhere for a large part of their production and consumption.314 At the same time, broadening germplasm pools for plant improvement is essential for future breeding. Countries are interdependent with regard to PGRFA.315 Said outstanding issues have been finally addressed in the International Treaty on Plant Genetic Resources for Food and Agriculture adopted in November 2001. The legal and even more the practical significance of the CBD in the area of PGRFA is therefore limited.316

2. Sovereign rights of States over their biological resources

Concerning the idea of entitlements of farmers and rural communities to the genetic resources they use, conserve and develop, the CBD has brought no advance, at least from a legal perspective.317 While for the first time the role of indigenous and local communities for the conservation of plant germplasm is recognized in a binding international agreement,318 the rights over these resources are vested with the provider State, not with the concerned communities. The principal reorientation in the Biodiversity Convention is to definitely abandon the common heritage of mankind approach and to lay down that States have sovereign rights over the biological resources within their jurisdiction.319 It should be noted that the right of States to

313 See Resolution 3 “The Interrelationship between the Convention on Biological Diversity and the Promotion of Sustainable Agriculture”, adopted by the Conference for the Adoption of the Agreed Text of the Convention on Biological Diversity on 22 May 1992, reprinted in GLOWKA et al. (1994), at 140 et seq.314 See COMMISSION ON GENETIC RESOURCES FOR FOOD AND AGRICULTURE (CGRFA) (1996), , para. 4.315 See id., para. 5.316 According to ZWEIFEL, ten years ago, gene banks held, for instance, an estimated 95% of all known varieties of wheat, potatoes, and barley, and 90% of all known varieties of corn. See ZWEIFEL, Helen, “Vom Artenschutz zum Schutz des geistigen Eigentums”, Dokumentation (Erklärung von Bern, Zurich, Switzerland), No. 3, 1993, at 2.2., as quoted in GIRSBERGER (1999), at 70/71. Yet, it is important to mention that landraces and wild species are not static. New farmers’ varieties are permanently developed. The above figures should therefore be regarded with caution and can now, ten years later, only give a rough idea. 317 But by turning away from the common heritage concept the CBD has paved the way for a new approach recognizing intellectucal property entitlements in wild species and landraces.318 See Preamble, 12th Recital, and Art. 8(j), which reads as follows: “Each Contracting Party shall, as far as possible and as appropriate: […] (j) Subject to its national legislation, respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of benefits arising from the utilization of such knowledge, innovations and practices.” 319 See Preamble, 4th Recital and Art. 3 and 15(1). It is an established principle of international law that a State has sovereign rights over the natural resources on its territory. Nevertheless, until the negotiations of the Convention, the principle of free access to genetic resources had prevailed, yet increasingly contested by developing countries. FAO Res. 3/91 of November 25, 1991 at the 26th

Session of the FAO Conference, had already recognized that “the concept of mankind’s heritage, as

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control access to genetic resources is not an absolute right.320 Pursuant to Art. 15(2)“each Contracting Party shall endeavour to create conditions to facilitate access to genetic resources for environmentally sound uses by other Contracting Parties and not to impose restrictions that run counter the objectives of this Convention.” Yet, this obligation does not hinder a State to allocate private rights over certain types of genetic resources. This is affirmed for IPRs in results of formal research321 and should equally apply to IPRs granted to indigenous and rural communities over the genetic resources they conserve and develop.

3. Prior informed consent and benefit sharing

a) Principles

Instead of the formerly free access to a Party’s genetic resources, the Convention provides for access subject to national legislations,322 and to prior informed consent of the Party providing the resources,323 which gives this Party the opportunity to negotiate mutually agreed terms, including for benefit sharing, with the interested State or institutions.324 The “Party” is clearly the State, not the community concernedArt. 15(7) contains the obligation of each Contracting Party to

“take legislative, administrative or policy measures, as appropriate, and in accordance with Articles 16 and 19 and, where necessary, through the financial mechanism established by Articles 20 and 21 with the aim of sharing in a fair and equitable way the results of research and development and the benefits arising from the commercial or other utilization of genetic resources with the Contracting Party providing such resources. Such sharing shall be upon mutually agreed terms.”

It is the choice of each State to pass on these benefits and rights to local communities in order to provide incentives for their continued engagement in the conservation and development of plant genetic resources. The only case, where the Convention requires “the approval and involvement” of indigenous and local communities and obliges Contracting States to “encourage the equitable sharing of benefits arising from the utilization” is where “knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and

applied in the International Undertaking on Plant Genetic Resources, is subject to the sovereignity of the states over their plant genetic resources.” Increased progress in plant genetic engineering had given rise to greater attention to the value of genetic resources. This has lead to parallel reactions in industrialized and developed countries, both striving to increase private or public control over access to the genetic resources developed under their jurisdiction. See GLOWKA et al. (1994), at 5.320 See STRAUS (2000), at 146, referring to Doc. UNEP/CBD/COP2/13 of October 5, 1995, No. 9.321 See Art. 16(2).322 See Art. 15(1).323 See Art. 15(5). Prior informed consent involves the provision of information by the Party or institution interested in access prior to the decision of the Contracting Party, and the consent of this Party based on said information. See STRAUS (2000), at 148.324 See Art. 15(4).

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sustainable use of biological diversity” are used.325 The moral and awareness creating effect of the CBD should not be underestimated.326 However, concerning the legal effects of the CBD, it should be noted that the provisions of the CBD do not recognize, even indirectly, any rights of local communities over the plant genetic resources they use and develop.327

b) Prior informed consent as patenting requirement

As mentioned earlier, there was controversial discussion whether the prior informed consent and benefit sharing provisions of the CBD, as “relevant rule of international law applicable in the relation between the parties”, could lead to an interpretation ofthe TRIPS Agreement allowing for an additional patenting requirement besides those specified in Art. 27(1), 29 and 62(1) of the TRIPS Agreement. What exactly are the obligations of the CBD Contracting States in this respect? Commentators have rightly observed that “[t]he articles on access to genetic resources (article 15) and access to and transfer of technology (article 16), complex and imprecise as they are, […] leave much to each Contracting Party to decide regarding their implementation.”328

Art. 15 is based on the expectation that negotiations will take place between a Party, company or institution seeking access and the providing State leading, prior to access, to mutually agreed terms which regulate the fair and equitable sharing of research results and benefits arising from the utilization of the concerned resources. But plant genetic resources are capable of self-replication and multiplication, which makes very small quantities sufficient for exploiting their value, i.e. the genetic information contained.329 Consequently, circumventing access legislations is rather easy. This situation is not addressed in the Convention.330 It could be argued that, to implement

325 See Art. 8(j). 326 It is without doubt the merit of this Convention that “prior informed consent” and “benefit sharing” are now frequently cited in the context of the contribution that indigenous and rural communities make to the development of modern varieties.327 Interestingly, a certain evolution in the concept of prior informed consent and benefit sharing can be observed in the soft law following the adoption of the CBD. In 1999 work began in the Conference of the Parties to the Convention (COP) to operationalize the provisions of Art. 15 which adresses the terms and conditions for access to genetic resources and benefit sharing. A first result were the so-called Bonn Guidelines on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising Out of Their Utilization, a non-binding instrument adopted unanimously by some 180 Countries at the sixth meeting of the COP in April 2002. (See Secretariat of the Convention on Biological Diversity, Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of the Benefits Arising out of their Utilization, 2002, Introduction, at III, available at http://www.biodiv.org/outrich/awareness/publications.asp.) The Guidelines make no distinction anymore between access to traditional knowledge and access to genetic resources. Several provisions seem to acknowlege that benefit-sharing claims with respect to genetic resources should also belong to indigenous and rural communities and that their informed consent should be sought prior to access. See in particular Sec. 16(b)(ix), 18, 21, 26(d), 31, 48.328 GLOWKA et al. (1994), at 2.329 STRAUS (2000), at 141, points out that this is at the same time “[the] natural strength and [the] legal weakness” of biological material.330 See also STRAUS (2004), at 793, who righthly observes that the CBD contains no provisions for enforcing the principle in Art. 15(7) CBD. The Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of the Benefits Arising out of their Utilization, adopted by the Conference

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the benefit-sharing obligations under said provisions effectively, a control and sanction mechanism would be necessary which ensures that the concerned Contracting Party gets knowledge of the use of its resources and the technological results and that the user of the genetic resource is forced to conform to its obligation of entering into an arrangement with the providing State. But the validity of this argument, in this generality, seems doubtful. There are many different ways to achieve the aim to provide access to and transfer of technology which makes use of genetic resources provided by a Contracting Party. One way, mentioned in Art. 15(7) itself, is the use of the financial mechanism under Art. 20, 21, another is to provide tax or other economic incentives. Industrialized countries could acquire privately-owned patented technology and assign it or license it to other Parties on very favourable conditions. Only, with respect to the countries of origin of the material, it seems reasonable to say that the authority to determine access implies the right to provide for sanctions in case of non-compliance with access rules. But, neither letter, nor spirit of Art. 15 requires that the sanction for non-compliance with access rules has to be precisely the denial of patent protection for the R&D results.

The same is true for Art. 16(3)331 and 19(2).332 Both state that access to technology and to benefits from such technology is provided “on mutually agreed terms”. It is also noteworthy that according to Art. 16(2) access to technology relevant for the conservation and sustainable use of biodiversity or making use of genetic resources has to be provided by the Contracting States “on terms which recognize and are consistent with the adequate and effective protection of intellectual property rights.” Thus IPRs in technologies related to genetic resources, including biotechnology, are principally recognized.333 While Art. 16(5) obliges the Contracting Parties to cooperate to ensure that “such rights are supportive and do not run counter to [the] objectives [of

of the Parties at the IVth meeting represent a small step further in addressing these situations, but they are non-binding. "Contracting Parties with users of genetic resources under their jurisdiction" are mentioned under point C on "Responsabilities". These parties "should take appropriate legal, administrative, or policy measures, as appropriate, to support compliance with prior informed consent of the Contracting Party providing such resources and mutually agreed terms on which access was granted". They "could consider, inter alia, [...] (ii) Measures to encourage the disclosure of the country of origin of the genetic resources and of the origin of traditional knowledge, innovations and practices of indigenous and local communities in applications for intellectual property rights". See Decision VI/24, available at http://www.biodiv.org/decisions/default.aspx?m=cop_06&d =24, last visited 16 September 2005.331 Art. 16(3) reads as follows: “Each contracting Party shall take legislative, adminitsrative or policy measures, as appropriate, with the aim that Contracting Parties, in particular those that are developing countries, which provide genetic resources are provided access to and transfer of technology which makes use of those resources, on mutually agreed terms, including technology protected by patents and other intellectual property rights, where necessary through the provisions of Articles 20 and 21 and in accordance with international law and consistent with paragraphs 4 and 5 below.” 332 Art. 19.2 provides that “[e]ach Contracting Party shall take all practicable measures to promote and advance priority access on a fair and equitable basis by Contracting Parties, especially developing countries, to the results and benefits arising from biotechnologies based upon genetic resources provided by those Contracting Parties. Such access shall be on mutually agreed terms.”333 The CBD has thus established a link to the international regime of IPRs, including the TRIPS standards. See GLOWKA et al. (1994), at 86 and UNEP/CBD/COP/3/23 of October 5, 1996, Nos. 34 et seq., quoted by STRAUS, note 41.

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the Convention],” and this provision had originally prevented the US from signing the Convention,334 this obligation is subject to international law and has to be interpreted in the light of this international law. Prior to the entry into force of the TRIPSAgreement, Contracting States could possibly have invoked the provisions of the CBD to justify restrictions to patent protection or to subject it to the mentioned disclosure requirement. But since the TRIPS Agreement is now international law to be observed,335 since the relevant provisions of the CBD leave considerable discretion with the Parties336 and there is definitely no explicit obligation to implement the prior informed consent requirement as part of the patent procedure, the relatively precise obligations under Art. 27, 29 and 62(1) of the TRIPS Agreement prevail. The situation is different in the context of plant variety rights legislation. Those hard and precise obligations do not exist for the “effective sui generis system”. The latter term has to be interpreted in the light of the CBD, which is a relevant rule of international law applicable in the relations between the parties. The authority to provide for access legislation includes the right to set out sanctions for user of genetic resources who do not comply with these provisions.337

III. The International Treaty on Plant Genetic Resources for Food and Agriculture338

The Treaty, which entered into force on 29 June 2004,339 reaffirms some of the major principles that have emerged during the process described above leading to the revisedInternational Undertaking and the CBD.340 Especially sovereign rights of States over

334 On details, see STRAUS (2000), at 152.335 STRAUS rightly points out, that the CBD and the TRIPS Agreement have been by and large negotiated by the same parties. He also states that the patent provisions of the CBD are to be understood as the preliminary outcome of the dialogue on the impact of IPR on technology transfer implied by Art. 16(5) of the CBD. See STRAUS (2000), at 152/153. 336 See GLOWKA et al. (1994), at 5 with respect to Art. 15.7.337 Yet this means that the prior informed consent requirement as criterion for the granting of PBR may only cover genetic resources which fall under the national access legislation that implements the CBD. It may be recalled that germplasm from ex situ collections are exempted from the scope of the CBD.338 For an instructive analysis by an insider, see FOWLER (2003). FOWLER served as the CGIAR’s representative in the negotiations for the Treaty. The following paragraph may resume his view on the Treaty (id., at 2): “The Treaty contains enough built-in problems and ambiguities to trouble anyone working in the field of PGRFA. Scientific, legal, and political perfection was never a realistic option. Nevertheless, the new Treaty is a considerable achievement, for it holds out the prospect that germplasm flows in the future might become more automatic and routine as they are now. Facilitated access and a transparent system for benefit sharing will advance the use of genetic resources which will promote sustainable agriculture and food security.” Interesting details on the policy background can also be found in MELDOLESI (2002). 339 See FAO (2004). The Treaty was adopted in November 2001 by Resolution 3/2001 (availabe athttp://www.fao.org/legal/TREATIES/033t-e.htm, last visited 10.06.03) by the FAO Conference at its 31th session with 116 favorable votes, no dissenting votes and two abstentions from the US and Japan. See MEKAOUR, at 2. 78 States have signed the Treaty, including the US, out of these 34 have ratified it, 2 have accepted it and 3 have approved it so far. Further 28 States have acceded to the Treaty. On the status of signatures and ratifications, see http://www.fao.org/Legal/TREATIES/033s-e.htm, last visited on 21.02.05.340 See MEKOAUR (2002), at 5.

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their PGRFA, farmers’ rights and the principle of equitable sharing of benefits are reconfirmed,341 and, in the case of benefit sharing and farmers’ rights, further developed, as will be seen in sub-section 1 below. At the same time, the Treaty takes account of the specific nature and needs of the agricultural and breeding sectors which imposes taking account of “criteria of food security and interdependence”.342 Instead of the bilateral approach to access to genetic resources as provided by the CBD, the Treaty proposes a Multilateral System of Facilitated Access and Benefit Sharing, which will be analysed in sub-section 2 below.

1. Farmers’ rights

The PGRFA Treaty is the first binding treaty that deals with farmers’ rights. The strongest statement can be found in the Preamble:

“Affirming also that the rights recognized in this treaty to save, use, exchange and sell farm-saved seed and other propagating material, and to participate in decision-making regarding, and in the fair and equitable sharing of benefits arising from, the use of [PGRFA], are fundamental to the realization of Farmers’ Rights, as well as the promotion of Farmers’ Rights at national and international levels.”

However, in the treaty text, the relevant Art. 9 leaves considerable discretion to the Contracting Parties on how to implement farmers’ rights. “[...] the responsibility for realizing Farmers’ Rights, as they related to [PGRFA], rests with national governments.”343 Art. 9(2) further stipulates that Contracting parties “should […] take measures to protect and promote Farmers’ Rights”, but only “in accordance with their needs and priorities”, “as appropriate”, and “subject its national legislation”. Farmers’ rights are still not defined in terms of a mandatory content of rights to be conferred, but the examples for measures to be adopted show that the concept has evolved. These include:

(a) protection of traditional knowledge relevant to [PGRFA];(b) the right to equitably participate in sharing benefits arising from the utilization of [PGRFA]; and(c) the right to participate in making decisions, at the national level, on matters related to the conservation and sustainable use of [PGRFA].”344

The idea of benefit-sharing claims of farmers with respect to plant genetic resources is now endorsed in a binding treaty, yet in rather cautious terms. They merely “participate” in the benefit sharing and in decision making at the national level. More

341 For the sovereign rights of States, see the second-last paragraph of the Preamble and Art. 10(1) of the Treaty dealing with access rights, for farmers’ rights, see the 7th and 8th preambular paragraph and part III of the Treaty; for benefit sharing, see Art. 1 on the objectives of the Treaty and part IV of the Treaty. 342 Phrase used in Art. 11(1).343 See Art. 9(2), 1st sentence.344 See Art. 9(2), 2nd sentence.

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importantly, as will be seen below, the benefit-sharing mechanism under the Multilateral System does again not provide for compensation to individual communities. Nevertheless, commentators consider the PGRFA Treaty as a major step in the transition of farmers’ rights from a political concept to an operable legal concept that will complement existing forms of IPRs.345

The Treaty also explicitly includes for the first time the farmers’ privilege as one element of the farmers’ rights concept. Interestingly, the Preamble speaks of “rights recognized in this Treaty”, which are “fundamental to the realization of Farmers’ Rights”, whereas the Treaty text itself, in Art. 9(3) does not seem to give rise to any obligation or the international recognition of the concerned rights, as it merely states that:

“[n]othing in this Article shall be interpreted to limit any rights that farmers have to save, use, exchange and sell farm-saved seed/propagating material, subject to national law and as appropriate.”

2. The Multilateral System of Access and Benefit Sharing

Art. 10(2) contains the commitment of the Contracting States to

“establish a multilateral system, which is efficient, effective and transparent, both to facilitate access to plant genetic resources for food and agriculture, and to share, in a fair and equitable way, the benefits arising from the utilization of these resources, on a complementary and mutually reinforcing basis.”

a) Coverage

Pursuant to Art. 11, facilitated access is provided to an agreed list of over 60 plant genera, including 35 crops and 29 forages, which is specified in Annex I to the Treaty.346 The Multilateral System automatically applies to genetic resources of the listed genera which are “under the management and control of the Contracting Parties and in the public domain.”347 As concerns proprietary germplasm, Contracting States agree to “take appropriate measures to encourage natural and legal persons within their jurisdiction who hold [PGRFA] listed in Annex I to include such [PGRFA] in the Multilateral System”.348 Natural and legal persons that have not included their PGRFA may be barred from facilitated access to the PGRFA in the system by a decision of the Governing Body two years from the entry into force of the Treaty.

345 See, e.g. ALKER/HEIDHUES (2002), at 69; See also MEKAOUR (2002), at 6.346 Available at: http://www.fao.org/legal/TREATIES/033t-e.htm. The Scope of the Treaty in general covers all PGRFA, i.e. “any genetic material of plant origin of actual or potential value for food and agriculture.” See Art. 3 and 2. The provision on farmers’ rights, e.g., refers to all PGRFA. As concerns the issue of access, the Treaty is principally limited to the listed crops, but also contains provisions on access to non listed crops held by the IARCs of the CGIAR (Art. 15(1)(b)).347 See Art. 11(2).348 See Art. 11(3).

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The status of farmers and their PGRFA in the Multilateral System is not addressed expressly, but some indications can be found in the Treaty. It can be derived from Art. 13(2)(d)(ii), 2nd paragraph, that farmers may directly access germplasm from the Multilateral System.349 Yet, the gain of this possibility for most traditional farmers is probably limited. It has to be kept in mind that samples are provided “solely for the purpose of utilization and conservation for research, breeding and training”. In traditional farming breeding and crop production are usually not separate activities.350

Another question is whether farmers’ varieties have to be considered as PGRFA “under the management and control of the Contracting Parties and in the public domain” and whether States consequently have to provide facilitated access to farmers’ varieties. According to Art. 12(3)(h) it is the national legislation which determines the status of germplasm developed and conserved by farmers in situ.351

Thus, Contracting States seem to be free to consider farmers’ varieties as public domain germplasm or to allocate rights to the farming communities concerned over the genetic resources found in in situ conditions in their fields. Yet, it also has to be noted that pursuant to Art. 12(3)(e) “access to [PGRFA] under development, including material being developed by farmers, shall be at the discretion of its developer, during the period of its development.”352 It is unclear whether this provision implies that farmers have to be granted some sort of proprietary right over the farmers’ varieties they develop.

The International Agricultural Research Centres (IARCs) of the Consultative Group on International Agricultural Research (CGIAR) are called upon by the Contracting Parties to join their material as listed in Annex I to the Multilateral System by signing agreements with the Governing Body.353 There is little doubt that the Centres of the CGIAR will agree to become a part of the Multilateral System.354 This will actually not fundamentally change the present regime of access and use of the material by a

349 This provision provides that the Governing Body may decide “on the need to exempt from such [benefit sharing] payments small farmers in developing countries and in countries with economies in transition.”350 Moreover, from a practical point of view, it is difficult to imagine how a traditional farmer should get access to the information necessary to order a specific germplasm sample from one of the participants of the system. 351 Art.12(3)(h) reads as follows: „Without prejudice to the other provisions under this Article, the Contracting Parties agree that access to [PGRFA] found in in situ conditions will be provided according to national legislation or, in the absence of such legislation, in accordance with such standards as may be set by the Governing Body.”352 Putting breeders of the formal sector and farmers on an equal footing is certainly an important political gesture, but will render the application of this provision with respect to farmers’ germplasm rather difficult. As will be seen below in chapter 7, farmers’ varieties are in many cases not static but under permanent development.353 See Art. 11(5) and 15(1).354 The Centres have formally welcomed the Treaty and indicated their intention to associate themselves with it formally. See FOWLER (2003), at 13.

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recipient.355 Especially IPR related prohibitions and possibilities remain in all major respects the same.356

b) Conditions of access

Compliance of the recipients with the conditions of access will be assured by a standard material transfer agreement (SMTA).357 Access to material covered by the system has to be provided “solely for the purpose of utilization and conservation for research, breeding and training for food and agriculture.”358 Access has to be accorded “expeditiously, without the need to track individual accessions and free of charge, or when a fee is charged, it shall not exceed the minimum costs involved.”359 What is of particular importance in the present context is that recipients, according to Art. 12(3)(d), “shall not claim any intellectual property or rights that limit the facilitated access to [PGFRA], or their genetic parts or components, in the form received from the Multilateral System”. Emphasis has to be put on the phrase “in the form received from the Multilateral System”. FOWLER rightly observes that:

“While the construction of this sentence opens the door for multiple interpretations, the provision must be understood in the context of the entire Treaty. The Treaty’s benefit-sharing provision is triggered only when someone accesses material from the Multilateral System, uses it, and protects the resulting product […] in a manner that restricts further access and use of the product. In other words, material accessed from the Multilateral System […]

355 For an outline of the present system, see FOWLER (2003), especially at 4 et seq.356 See FOWLER (2003), at 5 et seq. and at 2. In an agreement concluded between the FAO and the CGIAR Centres in 1994, the Centres agreed not to “claim legal ownership over the designated germplasm [basically the germplasm held in trust by the CGIAR Centres]” or seek any IPRs over “that germplasm or related information.” They also agreed to ensure that when material is transferred to another person or institution the recipients are bound by the same conditions regarding ownership and IPRs. The Parties to the agreement further stated in a Joint Statement that this requirement would be satisfied by arrangements with the recipients, such as material transfer agreements (MTAs). This regime, however, did not prevent recipients from using the “in trust” materials in breeding programs aimed at the development of new varieties protected by PBRs. It is interesting to note that the FAO Commission on Genetic Resources never reached a consensus regarding the extent to which germplasm must be altered before it can become eligible for protection consistent with the MTAs. FOWLER adds that “by any measure, the abuse rate of the MTAs is extraordinarily low”. Id., at 7.357 See Art. 12(4). The SMTA is currently drafted by the Contact Group for the Drafting of the Standard Material Transfer Agreement, which was established at the Second meeting of the Commission on Genetic Resources for Food and Agriculture acting as Interim Committee for the PGRFA Treaty. It will complete the preparation of the Standard Material Transfer Agreement in a further meeting in late 2005 or early 2006, so that it may be considered for adoption by the first meeting of the Treaty's Governing Body. See COMISSION ON GENETIC RESOURCES FOR FOOD AND AGRICULTURE, Doc. No. CGRFA/IC/CG-SMTA-1/05/Rep, dated July 2005, at points 1 and 13.358 See Art. 12(3)(a).359 See Art. 12(3)(b).

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can be used in breeding programs and the resulting varieties or lines may be protected by IPRs, though benefit-sharing requirements may apply.”360

PBRs claimed in relation to a new variety derived from the germplasm received from the Multilateral System are clearly compatible with the access conditions.361 In contrast, there was no consensus among the delegates negotiating the agreement on the impact that the phrase “in the form received” has on IPR in respect of “parts and components” of genetic resources accessed from the Multilateral System.362 The crucial question is whether someone can obtain an accession from the Multilateral System and patent a gene contained therein without infringing the SMTA under the Treaty. The provision in Art. 12(3)(d) has been interpreted to mean that only protection of pre-existing material is prohibited.363 Consequently, the isolated and purified form of a DNA molecule contained in the accession could be patented, whereas the material accessed from the Multilateral System would remain available for use albeit only in the form received (i.e. as a seed that can be used in a breeding programme).364 On the other hand, it could be argued that the fact that the genetic parts and components and the facilitated access to these components is explicitly named in the provision shows the intention to keep them available not only as integrated parts of the accessions received, but also as isolated components.

With respect to IPR on genetic resources that are placed in the Multilateral System the Treaty states that “[a]ccess to [PGRFA] protected by intellectual and other property rights shall be consistent with relevant international agreements, and with relevant national laws.”365 In the case of protection by PBR there is principally no conflict as the breeders’ exemption provides for free use of the protected material in a breeding program resulting in a new variety.366 It is less clear what facilitated access respecting IPR will mean if material containing genetic components protected by patents is placed in the Multilateral System by a natural person.

360 FOWLER (2003). Fowler is Senior Advisor to the Director general of the International Plant Genetic Resources Institute (IPGRI) in Rome and served as the CGIAR’s representative in the negociations for the Treaty.361 See also BLAKENEY (2002), at 28.362 See FOWLER (2003), at 9. This is also reflected by the multiple formulations in brackets in the "First draft of the Standard Material Agreement as established by the Contact Group for the Drafting of the Standard Material Transfer Agreement", which was adopted by the Contact Group for the Drafting of the Standard Material Transfer Agreement. See Appendix A of Doc. No. CGRFA/IC/CG-SMTA-1/05/Rep, as above note 357.363 See FOWLER (2003), at 9.364 In its position paper, ISF favours the following interpretation: "It is possible to claim intellectual property or other rights that limit access to the genetic parts or components isolated or inherited from the material received, provided of course that the patentability criteria are fulfilled and in particular the utility one in case of patent. A gene sequence as such, without proved industrial activity, should not be patentable. However, the rights granted should in no case limit access to the initial genetic material." See ISF (undated (a)).365 See Art. 12(3)(f).366 This free use is circumscribed however by the provisions on essentially derived varieties. According to FOWLER (2003), at 10, by Art. 12.3(f) the Treaty, precisely in this case, recognizes the solutions of national law.

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c) Benefit sharing

The Parties agree that benefits accruing from the facilitated access shall be shared fairly and equitably in accordance with the provisions of Art. 13(2). Art. 13(2)envisages that benefit sharing includes the exchange of technical information, access to and transfer of technology, capacity building, and the sharing of benefits from commercialisation.367 The first three benefit-sharing mechanisms only engage the Contracting Parties, not natural or legal persons participating in the Multilateral System.368 Concerning the sharing of monetary and other benefits of commercialisation, as a rule, all recipients, including private parties, who commercialize a product that is a PGRFA and that incorporates material accessed from the Multilateral System will be obliged by the standard Material Transfer Agreement to pay “an equitable share of the benefits” to a common fund. Yet, there is a noteworthy exception to this rule: “[W]henever such a product is available without restriction to others for future research and breeding” the payment is encouraged but voluntary.369 Consequently, if a breeder develops an inbreeding line for hybrid production protected by a trade secret, he is obliged to pay compensation under the SMTA. If, on the other hand, the product is a plant variety only protected by PBR which principally do not prevent other breeders from building on this new variety, payment is not compulsory. The precise terms of the benefit-sharing provisions in the SMTAs, i.e. “level, form and manner of the payment” will be determined by the Governing Body.370 The Treaty only gives guidance insofar as the payments have to be “in line with commercial practice.”371

The Treaty chooses a multilateral approach to benefit sharing, in which the compensation is not paid directly to the providing State or community, but to a common fund, and where the distribution of the resources in this fund is implemented though PGRFA-related programmes “taking into account the priority activity areas in the rolling Global Plan of Action”, under the guidance of the Governing Body.372 Yet, the Contracting Parties agree that the benefits should flow primarily to farmers,

367 See Art. 13(2).368 See Art. 13(2)(a), (b), (c). Technology transfer, including transfer of elite germplasm developed through the use of PGRFA under the Multilateral System, “shall be provided and/or facilitated [to developing countries] under fair and most favorable terms […] which recognize and are consistent with the adequate and effective protection of intellectual property rights.” See Art. 13.2(b)(i) and (iii).369 See Art. 13(2)(d)(ii). This exemption is subject to review within a period of five years from the entry into force of the Treaty. See Art. 13(2)(d)(ii), 2nd paragraph.370 Currently the Contact Group for Drafting the Standard Material Transfer Agreement is preparing a draft to be adopted by the Governing Body at its first meeting. See above note 357. The draft, which so far shows the controversial issue rather than the envisaged solution, is available via http://www.fao.org/ag/cgrfa/cgmta1.htm, Appendix A to Doc. CGRFA/IC/CG-SMTA-1/05/Rep.371 See Art. 13(2)(d)(ii), 2nd paragraph. It is also stated there that the Governing Body may establish different levels of payment for various categories of recipients who commercialize such products. For a very interesting paper on "Commercial Practice in the Use of Plant Genetic Resources for Food and Agriculture", see SMOLDERS (undated). The paper was prepared at the request of the Secretariat of the CGRFA in order to provide background information to the Contact Group on commercial practice in the use of plant genetic resources for food and agriculture.372 See Art. 13(2), 13(4), 13(5), 18 and ALKER/HEUDHUES (2002), at 78.

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especially in developing countries and countries with economies in transition, who conserve and sustainably utilize PGRFA.373 Whether the provision regarding sharing of monetary benefits can be considered as a “real conceptual break-through” as held by MEKOAUR374 will to a large extent depend on level, form, and manner of the payments to be stipulated in the SMTA and their acceptance by private sector breeders.

IV. Conclusions of part B

The idea of recognizing and rewarding rural and tribal communities by some kind of compensation mechanism, possibly even by IPRs is a relatively new concept. In this respect few obligations can be derived from the CBD and the PGRFA Treaty that have to be observed by India in framing its sui generis law and patent law. Access to genetic resources based on prior informed consent, mutually agreed terms and fair and equitable benefit sharing is presently, in international law, what comes closest to recognizing rights of indigenous and rural communities over their traditional knowledge and over the genetic resources they use and develop. Art. 9(2)(b) of the PGRFA Treaty obliges Contracting Parties to take measures to protect and promote “the right to equitably participate in sharing benefits arising from utilization of [PGRFA]”.

A specific mechanism for implementation of this benefit-sharing concept is only provided for germplasm “under the management and control of the Contracting Parties and in the public domain”. In this case, benefit-sharing obligations are determined by the SMTA to be adopted by the Governing Body. Additional access rules provided by national law stipulating further consent requirements or benefit-sharing obligations would contradict the concept of facilitated access.375 The Contracting Parties are free to determine the status of varieties conserved in situ by farmers.376 In this respect Contracting Parties are only bound by Art. 9 on farmers’ rights, which does not specify any mandatory form of benefit sharing, and by the CBD, which refers this issue to the access legislation of the Contracting States. The CBD sees no contradiction between the obligation of States to provide access to their genetic resources and the attribution of IPRs over different types of plant genetic resources. The ex situ conserved farmers’varieties are a priori in the public domain. It would also seem that a general exclusion of public ex situ collections from the Multilateral System would be against the spirit of the Treaty. A contradiction to the PGRFA Treaty could only be avoided where samples in a public germplasm bank can be traced back to a specific community or farmer and proprietary rights are attributed.

“Conventional” IPRs in plant genetic resources are principally compatible with both treaties. In both cases access is provided while respecting private IPRs.377 Only in exceptional cases of IPRs on plant genetic resources in their naturally occurring form

373 See Art. 13(3).374 See MEKAOUR (2002), at 7.375 See Art. 12.376 See Art. 12(3)(h).377 See Art. 12(3)(f) of the PGRFA Treaty and Art. 16(2) of the CBD.

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may there be doubts whether their grant is in line with the CBD. Under the PGRFA Treaty, it is up to the private natural or legal person to decide whether he/she wants to participate in the Multilateral System, in which case he/she will be bound by the obligation to provide facilitated access and, if he/she accesses material, to conform to the SMTA. As concerns the content of these PBRs and patents, it may be doubted whether the paragraph on farmers’ rights in the preamble amounts to an obligation to recognize the right of farmers “to save, use, exchange and sell farm-saved seed and other propagating material”. The cautious formulation of Art. 9(3) PGRFA Treaty and the principal recognition of IPRs in accordance with international law rather speak against this conclusion. But the binding acceptance of this paragraph by an increasing number of WTO Member States could possibly influence the interpretation of the term “effective sui generis system”.

C. CONCLUSIONS AND OUTLOOK

If India is to respect her obligations under international law, the Indian legislator has to introduce a sui generis system for the protection of plant varieties. This term leaves TRIPS Member States a considerable flexibility, but deviations from the standards of UPOV 1978 need to be thoroughly justified. India further has to provide a minimum patent protection in the field of plant genetic engineering. This patent protection includes protection for breeding processes which are not based on crossing and selection steps as well as protection for proteins, vectors, microorganisms, and parts thereof, including genes, provided they do not fall under the exception for “discoveries”. Neither farmers, nor conventional breeders would in principle have to worry about patent law.

Where patent law has to be granted the margin of the Indian legislator to deviate from the standard definitions of the patenting requirements is restricted. Inventive step, industrial applicability and enabling disclosure may certainly be interpreted in a way to ensure that patent protection corresponds to the technical contribution to the art of the inventor. Certain guidelines could be given by the legislature. The enabling disclosure requirement could, for instance, be interpreted in a way to restrict the use of merely functionally defined claims. But they do not permit excluding those types of biological material generally from protection which have to enjoy patent protection under Art. 27(1) and 27(3)(b) TRIPS Agreement. Although the question explored here is what protection system would be suitable for the needs of the Indian agricultural sector, India’s international obligations will certainly have to be taken into account by the Indian legislature and may be a crucial factor in its decisions in areas where the interests of the country are ultimately a matter of speculation.

Neither the CBD nor the PGRFA Treaty obliges the Contracting States to allocate individual rights to farmers over the plant genetic resources they have developed. Consequently, India is free to implement the concepts of farmers’ rights and of benefit sharing by a system of contributions of germplasm users to a state fund, for instance. However, some constraints for the Indian legislator arise from the fact that the PGRFA Treaty provides for a specific mechanism for the implementation of benefit sharing

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where germplasm is “under the management and Control of the Contracting Parties and in the public domain”.

The issue of whether the TRIPS Agreement conflicts with the commitments of States under the CDB and the PGRFA Treaty has been discussed in detail elsewhere.378 A justification for a non-application or re-interpretation of the TRIPS Agreement standards of patent protection or a harmonisation leading to a lowering of these standards cannot be expected from this argument. The minimum protection standards as provided by the TRIPS Agreement with respect to genetic material do not conflict with sovereign rights of States over their genetic resources or the principle of facilitated access. The CBD principally recognizes IPRs in technology that makes use of genetic resources.379 Therefore facilitated access to genetic resources for environmentally sound uses can not be read to mean that Contracting States are obliged to restrict private exclusive rights over genetic resources. This interpretation is confirmed by the legislative history leading the CBD regime. Even with respect to the term “free access” used in the International Undertaking it was specified that free does not necessarily mean “free of charge”.380 Hence, exclusive rights and facilitated access for sustainable use of genetic resources do in principle not contradict each other. While Art. 16(5) provides for a further dialogue on the impact of IPR on the implementation of the CBD and obliges the Contracting Parties to cooperate to ensure that IPR do not interfere with the Conventions objectives, this obligation is largely restricted by its subjection to existing international and national law.381

Furthermore there are sound arguments for the view that there is no legal conflict between prior informed consent and benefit sharing commitments under the CBD and TRIPS obligations. A mandatory disclosure of origin requirement to be met by patent applications is, according to the view adopted here, TRIPS compliant. And while the TRIPS Agreement may prohibit other potential mechanisms ensuring the respect of the provisions of the CBD (such as a proof of prior informed consent and benefit sharing requirement), there definitely are TRIPS compatible ways for implementing the CBDcommitments.382 The CBD imposes no specific form of implementation.

However, at the political level it can indeed be argued that the situation of two linked issues being regulated in different international treaties with different enforcement possibilities is an unsatisfactory situation.383 Providers of TK and genetic resources depend on international cooperation and globally harmonised protection mechanisms

378 See, e.g. MANGENI (2000), at point 13; BLAKENEY (1999), at 21-22; INTERNATIONAL CHAMBER OF COMMERCE (1999). For a summary of the discussion in the TRIPS Council, see e.g., IP/C/W/368, at 2 et seq.; see further for the view of India IP/C/M/25, para. 89, IP/C/M/24, para. 81, IP/C/W/196, IP/C/W/195.379 See Art. 16(2), 16(3). For the definition of “technology”, see Art. 2 CBD.380 See Art. 5 of Res. 4/89. See also GLOWKA et al. (1994), at 77.381 See GLOWKA et al. (1994), 91.382 The view that granting patent rights over inventions using genetic material does not hinder compliance with the provisions of the CBD with respect to prior informed consent and benefit sharing has also been put forward by the EC. See e.g. EC, IP/C/W/254, IP/C/M/30, para. 143, as quoted by IP/C/W/368, at 3, note 8. 383 See e.g. MANGENI (2000), at point 12.

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just as much as inventors in a global economy depend on harmonised IP standards and enforcement mechanisms in countries of imitators. The international efforts to link both regimes by a disclosure of origin requirement implemented in a legally binding and universal manner, which are now also supported by the EC countries and Switzerland,384 go in the right direction. The additional proposal by India, Brazil and others, suggesting to require evidence of prior informed consent of the country providing the genetic resource and of fair and equitable benefit sharing385 seems to ambitious. As rightly stressed by Switzerland, existing and future national systems of prior informed consent can be expected to differ substantially.386 Similarly, benefit-sharing agreements may take different shapes, as they are tailored to the needs of each individual case. National patent granting authorities in Member States with users under their jurisdiction would find it very burdensome, if not impossible, to establish whether national and contractual access rules have been observed. The solution to problems of international enforcement should rather be sought in the field of international recognition of decisions handed down by the competent authorities of the country of origin.

In any case, the minimum patent protection standards and the obligation to provide for sui generis protection for plant varieties will be untouched by these amendments. Given the firm positions on both sides, a modification of Art. 27(3)(b) is very unlikely. These obligations are therefore an element which definitely needs to be taken into account when framing the Indian plant IPR legislation.

384 See above notes 221.385 See, e.g. doc. IP/C/W/356, dated 24 June 2002, para. 10.386 See doc. IP/C/W/400/Rev. 1, as above note 221, at 8 et seq.

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CHAPTER 3: THE EUROPEAN SYSTEM OF IP PROTECTION FOR PLANT VARIETIES AND PLANT RELATED BIOTECHNOLOGYINVENTIONS

The following chapter will describe the IP protection available for innovations of plant breeders and plant genetic engineers in Europe, explain the policy reasons for its development and outline the views of stakeholders on the success of this system.387

The detailed presentation of the European model seems important in the present context for several reasons: Firstly, the European model may provide orientation marks for the interpretation of the TRIPS Agreement. As pointed out above, it will probably be with reference and in delimitation to this model that the sense of the provisions of the TRIPS Agreement will be established. Secondly, the European system is the birth place of a sui generis system for the protection of plant varieties and additionally excludes plant varieties from patentability. Thus it shows one of the possible options of Art. 27(3)(b) of the TRIPS Agreement in operation. India could possibly draw lessons from the developments in Europe. And finally, it is of crucial importance that the discussion on the effects of a plant variety protection system or plant related patent protection in India is based on a solid understanding of the features of both systems. The analysis of these features will permit to dispel a number of prejudices which sometimes obstruct the debate and distract attention from the actual issues. Describing the way the European patent system deals with biotechnological inventions also permits illustration of the fact that patent requirements and scope of protection or rights conferred can be modulated and framed according to the needs and apprehensions of the stakeholders. The EC Directive on the Legal Protection of Biotechnological Inventions388 (henceforth EC Biotechnology Directive) points in this direction, when it integrates the farmers’ privilege of the plant variety protection regime as an exemption in the patent system.

The broad structure of this chapter is determined by the contours of the European system of plant related IPR protection. Two parallel legal regimes co-exist and apply alternatively, not cumulatively as in the US,389 to different types of subject matter, namely plant varieties and inventions. Plant varieties, i.e. populations of plants which uniformly and stably exhibit a set of morphological and physiological characteristics,390 are protected by a special IP regime, which is based on the features laid down in the aforementioned UPOV Convention.391 While the Community Plant

387 The following analysis focuses on the legal situation in EU Member States. The statements with respect to the European Patent Convention and the UPOV Convention are valid for a larger number of States.388 Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions, see above note 48.389 See Supreme Court of the United States, decision of 10.12.2001 – “ J.E.M. AG Supply, Inc. dba Farm Advantage, Inc., et al. v. Pioneer Hi-Bred International Inc”, GRUR Int. 2002, 355 et seq.390 A legal definition of “plant variety” will be given in point A.II.1.391 See above, note 92.

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Variety Rights system392 follows the model of the UPOV 1991 Act,393 at the national level, a number of EU Members States are either still party to the versions of 1961 as amended in 1972394 or the version of 1978395 or not members at all.396 The 1961 Act being quite similar to the 1978 Act, only the two latest versions of the UPOV Convention will be presented in part A of this chapter.

Inventions, i.e. technical teachings, including those relating to plants or processes for their production, may be protected by patents, unless the technical feasibility of the invention is confined to a particular plant variety or the claimed plant breeding process is “essentially biological.” These exceptions pursuant to Art. 53(b) European Patent Convention (EPC) and corresponding national provisions is the basis of the European model, which in spite of an increasingly restrictive interpretation of these provisions, still keeps certain plant related inventions out of the ambit of patent law. The focus of the presentation in part B will be on the law of the EPC and the EC Biotechnology Directive rather than on the still slightly diverging national laws, except for those issues which are governed by national laws even with respect to European patents.397

In view of the aim to draw lessons from the European experience, the following presentation seeks to combine legal and policy analysis. Part A on plant breeders’ rights (PBRs) puts emphasis on the historical reasons for the introduction of a sui generis system, on the evolution of this system, and its evaluation by stakeholders. Part B on patents addresses a number of concerns raised by critics in respect of “patents on life”, discusses their validity in the European legal context and outlines the legal solutions discussed – de lege lata or de lege ferenda – in the specialized literature.

A. THE PLANT BREEDERS' RIGHTS (PBRS) SYSTEM BASED ON THE UPOV CONVENTIONS

The development of a plant variety generally requires many years of breeding effort and considerable financial investment. Yet, as mentioned the introduction, breeders face a significant appropriation problem.398 Shortly after the beginnings of modern i.e.

392 Two parallel levels of plant variety protection are at the disposal of breeders in Europe: On the one hand, the European Community regime under the Council Regulation on Community Plant Variety Rights (EC 2100/94 of 27 July 1994, OJ L 227/1, publication date 01.09.1994) provides for the grant of a PBR valid throughout the European Community and establishes a Community Office as granting institution. The EU acceded to UPOV on 29 June 2005 (see CPVO (2005)). On the other hand, the national regimes in each country confer PBRs limited to the national territory.393 Available, at http://www.upov.org/en /publications/conventions/1991/content.htm.394 Available at http://www.upov.org/en /publications/conventions/1961/content.htm.395 Available, at http://www.upov.org/en /publications/conventions/1978/content.htm.396 See UPOV (2004). According to this list Belgium and Spain are Parties to the 1961/1972 Act, France, Ireland, Italy, Portugal and Slovakia to the 1978 Act and Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Lithuania, Netherlands, Poland, Sweden and the United Kingdom are Members to the 1991 Act; Luxembourg and Greece are not listed among the Member States. 397 See below point B.V.398 See also below, chapter 4, A.I.1a).

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specialized plant breeding breeders and legal commentators saw a need for an exclusive right of exploitation to the breeder of a new variety in order to secure a reasonable return on their R&D investments.399 At the same time the drafters of national laws and of the UPOV Convention which were mainly agronomists400

considered that there were “special problems arising from the recognition and protection of the right of the creator in this field and particularly of the limitations that the requirements of public interest may impose on the free exercise of such a right.”401

Section I of Part A will explain the background of this citation from the UPOV 1961 Convention by analysing the historical reasons for introducing a special plant-tailored system of protection. The then following sections will present the protectable subject matter (II), the requirements for protection (III), and the rights conferred (IV). In the context of the relevant provisions the criticism and in particular the reasons for the 1991 revision of the UPOV Convention will be addressed, thus permitting a later discussion of their transferability to the Indian situation. Finally, an outline will be given of the overall appreciation of the PBRs system by European stakeholders (V).

I. Motives for the introduction of a special form of protection for plant varieties

The question of whether or not plants can enjoy patent protection has been discussed since the establishment of patent acts in Europe.402 The results of this discussion were far from unanimous.403 The majority opinion which developed in Europe among agricultural experts finally preferred a sui generis regime with particular features, partly for legal reasons and partly for policy reasons.404 Two principal lines of reasoning were invoked for introducing a sui generis system for the protection of

399 See, e.g. the statement of the A.I.P.P.I. at its 25th Congress in Vienna, 2-7 June 1952, speaking even of patent protection or equivalent protection, as quoted in MARX (1952), at 456. For views from the German legal literature see, e.g. PINZGER (1938), at 746; VON DER TRENCK (1939), at 437; MARX (1952), at 456; WUESTHOFF (1957), at 49 et seq.400 See ROYON (2001), at 13.401 Second Recital of the UPOV Convention of 1961. 402 See VAN OVERWAALE (1998), at 143.403 For an overview on the German, Dutch and Belgian debates, see VAN OVERWALLE (1999), at 143 et seq. with references; on the German debate, see further NEUMEIER (1990), at 17 et seq. with references. For a view against patent protection see e.g. VON DER TRENCK (1939), at 437 et seq., SCHMIDT (1952), at 168 et seq.; for the contrary position, see e.g. PINZGER (1938), at 733 et seq.; WUESTHOFF (1957), at 49 et seq.404 In the beginning of the European harmonization process by the UPOV Conventions, protection by patents was still envisaged as one form to fulfill the Convention. See SCHADE (1957), at 328. The ban on double protected stated in Art. 2(1), 2nd sentence left the choice between patent protection and “a special title of protection” to the Member States, a choice which could even be exercised with respect to each botanical genus or species. Yet, there was a consensus that a protection system under the Convention should have particular features, such as the absence of dependency and the examination of the DUS requirements by field trials, which were finally not entirely compatible with patent protection. See NEUMEIER (1990), at 46. The choice for a sui generis system was definitely made only by the coming into force of the EPC which contains in its Art. 53(b) EPC an exclusion from patentability of plant varieties.

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breeding results:405 One concerned the difficulties of patent requirements to accommodate plants (1). The other considered that breeding products might be patentable, but, for policy reasons, advocated a specially tailored system with a scope of protection and rights conferred different from that of patent protection (2). Section 3 provides a short summary of today’s validity of these arguments.

1. Unsuitability of patenting requirements

At the time of the introduction of the plant variety protection system, the capability of new varieties of plants to fulfil certain patenting requirements was indeed very controversial.406 In Germany, for instance, while there had been a large number of –criticized – decisions by the patent office in favour of product and process patents in the area of plant breeding, especially after 1950,407 it was not until the end of the 1980 that a leading court decision confirmed this approach.408 The dominant view tended to consider that breeding results would generally not be eligible for patent protection.409

The debate circled around the following key issues:

a) Living organisms as inventions

Some early decisions of patent authorities and legal commentators raised an objection against the patenting of plant varieties based on their character as living material. The application of patent law to this sphere was considered by a number of legal analysts as going beyond the limits of interpretation of the patent provisions which had been developed for the protection of inventions in the field of inanimate techniques.410 It was further argued that culture methods, breeding methods and breeding products were largely the result of nature’s “work” with minor human intervention and therefore not “technical” inventions.411 This argument was considered in particular with respect to

405 See e.g. the reasons [Begründung] of the German Variety Protection and Seed of Agricultural Plants Act [Gesetz über Sortenschutz und Saatgut von Kulturpflanzen], BTDrs. Nr. 2870, 24.11.1951, at 21/22. See also LANGE (1985), at 88/89.406 In Germany, Belgium, France and Italy patents for breeding inventions had been granted, the Swiss Federal Court had revoked plant patents. The patent practice in Austria and the Netherlands refused protection to plants. See SCHADE (1957), at 327. On the doctrine in Belgium, Germany and the Netherlands, see VAN OVERWALLE (1999), at 143 et seq. 407 See NEUMEIER (1990), at 18 et seq. and 29/30 with references; WUESTHOFF (1957), at 50/51with references; HESSE (1969), at 644 with references. 408 On the development of BGH [German Federal Supreme Court] case law on patenting of living organisms, see NEUMEIER (1990), at 57 et seq. The “Rabies virus” decision of the BGH of 12.02.1987 concerned a microorganism, and admitted for the first time that the reproducibility of the production process could be replaced by making available a multiplyable probe of the organism. See GRUR Int. 1987, 357 et seq. This jurisprudence was considered a breakthrough also for thepatentability of plants. See NEUMEIER (1990), at 59/60, with references. 409 See reasons of the German Variety Protection and Seed of Agricultural Plants Act, as above note 405, at 21.410 See, e.g. VON DER TRENCK (1939), at 439 et seq.; VAN OVERWALLE (1998), at 150/151 with references.411 See VAN OVERWALLE (1999), at 148/149 with references; for references to decisions of the German Reichspatentamt [Patent Office of the German Reich], which denied the technical nature with

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breeding by selection, as the selected first-generation plant was a “product of nature”.412 Patent attorneys tried to overcome this difficulty by claiming only the propagating material derived from this first individual, arguing that the production of propagating material clearly required human intervention.413 It was further rightly argued that selection breeding does lead to a product with new characteristics.414

b) Inventive step of conventionally bred varieties

A further objection put forth against patents for plants was that varieties bred by conventional methods of selection and crossing were generally the result of ordinary artisan and thus would not be capable of reaching the inventive step threshold.415

Whereas some patent proponents argued that realising a technical progress, i.e. providing a new variety with useful characteristics implied meeting the inventive step requirement,416 others acknowledged the possible difficulty of new varieties fulfilling this criterion.417 They argued in favour of the application of the usual measure of inventiveness. It was always possible that the application of the known breeding processes would result in a new goal or an unanticipated effect.418 As in the area of chemical inventions using analogous processes, the inventiveness could be seen in the choice of the specific parents for the cross. Decisions of patent authorities confirmed this approach.419 Nevertheless lack of inventive step was still a recurrent argument in patent proceedings in the 1950s,420 and the inventive step requirement was not interpreted in a way to accommodate all new varieties.

c) Impossibility of description and non-reproducibility

A further obstacle to the patenting of breeding inventions was seen in the difficulty of sufficiently describing a claimed living organism.421 Various commentators pointed out that the description in technical parameters of characteristics such as the taste of a fruit, the smell of a flower, of the baking power of a cereal or the brewing power of barley might raise difficulties.422 Concerning more standard morphological features,

the argument that the success was principally based on the self-acting functioning of the living nature, see NEUMEIER (1990), at 18. For counter-arguments, see e.g. WUESTHOFF (1957), at 52. 412 See WUESTHOFF (1957), at 52. 413 See id., at 52.414 See PINZGER (1938), at 740.415 See VAN OVERWALLE (1998), at 152/153 with references; NEUMEIER (1990), at 20, referring to GISSEL, Oskar, “Patentfähigkeit von Pflanzenzüchtungsverfahren und Pflanzenzüchtungen, Recht des Reichsernährungsstandes 1943“, at 473; BUNDESTAG (1951), at 22. 416 See PINZGER (1938), at 743.417 See e.g. MARX (1952), at 460.418 See VAN OVERWALLE (1998), at 153 with references.419 See e.g. 1st Board of Appeal of the German Patent Office, decision of October 31, 1934, Mitt. 1936, 94 (Saatgut für Tabak), as referred to by HÄUßER (1996), at 331 and 5th Board of Appeal of the Patent Office, decision of September 17, 1958, 61 Bl. f. PMZ 1959, 70 (Rosen). 420 See e.g. the decision of the 5th Board of Appeal of the German Patent Office (Rosen), as above note 419. 421 See VAN OVERWALLE (1999), at 154/155.422 Id., at 154/155.

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the difficulty of describing a breeding product was considered by patent authorities, but generally not seen as obstacle to patenting. In a decision in 1958 for instance, the Board of Appeal of the German Patent Office held that the characterisation of the product of a claimed breeding process for a new rose variety by details such as foliage, average height and colour was sufficient.423 Yet, in the following decades, the description of a claimed living organism in words and pictures continued to be an issue. In numerous decisions, the European Patent Office just as national granting authorities and courts had to deal with cases where the description of the invention by its composition, its structure or other testable parameters was impossible. To solve this problem, the Boards of Appeal of the EPO and the German Federal Supreme Court allowed for product-by-process claims under certain conditions.424

The German debate on the patenting of living organisms focused on the issue of reproducibility.425 Patent law requires, either as aspect of the invention concept, of the requirement of industrial applicability or of the requirement of sufficient disclosure,426

that the written description enables someone skilled in the art to carry out the invention, i.e. to arrive repeatedly at the same result as the inventor. In the sphere of unanimated nature this means that the skilled person must be able to repeat the process that led to the production of the claimed item. The opposite positions of the controversy which took place in other European countries also, can be summarized as follows:427 Those who favoured a strict interpretation of the reproducibility requirement pointed out that the classical breeding process used in the production of a plant variety is not repeatable.428 In the framework of an economically realistic breeding program, it is indeed improbable that a repetition of an initial cross will produce the same genotype as has occurred in the initial cross. On the other hand, it was argued that the strict application of the reproducibility requirement did not make sense in the context of plant breeding, as the concerned breeding results were self-

423 Decision of the 5th Board of Appeal of the German Patent Office (Rosen), as above.424 See e.g. German Federal Patent Court [BPatG], decision of 5 April 1978 - “Lactobacillus bavaricus”, GRUR 1978, 586, 587; German Federal Supreme Court [BGH], decision of 30.03.1993 -“Tetraploide Kamille”, GRUR 1993, 651, 655. For the jurisprudence of the Technical Boards of Appeal of the EPO, see e.g. T 150/82 (Claim categories/IFF), point 7 et seq. of the reasons; T 248/85 (Radiation process/BICC), point 3 et seq. of the reasons; T 320/87 (Hybrid plants/LUBRIZOL), point 3 of the reasons; T 130/90, (Recombinant monoclonal antibodies/THE BOARD OF REGENTS, TEXAS), point 3.3 of the reasons.425 See NEUMEIER (1990), at 108.426 In Belgium and Germany, it was first seen as an element of the industrial applicability requirement and of the concept of invention as a technical teaching. In the United States it is considered in the context of the disclosure requirement. See VAN OVERWALLE (1999), at 157 et seq. On the dogmatic nature of this requirement, see also NEUMEIER (1990), at 108/109.427 See also VAN OVERWALLE (1999), at 157, on the Belgium doctrine; NEUMEIER (1990), at 21 on the German doctrine. 428 See e.g. VON DER TRENCK (1939), at 441 et seq. It should be noted that, while description in technical parameters and reproducibility are an issue with respect to plant varieties, plant related biotechnological inventions are usually defined by one or a few characteristics, not their entire genotype. They can be defined in technical terms by the gene construct they are containing, and a reproducible process for their production can generally be described.

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reproducing.429 Thus breeders or seedsmen would never consider working the invention by repeating a decade-long breeding process, where additional “copies” of the first specimen can be obtained by simply using multiplication via sexual or asexual reproduction. Yet, the view that the theoretical probability of a repetition should be sufficient was only reluctantly accepted by the German Patent Office.430 In the doctrine, this view was criticised with the argument that the aim of the disclosure requirement was to assure the permanent availability of the invention especially after the expiration of the patent, which was not assured if one relied only on multiplication for the production of the invention.431

At the time of the drafting of the UPOV Convention this issue was still unsettled. While a Board of Appeal of the German Patent Office had held in 1958 that the theoretical possibility of repeating the invention was sufficient,432 this approach was reversed in 1969 by the famous “Red dove” decision of the German Federal Supreme Court which required again that a person skilled in the art must be in a position of reproducing the breeding process even if the result of such breeding can propagate itself.433 The difficulties of plant breeding processes and products in meeting this requirement were illustrated by the decision “Usambara-Veilchen”, where the Federal Patent Court considered that the breeding process was not repeatable with a causally anticipatable genetically identical breeding result.434 For micro-organisms, the problem of lack of reproducibility was finally solved by allowing the replacement of the strict repeatability requirement by the deposit of a multipliable sample of the claimed material in a recognized depositary institution.435 However, in the decision “Tetraploide Kamille [Tetraploid Camomile]”, the Court left the question open whether or not the deposit mechanism should be extended to the field of plant inventions and merely pointed out that there was no obligation to deposit plant material if the product invention was sufficiently described by its process.436

429 See e.g. WUESTHOFF (1957), at 53; KIRCHNER (1951), at 573; PINZGER (1938), at 739; MARX (1952), at 458.430 See e.g. WUESTHOFF (1957), at 53 and NEUMEIER (1990), at 110 with references. 431 See VON DER TRENCK (1939), at 442. In the same vein HESSE (1969), at 649.432 5th Board of Appeal of the German Patent Office (Rosen), as above note 419. The Board considered a theoretical possibility to repeat the process with the same result as sufficient, which was automatically assumed in the absence of findings or arguments that make the repetition of the process appear impossible. 433 See BGH [German Federal Supreme Court], decision of March 27, 1969 - “Rote Taube”, 1 IIC 1970, 136. 434 See BPatG [German Federal Patent Court], decision of 16.10.1973, Bl. f. PMZ 1974, 203, as cited in NEUMEIER (1990), at 111. 435 See BGH, decision of February 12, 1987 - “Rabies Virus”, 18 IIC, 396; see also R. 28 of the Implementing Regulations to the EPC. 436 BGH (Tetraploide Kamille), as above note 424, at 655.

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2. Unsuitability of the scope of patent protection and the rights conferred

Further objections against the application of patent law to plant breeding inventions were based on the view that the scope of patent protection was not adapted to the particularities of living matter and especially the field of plant breeding.

a) The principle of dependence

The question of whether or not protected plant varieties should be freely available as germplasm source for other breeders or whether the latter should have to seek the authorization of the breeders of these protected varieties for their use in a breeding program has received particular attention during the International Conference on the Protection of New Varieties of Plants in 1957 in Paris.437 A consensus emerged that the principle of dependence of conventional patent law was not adapted to the relationship between breeders.

The importance of this issue which remains the major difference between plant variety and patent protection was also reflected in the controversial discussion in the legal doctrine. Patent proponents argued that pioneering plant inventions may still have little deficiencies the first time and may thus be doubled and replaced by competitor varieties principally based on the pioneering effort.438 Opponents439 invoked the reasoning which is still advocated by UPOV circles,440 commentators441 and by plant breeders themselves442 today: The hereditary elements used in conventional plant breeding pre-exist in other varieties, landraces or wild species. At least if only crossing and selection steps are involved, breeders do not create variation. The performance of the breeder is generally seen in the unique “mixture” of the new genotype he assembles, in the specific recombination of favourable traits in one variety.443 A widespread use of patenting in the area of breeding would lead to a confusing network of patent dependency, which could slow down breeding progress.444 It was argued that more than in the industrial sphere, technical advance in the seed sector was reliant on the access of breeders to a broad range of germplasm, including the latest

437 See SCHADE (1957), at 328.438 See WUESTHOFF (1957), at 55; see also PINZGER (1938), at 746, and MARX (1952), at 459, who both consider that dependence is justified where the breeder of the new variety builds on a previous breeding invention, without however discussing the specificities of plant breeding, which usually involves the use of multiple parents. 439 See, e.g. SCHMIDT (1952), at 175.440 See, e.g. WIPO (1997), at 458/459, para. 27.17.441 See ,e.g. RANGNEKAR (2003), at 90/91.442 See, e.g. DEPREZ (2002), at 3/4. See also LANGE (1996), at 587; LANGE (1993b), at 802. LANGE represents the most important German breeding firm, KWS.443 See LANGE (1996), at 586.444 See SCHMIDT (1952), at 175.

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innovations.445 The starting point for the development of a new variety is in fact the progress achieved and embodied in recently developed varieties.446

b) Farm-saved seed

Commentators opposing the application of patent law to plant breeding inventions emphasized the different treatment that certified seed and farm saved seed received in law and in commerce.447 They argued that product patent rights might even cover the production of grains and of seed for one’s own holding, an effect which would lead to an “intolerable situation”.448 Even advocates of plant patents generally sought for solutions to attenuate the effects of patent rights in the relationship to farmers.449 There seems to have been a wide consensus that the main purpose of IP protection of plant varieties was to protect breeders against the competition by other professionals in seed production. The fact that farmers were generally not regarded as competitors in seed supply has to be seen against the background of seed laws already in place. The German legislation, for instance, prohibited the commercialisation of seeds other than certified material of varieties figuring in the National Listing.450

c) “Monopolies on food”

ROYON reports that breeders had requested a protection that would cover the “propagation, use and sale of the variety”, but that experts in the preparatory conferences had unilaterally and wrongly decreed that “what breeders were interested in was to be able to exercise control over the propagation of the reproductive organs.”451 This proposition of breeders would have led to a scope of rights similar to patent protection, meaning in particular that harvested products, such as grain and fruits, would have been covered. Yet, a strong opinion still considered that a monopoly

445 Id.; see also DESPREZ (2002), at 3/4.446 See WIPO (1997), at 459; LANGE (1996), at 587. See also ADCOCK (2001), at 42 et seq., reporting on the preliminary results of a survey among European breeding companies from France, Germany, the Netherlands and UK. The endeavour of breeders to frequently up-date their material, especially the advanced material, is also illustrated by a CIMMYT study covering 52 countries which gives an interesting insight into the germplasm use pattern of scientists working in wheat breeding programmes and shows that they use advanced genetic material more often than other types of germplasm in their crosses. The percentage of material replaced in the crossing blocks each season amounts to 41%, of which 72.3% are released varieties and advanced lines. Almost 39.7% of the parent material entered in their crossing blocks (nurseries that contain the active parental stocks that breeders use in their crossing programmes) were own advanced lines, 17.4% released varieties, 18.6% material from CIMMYT international nurseries, 11.0% advanced lines from other countries, only 7.5% landraces (from local or foreign origin) and only insignificant 0.8% were wild species. See REJESUS et al. (1996), at 129 et seq.447 See e.g. SCHMIDT (1952), at 173/174.448 See id.449 See PINZGER (1938), at 740, who holds that a farmer purchasing seed of a patent protected variety may use it for the production of propagating material for his own holding, this being compatible with the interests of the patent holder. 450 See SCHMIDT (1952), at 170. On the similar French legislation, see NEUMEIER (1990), at 31.451 See ROYON (2001), at 13.

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on food could “for obvious reasons” not be granted.452 The extension to harvested material sold for consumption purposes being controversial, the compromise retained in the Convention provided for a special regime for ornamental plants453 and left the option to Member States to grant more extensive rights to breeders regarding certain botanical genera or species.454

3. Validity of these arguments today

a) Patenting requirements

From a legal point of view only few arguments against the general patentability of plants or plant breeding processes remain valid today. The principal applicability of patent law to living organisms has been repeatedly confirmed by the national and European legislator. The product of nature-objection will generally not apply, as breeding programs largely comprise a sophisticated sequence of selection and crossing steps where little doubt remains as to the decisive nature of human intervention for the result. Only in instances where the activity of the breeder is strictly limited to selection, may the argument still have some merit.

Similarly, there is no principle obstacle which prevents breeding inventions developed by conventional breeding techniques from meeting the inventive step requirement. Yet, patent practice in Germany shows that a certain threshold for inventiveness is sought to be maintained. Aspects of the invention from which inventiveness can be derived are to be found, for instance, in a more recent ruling by the German Federal Supreme Court.455 Acknowledging that the used breeding process of rendering a camomile plant tetraploid as such was not inventive, the court invited the Federal Patent Court to examine whether the increased contents of two active substances which characterized the invention was surprisingly high, whether the inventiveness could result from the combination of all characteristics, or whether a plant grouping could be regarded as inventive, because it is the result of a systematic, lengthy and complex breeding process.456 According to this approach, not every new variety qualifies for patent protection.457 Yet, legal commentators have proposed the view that, where a variety was not suggested in prior art, any new combination of characteristics should be regarded as inventive.458 This would be a possible way to accommodate plant varieties in patent law, but might have to face the critic of coherence with the threshold applied in other areas.

452 See SCHMIDT (1952), at 170 and the reference therein.453 See Art. 5(1), 2nd sentence of the UPOV 1961 Act.454 See Art. 5(4) of the UPOV 1961 Act.455 See the aforementioned decision of the BGH (Tetraploide Kamille), as above note 424, at 654.456 See id.457 Many legal commentators therefore see the difficulty of plant varieties in meeting patenting requirements as an argument in favour of a PVP system. See NEUMEIER (1990), at 90; LANGE (1993b), at 802; WILLNEGGER (2003), at 820.458 See CLAES (2001), at 13.

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The “impossibility of description”- argument is still discussed in current legal doctrine, but is rejected.459 NEUMEIER rightly points out that a scientifically exact description of the structure and all characteristics of the claimed plant, even of those features without practical relevance for agriculture, is not necessary for patenting purposes.460

Similar to the above cited decision of the German Federal Supreme Court, he holds that it is sufficient to unambiguously identify the claimed plant by physical or chemical parameters, or if this is not possible, by the process used to make it. Yet, if protection is to be limited to the plant variety which is actually made available by the breeder and not to closely resembling populations, the establishment of infringement merely on the basis of a written description and possibly drawings or photographs poses a serious challenge. It is not without reason that the plant breeders’ rights system has recourse to growing tests. Even the US approach which relies on written descriptions for the initial granting decision, uses field trials carried out with material deposited at the time of application in case of a legal dispute on infringement. But there would be no inherent contradiction between the patent system and some kind of deposit mechanism allowing eventually for field trials to establish the exact identity of the protected variety. In contrast to plant varieties, plant biotechnological inventions can be mostly described in technical parameters as they do not concern the entire genotype but precise genetic elements, i.e. mostly DNA molecules which can be defined by their chemical structure or functional features.

The issue of reproducibility of breeding innovations may have lost some of its significance by the technical advances made in the area of plant breeding in the last decades.461 New methods of marker added selection, gene mapping etc. permit a better understanding and control of biological structures and processes. Nevertheless, maintaining a strict application of the reproducibility requirement would be an obstacle to the patenting of plant varieties. While current patent practice shows that a plant related invention characterised by a few outstanding features can be carried out by a person skilled in the art, the situation is different where the aim is to protect plant varieties defined by their genotype or combination of genotypes. Repeating a breeding process with exactly the same genotypic result is highly improbable. The more characteristics are included in the description of the protected plant grouping, the narrower the future exclusive rights will be, and the more difficult it becomes to fulfil the reproducibility requirement. On the other hand a strict reproducibility requirement is not an intrinsic condition of patent protection. The function of disclosure, which is to make the invention available to the public as quid pro quo for the granted exclusive right can indeed be guaranteed by the self-reproduction of the claimed invention combined with a deposit mechanism.

459 See NEUMEIER (1990), at 114 et seq.; VAN OVERWALLE (1999), at 183 with references in note 173.460 See NEUMEIER (1990), at 114 et seq.461 See also NEUMEIER (1990), at 108.

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b) Scope of patent protection and rights conferred

The argument that breeding new varieties is a cumulative activity using mainly existing genetic variation is still valid today. Yet, it should be noted that the above reasoning which led to rejection of dependency between plant varieties was developed in a context of conventional breeding, where all breeder principally disposed of the same techniques and the same limited possibilities to increase variation by mutation techniques. The situation is more complex in the case of plant biotechnology. Of course, the basic elements, i.e. the genes, pre-exist in nature. But by breaking down the barriers of natural mating and transferring DNA from one species or even genus to another the genetic engineer increases the variability available to conventional plant breeders within one species. This particularity should not be ignored when designing the protection for recombinant DNA inventions. Moreover, the new technology of genetic engineering make cosmetic breeding easier, as they facilitate the insertion of specific traits in an existing variety and thus shorten breeding cycle time.462 This has strengthened the arguments against the absence of any principle of dependence. Yet, as will be seen below, even in the 1991 revision process there was a consensus that this fundamental difference to the patent system needed to be maintained, even though it was softened by the introduction of the concept of essential derivation.

Besides the emergence of genetic engineering, another development has impacted the changing shape of the UPOV system. In industrialized countries, public sector breeding programs were privatized on a large scale.463 This has certainly given more weight to the views and needs of the private seed sector in the UPOV forum. At the same time, the policy considerations which led to the introduction of the farmers’ privilege have lost some of their significance in Europe where farming is more and more considered to be an economic activity like any other. As a result in the 1991 Act, the farmers’ privilege was considerably restricted. The position of breeders has also been strengthened by an extension of their rights to harvested material under certain conditions. The aim of these modifications was to improve appropriability of returns from new varieties and thus increase incentives for private sector investment.464

c) Conclusion

Going through the requirements of protection shows that without the statutory exemption of plant varieties under Art. 53(b) EPC and corresponding national provisions, there would be no legal obstacle which generally bars plant innovations from patent protection. Patent law can be adapted to innovations in the area of plant breeding, including conventionally bred varieties, even though the current threshold of inventiveness might not be able to accommodate every contribution to breeding progress that seems worthy of protection. A system which also protects plant varieties defined by their specific combination of characteristics would therefore be conceivable, if the inventive step requirement was adapted and description was

462 See SAGE (2001), at 5.463 See id., at 5/6.464 See also SRINIVASAN (2001), at 105 et seq.

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supplemented by a deposit of samples. Out of the historical arguments in favour of a sui generis system, it is therefore the policy arguments for a special scope of protection and of the rights conferred which will play the most important part in the analysis of the options available to the Indian legislator.

II. Protectable subject matter: Plant varieties

1. Definition of plant variety

The legal definition of plant variety has changed over time, but the basic criteria are imposed by the function of the plant breeders’ right: 465 Only a multiplicity of plants, which can be identified and distinguished from other plant groupings, can be protected since enforcement requires that the identity of the plant material to which the rights are attached can be established beyond doubt. Consequently, it must be possible to give a standard description of the protected plant material based on a set of – traditionally –morphological and physiological characteristics. This also means that variation displayed by the component individuals of the grouping must remain within reasonable limits. The identification of the protected plant material also requires that it retains its distinguishing features from one generation to the next.

According to the definition in the 1961 Act466 “the word ‘variety’ applies to any cultivar, clone, line, stock or hybrid which is capable of cultivation and which satisfies the provisions of subparagraph (1)(c) and (d) of Art. 6.” The latter specify that “(c) [the] new variety must be sufficiently homogeneous, having regard to the particular features of its sexual reproduction or vegetative propagation” and that “(d) [the] new variety must be stable in its essential characteristics […]”. Thus the definition of “variety” was almost synonymous with the eligibility criteria for protection, with the sole difference that a protectable variety has to be commercially novel and distinguishable from any other variety commonly known.467

When reframing the definition for the 1991 Act,468 the Contracting States felt that there should be a clear distinction between the variety definition and a variety eligible for the grant of PBRs. One major reason for this was to ensure that a variety which does not reach the level of uniformity necessary for PBRs protection, but still can be regarded as an identifiable unity, may be taken into consideration for the purposes of distinctness.469 The new definition was framed as follows:470

465 On this necessity to establish “the identity for a unit of plant material to which breeders’ rights are to attach” and on the development of the definition of “plant variety”, see GREENGRASS (1991), at 407; WIPO (1997), at 456, para. 27.10 and 462/63, para. 27.37 et seq.; on the plant variety definition in the context of EPO case law see BLÖCHINGER (2000). 466 See Art. 2(2).467 See Art. 6(1)(a) and (b) of the 1961 Act.468 The variety definition was omitted in the 1978 Act and no consensus for a new concept was found during this revision.469 See WIPO (1997), at 462, point 27.38.

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“‘variety’ means a plant grouping within a single botanical taxon of the lowest known rank, which grouping, irrespective of whether the conditions for the grant of a breeder’s right are fully met[471], can be - defined by the expression of the characteristics resulting from a given

genotype[472] or combination of genotypes[473],- distinguished from any other plant grouping by the expression of at least one of

the said characteristics and- considered as a unit with regard to its suitability for being propagated

unchanged;”

These elements closely resemble the criteria uniformity, distinctness and stability respectively “but were considered to set these requirements at a lower level than that necessary for protection.”474 This gradual difference between the distinctness, uniformity and stability (DUS) necessary for determining the identity of a variety and the technical criteria applied in the DUS-test for variety protection will play a crucialrole for the protectability of landraces by IPRs.475

2. Limitation to certain genera and species under the 1978 Act

The protection which has to be conferred by Member States of the UPOV Convention476 potentially covers all plant varieties, which are distinguishable/distinct477 from other plant groupings, sufficiently homogenous/uniform478 and stable479. All these terms will be explained in section II. There is, however, an important limitation to this principle in the 1978 Act. It does not require its Member States to protect plant varieties of all genera and species. The Contracting Parties only undertake to apply the Convention to a minimum of five genera when the Convention enters into force in their territory, and to progressively extend the protection to the largest possible number of botanical genera and species, with a minimum of 24 genera or species to be covered after eight years.480 The reasons for this provision have already been addressed in the context of the interpretation of Art. 27(3)(b) TRIPS

470 This definition was also restated in Art. 5.2 of the Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights. 471 Emphasis added. 472 This is the case, for instance, in a population composed of clones, or of F1 hybrids, or in the case of a line. 473 Synthetic varieties and open-pollinated varieties comprise different genotypes. 474 See GREENGRASS (1991), at 407; WIPO (1997), at 462, point 27.39.475 See below chapter 7, D.I.1 and E.I.1.476 See Art. 1 and 30(3) of the 1978 Act and Art. 2 of the 1991 Act. 477 See Art. 6(1)(a) of the 1978 Act and Art. 7 of the 1991 Act. The use of a slightly different terminology in the 1991 Act has not changed the substance.478 See Art. 6(1)(c) of the 1978 Act and Art. 8 of the 1991 Act. The use of “uniformity” instead of “homogeneity” in the 1991 Act again does not change the meaning of the criterion.479 See Art. 6(1)(d) of the 1978 Act and Art. 9 of the 1991 Act.480 See Art. 4 of the 1978 Act. Most Member States to the 1978 Act protect all species of economic importance in their countries. See WIPO (1997), at 459, para. 27.19.

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Agreement.481 The shortcomings of this approach have led to its review in the 1991 revision process, with the result that under the 1991 Act, current Member States of the UPOV Convention were obliged to protect all genera and species five years after becoming bound by the Act, and new Member States were required to do the same ten years after their accession to the Convention.482

III. Requirements for protection483

A plant grouping that constitutes a plant variety in the above sense is eligible for a UPOV-type plant variety protection when a set of five substantive requirements are fulfilled.484 The three agritechnical criteria, namely distinctness, uniformity and stability (DUS), have already been mentioned above. Furthermore, a variety has to be commercially new and must be given a denomination.485

The criteria to be satisfied by a variety in order to qualify for protection have basically remained the same in both Acts presented here. While sporadic criticism has been voiced against the uniformity and stability criteria, these opinions remained minority views and, in particular, did not gain general acceptance in breeders’ circles. In the 1991 revision process substantive amendments of these requirements have played virtually no role.486 The more recent issue of “biopiracy” was not yet in public focus at this time. Only the threshold of innovation determined by the distinctness criterion had been subject to debate.487 These arguments, however, have not been taken into account by a review of the protection requirements but by the introduction of a special concept of dependence. Thus, even though there have been various changes in the language of the relevant provisions, there was generally no intention to change the substance.488

The criticism of the protection requirements will nevertheless be outlined here, as this discussion may be of interest when lessons are drawn from the European experience for India.

481 See above, chapter 2, A.I.3.482 Art. 3 of the 1991 Act. This has implications for the examination of the application. Member States will be forced to rely much more on the results of growing tests which have already been carried out by the breeder himself or by other Member States, as they will be obliged to protect varieties which cannot be grown on their territory for climatic reasons.483 Detailed presentations of these requirements can be found in TRITTON (1996); GREENGRASS (1991), at 468; WIPO (1997), at points. 27.10 – 27.13 and 27.45 – 27.53.484 See Art. 6(2) of the 1978 Act; Art. 5(2) of the 1991 Act. 485 On the last criterion, see Art. 13 of the 1978 Act and Art. 20 of the 1991 Act; for a short explanation see WIPO (1997), at 457, para. 27.12. 486 See e.g. UPOV Docs. CAJ/XIX/4, Annex IV, V, VI; CAJ/XIX/8; CAJ/XIX/9; CAJ/XIX/11, at 6; CAJ/XX/5, at 13 et seq.; CAJ/XXII/2, at 12 et seq.; CAJ/XXII/8, at 11; CAJ/XXIII/2, at 21/22; CAJ/XXV/2, at 16 et seq.; CAJ/27/8, at 8/9.487 See e.g. UPOV Doc. CAJ/XVIII/3; IOM/I/11, at 3 et seq; IOM/II/8, at 8 et seq.; IOM/III/6, at 19 et seq. 488 See WIPO (1997), at 464, point 27.45.

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1. Distinctness

a) Definition

Art. 6(1)(a) of the 1978 Act frames the distinctness requirement, which has also been referred to as agritechnical novelty,489 as follows:

“Whatever may be the origin, artificial or natural, of the initial variation from which it has resulted, the variety must be clearly distinguishable by one or more important characteristics from any other variety whose existence is a matter of common knowledge at the time when protection is applied for.”

Accordingly, the UPOV Convention does not require that the protected plant material stems from a variation obtained by humanly directed hybridization. The variety could also be the result of a selection from material of natural origin that the breeder has discovered.490 But, the existence of a similar variety anywhere in the world is, to speak in terms of patent law, “novelty-destroying”, if it is a matter of “common knowledge.” The factors to be taken into account to establish common knowledge, as laid down in Art. 6(1)(a), 2nd sentence, include “cultivation or marketing already in progress, entry in an official register of varieties already made or in the course of being made, inclusion in a reference collection or a precise description in a publication.”

Art. 7 of the 1991 Act retains the principles of Art. 6(1)(a) of the 1978 Act, but contains two interesting clarifications. The non-exhaustive list of factors to be considered in order to establish common knowledge has been omitted, as it confusingly included cases that do not constitute common knowledge in the normal sense.491 The examples given in UPOV Document No. TG/1/3 which serves to harmonize the examination of DUS, show that there was no intention to broaden the meaning of common knowledge.492 Moreover, in the definition of distinctness the

489 See BYRNE (undated), at 23.490 See also the definition of breeder in Art. 1(iv) of the 1991 Act of the Convention: “‘breeder’ means – the person who bred, or discovered and developed, a variety, […].” On its web-site, UPOV emphasizes that a mere discovery does not entitle the person to protection, because ‘development’ is necessary. See UPOV (2002b), at 5 of 13. However the UPOV Doc. C(Extr.)/19/2 Rev, Annexe, at 4, specifies that development simply means the process of reproduction, multiplication and evaluation. Depending on the reproduction features of the variety more or less breeding will be necessary to obtain a uniform and stable variety.491 GREENGRASS (1991), at 468, points out that an entry in an official register already made or in the course of being made is not a case of common knowledge in the normal sense as the information may not be available to the public. Instead, sentence two now clarifies that the filing of an application for the granting of a breeders’ right or for the entering in an official register of varieties is deemed to render that variety a matter of common knowledge only if the application is successful. According to GREENGRASS, the idea is to avoid “that the system becomes cluttered with large numbers of ‘varieties’ which were the subject of applications which have been refused or withdrawn and which no longer exist once they have been discarded by their breeders.”492 “Specific aspects which should be considered to establish common knowledge include, among others: (a) commercialisation of propagating or harvested material of the variety, or publishing a detailed description; (b) the filing of an application for the grant of a breeders’ right or for the entering

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previous reference to “one or more important characteristics” has been removed.493

The term “important” was considered to be ambiguous, as it was frequently understood by non-experts as meaning that the distinctive feature has to relate to commercial value or agronomic merit.494

Traditionally characteristics which serve to establish distinctness are morphological and physiological characteristics. Examples for such characteristics are plant growth habit, coloration of the auricles of the flag leaf, time of ear emergence, stem length, presence of awns or scurs, grain colour or resistance to pest and diseases.495 All these features have in common that they are visual characteristics, which can be evaluated in growing trials. Characteristics which require chemical analysis of the plants seem to be taken into account more reluctantly.496 While some chemical features have been integrated into the range of criteria assessed by PVP granting authorities,497 others are not.498 WILLNEGGER points out that breeders have, for instance, no possibility to get protection based on the oleic acid content of rape, maize or soybean varieties.499

b) Criticism of the low threshold for protection

When the German legislator introduced a system of plant variety protection in 1953, it contained the additional protection requirement of having “value for cultivation and use”.500 It was argued that the public participation in the costs for establishing novelty and stability could only be justified where the applied for varieties had such value.501

of a variety in an official register of varieties, in any country, […]; (c) existence of living plant material in publicly accessible plant collections.” See TG/1/3, at 13, point. 5.2.2.493 Art. 7, 1st sentence, of the 1991 Act reads as follows: “The variety shall be deemed distinct if it is clearly distinguishable from any other variety whose existence is a matter of common knowledge at the time of the filing of the application;”494 See TG/1/3, at 9, point 4.2.2; GREENGRASS (1991), at 468; and WIPO (1997), at 465, point 27.49.495 For further examples of morphological characteristics, see e.g. UPOV Doc. T/3/11 + Corr., at 9 et seq.; on the conditions for taking into account a characteristic based on response to external factors, UPOV Doc. TG/1/3, at 11, point 4.6.1. 496 However, it is interesting to note that, according to Joël GUIARD, Directeur Adjoint, GEVES (Group d’Etude et de Controle des Varieties Vegetales et des Semences, France), there is no principle obstacle to using the expression of a chemical in a plant to establish distinctness. See SIBLE (2000b), at 8.497 See WILLNEGGER (2003), at 816, referring to the sugar content of sugar beet, and at 816, referring to the eruca acid content of rape grains. 498 See e.g. the two examples given by CHLÖDWIG (2001), at 12 et seq.499 See WILLNEGGER (2003), at 815 et seq. On the reluctance of granting authorities to base distinctness on a chemical characteristic, see also the statement of F. CHLÖDWIG as quoted in SIBLE (2000b), at 7/8.500 The German term is “landeskultureller Wert”.501 See BUNDESTAG (1951), at 23.

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Stakeholders and commentators have criticized the absence in the UPOV system of any test as to the agronomical merit of a variety before the grant of a breeders’ right.502

RANGNEKAR argues that the inclusion of additional criteria of nutritional or agronomic value to raise the threshold for distinctness could provide a disincentive to breeders to flood the market with near-identical varieties.503 Likewise, breeders criticized the low threshold of protection in the 1978 Act which permitted “slavish imitation” of a protected variety under the sole condition that there is at least one clear difference in one characteristic, even if it is of no concern to the customers of the varieties concerned.504

While the issue of introducing the consideration of “value for cultivation and use” into the conditions for protection was discussed in the 1980s,505 the majority view in UPOV circles was that the worth or merit of a variety varies with time and environment and therefore is not suitable as a requirement for the grant of protection in an international IPR system.506 In fact, the absence of a merit test or some requirement of inventiveness reflects a political compromise wherein such qualities were left to be determined by the market and later through separate regulation in National Listings.507

An important consideration also is that the UPOV tests as they currently exist are easy to administer and not too costly.

The problem of “cosmetic breeding” or “slavish imitation” was addressed in the 1991 Act by introducing a (weak) form of dependence rather than by preventing the registration of close varieties.508 Notwithstanding, some breeders continue to raise concerns about the practice in establishing distinctness requirement using ever smaller minimum distances.509 Further, the difficulty to manage the increasing number of protected varieties in reference collection should also be mentioned in this context.510

502 IFAP (International Federation of Agricultural Producers), for instance, held that “the plant breeder should be granted a right for developing new varieties which show an improvement over existing varieties […]”. See IOM/IV/8, Annex, at 4.503 See RANGNEKAR (undated), at 39; see also LESKIEN/FLITNER (1997), at 50/51. 504 See e.g. the statement of CIOPORA (International Community of Breeders of Asexually Reproduced Ornamental Varieties), UPOV Doc. CAJ/XIX/4, Annex IV, at 3; UPOV Doc. CAJ/XVIII/3, at 5, para. 14. See also Annex I of UPOV Doc. CAJ/XVIII/3 reproducing a statement by DONNENWIRTH from the International Association of Plant Breeders (ASSINSEL) who suggests to grant protection “based on the assessment of the balance between similarities and differences”.505 See, e.g. UPOV Doc. CAJ/XVIII/3, at 1.506 See WIPO (1997), at 465, para. 27.49. 507 See RANGNEKAR (undated), at 38, note 26.508 See, e.g. LANGE (1993a), at 138, who emphasizes that essentially derived varieties can be protected by PBR which can be enforced against third parties.509 See GUIARD (2001), at 18.510 On this point see DESPREZ (2002), at 5.

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c) The role of chemical and DNA characteristics

As mentioned earlier, experts argued that chemical characteristics are not more systematically taken into account for establishing distinctness.511 This raises problems in particular for plants used in the pharmaceutical sector, but more generally where a breeding programme focuses on secondary plant products. However, the present situation seems to be more an issue of practice than a conceptual problem. Pursuant to UPOV Document No. TG/1/3, characteristics based on chemical constituents may be accepted provided they fulfil a number of criteria that characteristics used as basis for DUS testing have to meet.512 It is of particular importance for chemical characteristics to be well defined and that an appropriate method is established which will ensure consistency in the examination.513

A development which puts into question more fundamentally the current concept of distinctness based on a characteristic by characteristic comparison is the possibility to characterize plants not only on a phenotypic level but also on a molecular level, i.e. by their DNA profile. The adoption of molecular biology techniques in the determination of distinctness is looked on with suspicion by breeders. The concern has been raised that the integration of such characteristics might end up in a weakening of the PBR, because the instrument for assessing distinctness becomes so refined that minor differences may suffice.514 At the same time, some stakeholders see the integration of this technique in the long run as inevitable to match the technological development in breeding stations and keep the costs of the PVP system down.515

d) The reproach of facilitating “biopiracy”

In recent years, the distinctness requirement has brought UPOV the reproach of facilitating biopiracy.516 Unfortunately, debates touching upon the issue of farmers’ varieties appropriated via IPR by professional breeders tend to be unnecessarily polemical and undifferentiated.517 In many cases the problem does not lie at the legal

511 See WILLNEGGER (2003). However, the author advocates the use of biochemical quality features only in specific cases, where the quality characteristic has “landeskulturellen Wert” [value of use and cultivation]. Id., at 819/820.512 Their expression must (a) result from a given genotype or combination of genotypes; (b) be sufficiently consistent and repeatable in a particular environment; (c) exhibit sufficient variation between varieties to be able to establish distinctness; (d) be capable of precise definition and recognition; (e) allow uniformity requirements to be fulfilled; (f) allow stability requirements to be fulfilled, meaning that it produces consistent repeatable results after repeated propagation or, where appropriate, at the end of each cycle of propagation. See UPOV Doc. TG/1/3, at 9, point 4.2.1.513 See id., at 11, point 4.6.2.514 See SIBLE (2000b), at 20; WILLNEGGER (2003), at 819; GUIARD (2001), at 20.515 See Joël GUIARD as quoted in SIBLE (2000b), at 7; DESPREZ (2002), at 5. See also the favourable position of the British Society of Plant Breeders in UPOV Doc. CAJ/XIX/9.516 See, e.g. RAFI (1998).517 The above cited RAFI statement refers to a scandal, where Australian government agencies had (allegedly) applied for PBR protection for chickpeas collected by ICRISAT (International Crop Research Institute for the Semi-Arid Tropics) and to other cases where plant accessions held by CGIAR institutions had been the object of applications for PBR. Obviously infuriated by the

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level, but in the lack of appropriate reference collections or data bases or a failure to sensitize examiners to this issue. Farmers’ varieties in public collections worldwide have to be taken into account when establishing distinctness and this irrespective of whether they meet the DUS requirements.518 UPOV Document TG/1/3 which gives guidance for the interpretation of the DUS criteria expressly states that varieties of common knowledge may include “all types of variety, whether protected or not, and include plant material, such as ecotypes and landraces”, provided they satisfy the definition of variety, i.e. exhibit a minimum of uniformity and stability.519 Moreover, it is pointed out in this document that “a difference only in the level of uniformity of a characteristic, without any resultant change in the overall expression of the characteristic in the variety, is not a basis for establishing distinctness.”520

Problems may only arise in cases where landraces are heterogeneous and unstable to such a degree that they cannot be defined as a unit in terms of the characteristics examined for establishing DUS.521 Farmers may, for instance, regard plant groupings with very different genetic identities and phenotypic characteristics as one landrace defined by a few outstanding characteristics only.522 Taking such landraces as reference for distinctness would be very difficult, as it would amount to reducing the number of relevant characteristics used to describe plant varieties of a particular species. This in turn would mean fundamentally changing the concept of distinctness and exclude new varieties from protection which are only derived from a landrace population but not identical in all its relevant characteristics. It is important to emphasize that the current shape of the distinctness requirement is not an intentional bias against landraces but stems from the approach of the UPOV system to reward very small steps in breeding progress also.

unwillingness of UPOV to investigate into these problems, RAFI (1998) attacks the “UPOV’s Rules [as] Unruly, Unwordly, and Unethical”, overlooking the fact that according to said UPOV rules the landrace varieties, being part of publicly accessible germplasm collections (see point 5.2.2.1. (c) of the UPOV Doc. TG/1/3) and thus of common knowledge, were not eligible for UPOV type PBR protection. The need for a more unemotional matter-of-fact approach of RAFI, which does important investigative work, but discredits its information by the above kind of statements, cannot be overemphasized. 518 See UPOV Doc. C(Extr.)/19/2/Rev., Annexe, at 6. Against this background and the clear wording of the UPOV provisions, the ruling of the German Federal Patent Court of 15 April 1999 - “Schnee”, GRUR 2000, 312 et seq., interpreting the equivalent German provisions, seems questionable. The Court based its reasoning on what it considers to be the ratio legis of § 3 Sortenschutzgesetz [Plant Variety Act], which corresponds to Art. 7 UPOV 1991 Act. It argues that the aim of the PBR legislation to promote breeding innovations that correspond to certain uniformity and stability standards is not achieved as long as the available plant grouping of common knowledge has a uniformity and stability level inferior to the required level. The existence of such a plant grouping should therefore not be an obstacle to the registration of a new variety that fulfills the required standards. 519 See UPOV Doc. TG/1/3, at 13, point 5.2.520 See UPOV Doc. TG/1/3, at 15, point 5.3.3.4.521 These issues will be discussed in detail in chapter 7, C.II. and D.I.1.522 See id.

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Further reflection might be necessary on the concept of “common knowledge”. The UPOV Doc. TG/1/3 states that “the specific aspects which should be considered to establish common knowledge include, among others: (a) commercialisation of propagating or harvested material of the variety, or publishing a detailed description; (b) the filing of an application for the grant of a breeder’s right or for entering of a variety in an official register of varieties, in any country […]; (c) existence of living plant material in publicly accessible plant collections.”523 In view of this enumeration it may be doubted that the use of a landrace by a small circle of farmers would be regarded as sufficient to prevent its registration by a third person.524 This raises the question whether a collector of germplasm merits an exclusive right of exploitation merely because he made a wild species or a landrace collected in a remote village available to a larger public. As long as the relationship between the collector and the actual providers of the landrace remains unaddressed in the UPOV system this seems difficult to justify. Awareness in UPOV circles is increasing and in a document of August 2002, the Administrative and Legal Committee recommends that, in applying the notion of common knowledge, Member States should take into account not only written knowledge, but also orally transmitted knowledge of interested communities worldwide, provided that the existence of this knowledge can be established in a way that satisfies the standards of evidence applied in civil courts.525 There remains, of course, the practical problem that the examiner may not be aware of a variety known only by a small circle of farmers at the time when protection is sought. Yet, this would at least leave open the possibility to declare the plant breeders’ right void once it turns out that the variety was not the result of a breeding effort of the applicant.526

2. Commercial novelty

Pursuant to Art. 6(1)(b) of the 1978 Act, the variety has to be commercially novel, which means that it must not have been offered for sale or marketed with the agreement of the breeder in the territory of the State where the application is filed. States may, however, provide for a period of grace of one year prior to the date of application.527 Where the variety was offered for sale or marketed with the agreement of the breeder in any other Member State, the breeder has to file his application within four/six years to secure PBRs protection.528 “The fact that the variety has become a matter of common knowledge in ways other than through offering for sale or marketing shall […] not affect the right of the breeder to protection.”529 Under

523 See UPOV Doc. TG/1/3, at 13, point 5.2.2.1.524 See NEUMEIER (1990), at 40, esp. note 176, who explains that the term “common knowledge” excludes knowledge by a small circle of persons.525 See UPOV Doc. C(Extr.)/19/2 Rev., Annexe, at 6, para. 23. 526 On nullity and cancellation of a breeders’ right, see Art. 10 of the 1978 Act and Art. 21 of the 1991 Act. 527 Art. 6(1)(b)(i) of the 1978 Act528 Six years in the case of vines, forest trees, fruit trees and ornamental trees. Art. 12 contains a priority provision, giving the applicant a right to priority for a period of twelve month where an application has already been lodged for the same variety in another Member State. This means that the later application must betreated as if filed on the filing date of the earlier application.529 See Art. 6(1)(b), 3rd sentence of the 1978 Act.

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Art. 6(1)(i) of the 1991 Act, the one-year grace period becomes compulsory. Not only selling or marketing starts the grace period, but any form of disposing of the variety to others.530

The distinctness criterion being the agritechnical novelty requirement, the purpose of this provision is to prevent a breeder from removing his variety from the public domain once the seed market actors have taken their dispositions based on free availability of this variety. The criticism of this requirement for being exclusively focussing on commercial novelty therefore does not seem to be pertinent.531

3. Uniformity

a) Definition

Whereas the distinctness requirement is concerned with inter-varietal differences, the uniformity criterion demands that intra-varietal variations remain within reasonable limits. Pursuant to Art. 6(1)(c) “the variety must be sufficiently homogeneous, having regard to the particular features of its sexual reproduction or vegetative propagation.” Art. 8 of the 1991 Act keeps this reference to the particular features of propagation, but clarifies that only uniformity “in its relevant characteristics” is required.532

“Relevant” in this sense are those criteria which are significant for distinctness.533 Due to the different genetic structures of self-pollinated, cross-pollinated and vegetatively propagated plant populations, the standards determining the limits of intra-varietal variations are more or less severe. For the reasons outlined in the first chapter, the high degree of uniformity shown by a clonal variety or a self-pollinated variety cannot be expected from an outbreeding type.

b) Criticism

The uniformity requirement as applied by national granting authorities and UPOV Guidelines has been subject to criticism for two reasons. Firstly, it has been argued that high uniformity standards place a heavy burden on the breeder, while having little

530 See Art. 6(1) of the 1991 Act. On the other hand, the test of novelty is relaxed by the additional requirement that selling or otherwise disposing of the variety to others must have been done “for purposes of exploitation of the variety.” This may play a role in cases where an inbred line “variety” has prior to the application for PBR only been used for the production of F1 hybrids and not been itself commercially exploited. See TRITTON (1996), at 258.531 This criticism is mentioned by RANGNEKAR (undated), at 38.532 Art. 8 reads as follows: “The variety shall be deemed to be uniform if, subject to the variation that may be expected from the particular features of its propagation, it is sufficiently uniform in its relevant characteristics.”533 See KÖLLER (2002), at 45.

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agronomic value.534 Secondly, critics have pointed out the dangers of genetic uniformity leading to a higher degree of genetic vulnerability.535

It is important to note that the uniformity requirement is, to some extent, dictated by the need to define the identity of a protected variety and give an accurate description that is reflected by its individual plant components. Thus, it is only the degree of uniformity required in the granting practice which is at question. The applied standards do not seem to be considered as a problem by breeders of high yielding crops in industrialized countries.536 The issue was not addressed in the 1991 revision process.537

Nor does the loss of on-farm biodiversity seem to represent immediate disadvantages for farmers in industrialized countries, where a high degree of uniformity is considered desirable for modern agricultural practices.538 But these practices evidently raise environmental issues. It is important to point out that the high standards applied today are not inherent features of the PBRs system, which can to some extent be adapted to agricultural policy choices. The issue of uniformity standards has gained new actuality in the context of plant variety protection for landraces. The question to what extent the uniformity requirement can be interpreted less strictly in technical terms to accommodate these varieties will be discussed in greater detail in chapter 7.539

4. Stability

a) Definition

Finally, “the variety must be stable in its essential characteristics, that is to say, it must remain true to its description after repeated reproduction or propagation or where the breeder has defined a particular cycle of reproduction or multiplication, at the end of each cycle.”540 The definition of stability in Art. 9 of the 1991 Act contains a change in language but no substantial change.541 The essential characteristics that have to remain

534 See N.W. SIMMONDS (1979), “Principles of crop improvement”, London, UK: Longmann Group Ltd., as quoted in RANGNEKAR (undated), at 38; see also LESKIEN/FLITNER (1997), at 51 et seq. 535 See RANGNEKAR (undated), at 38 with references; FOWLER/MOONEY (1990), at 87, referring more generally to patents or “patent-like certificate[s]”.536 See ISF (International Seed Federation) (2002), at 4: “ISF also reasserts its total support to the guidelines for conducting DUS testing as published by UPOV after consultation with all the players involved and encourages all present and future UPOV members and others to use those guidelines, in order to harmonize the test results for Breeder’s Rights.”537 See above note 486.538 WRIGHT (1996), at 19, observes, for instance, with respect to the narrow germplasm base of US hybrid corn, that the “pool of diversity remains sufficient to provide disease resistance as needed in the high-input United States environment, and to provide an as-yet undiminished, remarkable rate of yield increase.”539 See below, chapter 7, D.I.1.b) and E.I.1.540 See Art. 6(1)(d) of the 1978 Act.541 Art. 9 reads as follows: “The variety shall be deemed to be stable if its relevant characteristics remain unchanged after repeated propagation or, in the case of a particular cycle of propagation, at the end of each such cycle.”

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unchanged include all characteristics used for establishing distinctness and examining uniformity at the date of grant of protection.542

b) Criticism

Similar to the uniformity requirement, the closely linked stability requirement has been criticized for placing increased time and costs upon breeders in making available new varieties. When introducing plant variety protection, some countries preferred lower standards for quicker access and diffusion of new varieties amongst farmers.543 Again, this has not been a concern of breeders in the 1991 revision process, indicating that a majority of breeders finally agreed with the standards.544

5. Examination of the application

Art. 7 of the 1978 Act or Art. 12 of the 1991 Act provide that Member States shall grant protection only after examination of the variety has shown that it complies with the protection requirements, in particular the DUS criteria.545 One of the particularities of the PBRs system is that the DUS test is based on growing tests that allow examination of uniformity and stability of the variety under field conditions, and to compare the candidate variety with other varieties of common knowledge.546 However, systematic individual comparison with varieties of common knowledge is only required where they cannot be distinguished from the candidate in a reliable way by merely comparing documented descriptions. For the purpose of facilitating the examination process, certain information may also be requested from the breeder through a technical questionnaire to be submitted with the application and seeking information inter alia on specific characteristics of importance for distinguishing varieties, on the breeding scheme of the variety, on similar varieties and characteristics by which the candidate may be distinguished from these.547

The examination is conducted following harmonized principles laid down in a series of UPOV documents intended to provide the Member States with a common basis for testing varieties and producing a varietal description in a standardized and internationally recognized form. These documents not only give general guidance for DUS examination of all species, but also set out test guidelines for many individual species. These specific test guidelines establish the appropriate characteristics to be evaluated and states of expression to be described, as well as standards for calculating uniformity.

542 See UPOV Doc. TG/1/3, at 23, 7.2.543 See RANGNEKAR (undated), at 39, with a reference to AKERMAN, A./TEDIN, O., “Testing of new varieties from a point of view of the plant breeder”, Development of Seed Production and the Seed Trade in Europe: Proceedings of an International Conference held at Stockholm, July 1954, Project 214, Anon, Paris, France, OEEC and European Productivity Agency: 47-53.544 See above note 486; see also ISF (2002), at 4.545 On the following see also WIPO (1997), p. 459, point 27.23.546 See UPOV Doc. TG/1/3, at 14, point 5.3.1.3. 547 See UPOV Doc. TG/1/3, at 14, point 5.3.1.4.

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Growing tests are carried out either by the authority competent for granting PBRs or by a separate institution acting on behalf of the granting authority or even, under certain conditions, by the breeder himself. Already Art. 7 of the 1978 Act was interpreted this way. Relying on growing tests conducted by breeders was considered possible provided the tests followed the relevant guidelines and breeders were required to provide a sample of the variety at the time of application and to allow state agents to inspect the trials.548 There is a shift of emphasis in Art. 12 of the 1991 Act necessitated by the aforementioned mandatory extension of protection to all genera and species. Due to this extension, examining authorities may be obliged to assess DUS of species that are unknown or for which there is little experience in the domestic testing system.549 Therefore Art. 12 makes an express reference to the case where the authority “take[s] into account the results of growing tests or other trials which have already been carried out.”550 UPOV Document TG/1/3 reaffirms that “[t]he decision on DUS may be based entirely on the test report supplied by the breeder although the member of the Union may verify the results, for example, by independent examination and publication of the variety description.”551 On the other hand, it is interesting to note that most Member States have a system of government-conducted testing.552

Major exceptions are the United States and Australia. In the United States the initial granting decision is only based on a comparison of the description given by the breeder of the candidate variety with the descriptions of the varieties of common knowledge. Only in case of infringement or legal dispute is the material, deposited at the time of application, used to compare the varieties in question in field trials.553

548 See WIPO (1997), at 459, point 27.23. See also UPOV Doc. TG/1/3, at 8, point 3.2.2.549 See GREENGRASS (1991), at 469.550 Art. 12 of the 1991 Act, 2nd sentence.551 See UPOV Doc. TG/1/3, at 8, point 3.2.2.552 Personal telephone conversation with Dr. JÖRDENS, Vice-President of UPOV, on 14.11.2002. Reasons for this are given by BYRNE (undated), note 25: “The perceived risk of applicants cheating (a risk not unknown to the patent system) is said to be tempering severely what enthusiasm there may be within UPOV for relying on growing tests conducted by the applicant but under scrutiny from the examining authority. One might suppose where cheating is suspected that the granting authority would want to test the variety independently on its own trialling grounds. Another reason for the lack of enthusiasm is the knowledge that, within the European Community, an application for breeders’ rights is usually combined with an application by the breeder for the variety to be included in the National List or the Community’s Common Catalogue, a mandatory step before selling seed or reproductive material of varieties belonging to a great many species.” See also SIBLE (2000a), at 2, resuming the results of the Plant Intellectual Property European Workshop at the University of Sheffield: “Many delegates expressed strong preference for the EU system because it involves less work for breeders applying for plant variety rights (PVRs) and reduces the potential for errors in awarding rights.” 553 See LANGE (2002), at 122.

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IV. Scope of the rights conferred

1. Extent of rights and farmers’ privilege

a) UPOV 1978 Act

Under Art. 5(1), 1st sentence, of the 1978 Act, Member States must as a minimum provide for the following exclusive rights for breeders of a new plant variety:

“The effect of the right granted to the breeder is that his prior authorization shall be required for- the production for purposes of commercial marketing- the offering for sale- the marketingof the reproductive or vegetative propagating material, as such, of the variety.”

Thus the minimum rights refer only to propagating material of a variety. They do not extent to the harvested product that is sold for consumption purposes. Yet, Member States are expressly permitted under Art. 5(4) to grant to breeders, in respect of certain genera or species, more extensive rights than those set out in Art. 5(1), extending in particular to the marketed product.

The second major restriction of breeders’ rights stems from the concept of “marketing”. Since the exclusive right of the breeder only applies to “production for the purposes of commercial marketing”, to “offering for sale” and “marketing” a farmer may produce and save seed for subsequent sowing on his own farm. The concerned propagating material is not intended for marketing and thus, by implication, exempted from the scope of the breeders’ right.554 The wording also implies that even seed supply to fellow farmers may fall outside the scope of the rights conferred, provided that the seed is not supplied on a commercial basis. The question of the exact limits of this exemption, especially of whether or not farmer to farmer seed sale is covered, will be discussed below in chapter 8 after analysing in detail the relevant Indian provisions.555

b) Persisting appropriability problems

In the 1991 revision process, UPOV and breeders’ organizations pointed out the fact that in various situations the protection afforded by PBRs could be considered as inadequate.556 In many situations breeders would still not share in the economic benefits continuously derived by producers from the improved variety.

Unsatisfactory situations stemming from the restriction of the rights to “propagating material” were in particular identified where the value added of the new variety resides

554 See e.g. GREENGRASS (1991), at 469; KÖLLER (2002), at 53. 555 See below, chapter 8, D.I.2.556 See UPOV Doc. No. CAJ/XVIII/6 of July 31, 1986.

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essentially in the end-product and not in the propagating material.557 Two examples may illustrate these loopholes which were of particular concern to breeders of fruit and ornamental plants:558 Nothing in a UPOV 1978 type regime prevented a commercial fruit producer from buying a very limited number of plants of a protected apple variety, propagating thousands of plants from these few plants and collecting and selling fruit as long as the plants are productive, i.e. for two decades or more. Since the producer does not sell propagating material as such, nor plants but only fruit he does not infringe the breeders’ rights. While the producer fully exploits the commercial advantages of the new variety, the breeder has collected a royalty only on the small number of initial plants bought by the producer. In the second example a rose variety is protected in country “C1”, but not in countries “C2” and “C3”. While the proprietor of the variety can collect royalties from propagators in “C1”, he cannot defend the importation of cut flowers of the same variety form “C2” and “C3”, as they are not “propagating material”.

Further, the Office of UPOV pointed out a number of cases excluded from the scope of the breeders’ rights by the narrow concept of “marketing”.559 Special forms of distribution, which may not necessarily be covered by this term included production of seed and distribution to farmers under contract by an agri-foodstuff company, production of seed by a cooperative for distribution to its members and also sale or exchange between farmers. Most importantly, even the farmers’ privilege of producing propagating material for his own production needs irrespective of the scale of production and its commercial nature was called into question. Under legislations compliant with the UPOV 1978 Act, in major crops, a share of 30 to 80 percent of the seed utilised by farmers was farm-saved seed.560 The resulting restriction of possibilities to recoup breeding costs was increasingly criticised by the breeding industry. At the same time, as mentioned earlier two developments have given more weight to these positions in the UPOV forum.561 In industrialized countries, the public sector has reduced its breeding efforts and the private sector has emerged as the principal investor in crop breeding in many genera and species. Moreover, the costs of investing in the new technology of genetic modification outran the income from certified seed royalties.562 A new important financial engagement of the public sector in this area seemed unlikely.563 Therefore a need was perceived to increase the income of the seed industry. It was argued that farmers in their turn would profit from the new

557 See ROYON (2001), at 15.558 See id.559 See UPOV Doc. CAJ/XVIII/6, at 2/3.560 See DESPREZ (2002), at 5.561 See SAGE (2001), at 6.562 See, e.g. SAGE (2001), at 6; see also LE BUANEC (2001), at 7, emphasizing the increase in research investments necessitated by the advent of biotechnology. 563 See LE BUANEC (2001), at 7; see also SAGE (2001), at 8, pointing out that 80% of new biotechnological products and processes are being developed by the private sector.

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technology and record increased returns.564 Representatives of the seed industry also pointed out that without a modification of the farmers’ privilege the seed industry would be encouraged to resort to hybrid varieties or genetically engineered plants that can be patented.565 Farmers’ organisations, which were associated quite late in the consultations preparing the 1991 revision of the UPOV Convention,566 claimed the maintenance of the right to save seed for one’s own holding and the exchange “under cost-free farmers’ self-help arrangements involving mutual benefits”.567

c) UPOV 1991 Act

The 1991 Act considerably extends the scope of breeder’s rights but still lags behind the scope of patent protection, especially in the relationship to farmers.

Art. 14(2) extends the breeder’s rights to acts with respect to harvested material. Additionally, each member State may further extend the breeder’s rights to acts in respect of certain products, i.e. products made directly from the harvested material.568

The following acts with respect to propagating material, harvested material or certain products require – under certain conditions – the authorization of the breeder:

“(i) production or reproduction (multiplication), (ii) conditioning for the purpose of propagation, (iii) offering for sale,(iv) selling or other marketing, (v) exporting, (vi) importing,(vii) stocking for any of the purposes mentioned in (i) to (vi), above.”569

564 In this vein, UPOV Doc. CAJ/27/7, “Revision of the Convention: Position of FIS on the ‘Farmer’s Privilege’”, Annex, at 1. See also DESPREZ (2002), at 5 who argues that users of seed should contribute to financing breeding research.565 See UPOV Doc. CAJ/27/7, as above note 564. See also VAN WIJK (1998), at 2 of 5, quoting SMOLDERS, patent attorney of Novartis (Switzerland) and Chairman of the Intellectual Property Working Groups of ASSINSEL and the Green Industry Biotechnology Platform.566 In the first three Meetings with International Organisations organised by UPOV only the International Association of Horticultural Producers was present, which however did not intervene in favour of the farmers’ privilege. COPA (Committee of Agricultural Organisations in the European Economic Community), COGECA (General Committee for Agricultural Cooperation in the European Economic Community) and IFAP (International Federation of Agricultural Producers) participated in the fourth and fifth meeting. See UPOV Docs. IOM/I/12, Annex; IOM/II/8, Annex I; IOM/III/6, Annex I; IOM/IV/10, Annex I; IOM/5/12, Annex. 567 See UPOV Doc. IOM/IV/6, Annex, containing the position of COPA and COGECA. For the similar position of IFAP, see UPOV Doc. IOM/IV/8. 568 Such products include e.g. vegetable oil, flour or wine.569 Art. 14(1)(a) of the 1991 Act. Under Art. 14(4) Member States may even provide that, subject to the provisions on exceptions to the breeder’s rights (Art. 15) and exhaustion of the breeder’s right (Art. 16), acts other than those referred in paragraph (1)(a) shall also require the authorization of the breeder.

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With regard to harvested material and the specified products, the breeder’s rights are subject to two conditions: Firstly, the harvested material or the products have to be obtained or made through the unauthorized use of propagating material of the protected variety.570 Secondly, the breeder must not have had reasonable opportunity to exercise his right in relation to the previous category of plant material, i.e. propagating material in case of harvested material, and harvested material in case of certain products.571 The UPOV Member States considered that the breeder needed protection in cases where he had no opportunity to exercise his rights in relation to the propagation material, for instance, if his variety was used in another country which did not provide for breeder’s rights protection, and the harvested material was subsequently imported into the country where the variety is protected. The position of the breeder was further strengthened by the rule that the alleged infringer usually bears the burden of proof.572

As the new provision of the 1991 Act extends protection to all acts of production or reproduction without regard to its purpose, it does not have the effect of implicitly creating the farmer’s privilege.573 In certain cases, seed production can be exempted under the exemption of Art. 15(1) of the 1991 Act which refers to “acts done privately and for non-commercial purposes.” A UPOV position paper specifies that these private and non-commercial purposes include subsistence farming.574 The farmer’s privilege is regulated expressly by Art. 15(2), which permits Member States, on an optional basis, to restrict the breeder’s right in relation to any variety “in order to permit farmers to use for propagation purposes, on their own holdings, the product of the harvest which they have obtained by planting, on their own holdings, the protected variety […]”. Yet, this exemption is not only discretionary, but also may not exceed „reasonable limits“ and is subject to safeguarding of the legitimate interests of the breeder. Additionally, it may also be concluded from the wording that farmer-to-farmer seed transfer is in principle an infringement under the 1991 Act.

Art. 14 of the Council Regulation (EC) No 2100/94575, further defined in Commission Regulation 1768/95576 as amended by Commission Regulation (EC) No. 2605/98577

has harmonized the implementation of Art. 15(2) UPOV 1991 Act as far as Community Plant Breeders Rights are concerned. Its concept also forms the basis for several national regulations.578 Farmers are entitled to save seed for sowing on their

570 See Art. 14(2) and (3).571 See Art. 14(2) and (3). 572 See WIPO (1997), at 467/468, points 27.61/62.573 See GREENGRASS (1991), at 469.574 See UPOV (2002a). 575 Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights, OJ L227/1 of 1.9.1994.576 Commission Regulation (EC) No. 1768/95 of 24 July 1995 implementing rules on the agricultural exemption provided for in Art. 14(3) of Council Regulation (EC) No. 2100/94 on Community Plant Variety Rights, OJ L173/14 of 25.7.1995.577 Commission Regulation (EC) No 2605/98 of 3 December 1998 amending Regulation (EC) No. 1768/95 […], rerpoduced in Plant Variety Protection No. 89 – September 2000, at 73. 578 For the United Kingdom see ARDLEY (1997), at 147; for Germany see KÖLLER (2002), at 55.

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own holding under the following conditions: The saved harvest product must have been obtained on their own holding from propagating material of a variety other than a hybrid or a synthetic variety.579 Further, the variety must belong to certain prescribed species.580 And most importantly, farmers other than small farmers581 are required to pay an equitable remuneration to the breeder, which shall, however, be sensibly lower than the royalty charged by the breeder for the licensed production of certified seed of the lowest category of the same variety in the same area.582 Monitoring compliance with these provisions is a matter of exclusive responsibility of the right holder.583 The regulations therefore contain detailed provisions on supply of relevant information to the right holders on their request.584 The rules for establishing the level of equitable remuneration are given in the aforementioned cited Commission Regulations. Priority is given to a consensual approach. The remuneration to be paid may form the object of a contract between the holder and the farmer concerned.585 Where such an individual contract has not been agreed, the definition of “sensibly lower” may result from agreements between organizations of holders and of farmers, which are established at the Community, national or regional level respectively.586 Only where such an agreement does not apply, as a rule, the remuneration shall be 50% of the amounts charged for licensed production of certified seed.587

2. Breeders’ exemption and essentially derived varieties

a) UPOV 1978 Act

Another limitation of the scope of PBRs, a fundamental principle of the UPOV Convention and, as mentioned, a major difference to the patent regime is the breeders’ exemption. According to Art. 5(3) of the 1978 Act “authorisation by the [initial]

579 See Art. 14(1) Council Regulation (EC) No 2100/94.580 See Art. 14(2) Council Regulation (EC) No 2100/94. The list includes fodder plants, cereals, potatoes and oil and fibre plants.581 Small farmers are considered to be: “in the case of the plant species […] to which Council Regulation (EEC) No 1765/92 of 30 June 1992 establishing a support system for producers of certain arable crops applies, farmers who do not grow plants on an area bigger than the area which would be needed to produce 92 tonnes of cereal; […], in the case of other plant species […], farmers who meet comparable appropriate criteria.” See Art. 14(3), 3rd indent of Council Regulation EC No 2100/94. Some aspects are further detailed in Art. 7 of Regulation No. 1768/95.582 See Art. 14(3) Council Regulation (EC) No 2100/94 read together with Art. 5(2) of Commission Regulation (EC) No 1768/95.583 See Art. 14(3), 5th indent Council Regulation (EC) No 2100/94.584 See Art. 14(3), 6th indent Council Regulation (EC) No 2100/94 and Art. 8 Commission Regulation (EC) No 1768/95.585 See Art. 5(1) of Regulation No 1768/95.586 See Art. 5(4) Commission Regulation (EC) No 1768/95, as amended by Commission Regulation (EC) No. 2605/98; In Germany an agreement has been reached between the Federal Association of German Plant Breeders [Bundesverband Deutscher Pflanzenzüchter] and the German Farmers’ Association [Deutscher Bauernverband]. The level of remuneration is fixed for cereals at 45% of the amount charged for licensed production, for potatoes at 30%. See KÖLLER (2002), at 55. 587 See Art. 5(5) Commission Regulation (EC) No 1768/95, as amended by Commission Regulation (EC) No. 2605/98.

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breeder shall not be required either for the utilization of the variety as an initial source of variation for the purpose of creating other varieties or for the marketing of such varieties.” An exception to this privilege only applies where “the repeated use of the variety is necessary for the commercial production of another variety.”588 This limited exception mainly refers to the necessarily repeated use of an inbred line for the commercial production of a F1 hybrid. In absence of such repeated use, the second breeder is free not only to breed, but also to commercialize his new variety. Accordingly, the breeder’s rights under the 1978 Act do not give the plant breeder any rights with regard to the genetic components which are contained in his variety.589

Protection is only given for the unique combination of genes as present in the variety provided by the breeder.

b) Plagiarized varieties and genetic engineering

The use of any protected variety as a parent in crossing was acceptable to successful breeders as normally it would take ten years or more for new derivative varieties to reach the market.590 Developing new varieties where distinction is based merely on cosmetic characteristics was always possible, but it took many seasons of back-crossing. As SAGE points out, in the 1980s the possibility of “cosmetic” breeding with shortened breeding cycles became a reality.591 “The thought that a competitor breeder might take a popular variety, insert a single gene for a distinguishing trait, and have the plagiarized variety on the market very quickly made breeders see the need to toughen up the level of protection given by the UPOV system.”592

At the same time, an imbalance between the exceptions under the patent system and the UPOV system became apparent, as genetic engineers started protecting genetic elements by patents. Thus, whereas the holder of this patent was free to insert his invention into a protected variety and protect this distinct variety without any obligation to reward the owner of the initial variety, the latter was obliged to seek permission from the patent holder if he wished to use the protected genetic element.593

The approach of the 1978 Act according to which sole distinctness defined the borders of protection was thus considered unsuitable for the new technological situation. This was all the more so since there was a trend in the UPOV system to use smaller and smaller minimum distances.594

588 See Art. 5(3) 2nd sentence.589 See UPOV(1995), at 18; BYRNE (undated), at 55.590 See SAGE (2001), at 5.591 See id., at 6.592 See id., at 6. See also KÖLLER (2001), at 7; GUIARD (2001), at 18; LANGE (1993b), at 803. 593 See JÖRDENS (2002), at 6; LANGE (1993b), at 803.594 See GUIARD (2001), at 18.

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c) UPOV 1991 Act

The breeders’ exemption was reaffirmed by the 1991 Diplomatic Conference.595 In principle, “acts done for experimental purposes” and, more importantly, “acts done for the purpose of breeding other varieties, and […] acts referred to in Article 14(1) to (4) in respect of such other varieties”, constitute a compulsory exception to the breeder’s right of the initial breeder.596 Thus in general, the breeders of “other varieties” that are clearly distinguishable from the source material they built on are free to exercise all acts that are reserved for a breeder by Art. 14(1) to (4) with respect to these other varieties, including their sale or other marketing form.

However, this right is subject to a new restriction detailed in Art. 14(5). By the introduction of the concept of “essentially derived varieties” the zone of protection around a protected variety is extended. “This zone will in future comprise the minimum distance that results from the existing distinctness rule together with an additional zone created by the essentially derivation principle.”597 Whereas under the 1978 Act, the authorization of the initial breeder is only required for producing and marketing varieties the production of which requires the repeated use of the protected variety (now Art. 14(5)(a)(iii)), Art. 14(5)(a)(i) of the 1991 Act extends the scope of the (initial) breeder’s right to “varieties, which are essentially derived from the protected variety”. According to Art. 14(5)(b) of the 1991 Act, a variety is deemed to be derived from another, when:

“(i) it is predominantly derived from the initial variety, or from a variety that is itself predominantly derived from the initial variety, while retaining the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety,(ii) it is clearly distinguishable from the initial variety and(iii) except for the difference which results from the act of derivation, it conforms to the initial variety in the expression of the initial characteristics that result from the genotype or combination of genotypes of the initial variety.”

Since the distinctness in accordance with Art. 7 is one element of the definition of an essentially derived variety, the breeder of such a variety may fulfil the criteria of breeders’ rights protection and seek protection.598 The granting office is not in charge of determining whether the new variety is essentially derived from another.599 The exploitation of the essentially derived variety, however, requires the authorization of the initial breeder since his exclusive rights under Art. 14(1) to (4) also apply in

595 See also WIPO (1997), at 470, point. 27.70; LANGE (1993a), at 140.596 Art. 15(1)(iii) of the 1991 Act.597 WIPO (1997), at 470, point 27.70.598 See also TRITTON (1996), at 263.599 See GREENGRASS (1991), at 471; LANGE (1993a), at 140; ISF (2002), at 11; KÖLLER (2002), at 60, who explains that the Bundessortenamt [German Federal Variety Office] had been approached by breeder circles, but does not intend to get involved in these disputes in order to keep its neutral position.

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relation to essentially derived varieties. This issue will be resolved between the breeders, if necessary through litigation.600 The burden of proof lies with the breeder of the initial variety.601 In particular he will have to provide evidence that the new variety has been causally derived from the protected variety. The concept does not refer to a similar variety developed independently of the protected variety.602 The determination of when a variety is „essentially derived“ from another variety will have to be gradually forged by arrangements between breeders and case law. Art. 14(5)(c) merely provides a non-exhaustive list of examples of acts that may result in the qualification as essentially derived variety. These examples of derivation include the selection of a natural or induced mutant, or of a somaclonal variant, the selection of a variant individual from plants of the initial variety, backcrossing, or transformation by genetic engineering. Beyond these examples there is considerable uncertainty.

Some Indian authors oppose the concept of essentially derived varieties based on a misinterpretation of this principle. DHAR and RAO, e.g., fear that finally most conventional breeding acts will fall under the definition of essential derivation.603 It may therefore be helpful to see what interpretations this principle has found so far, especially in UPOV circles. It is at present impossible to draw an exact line but certain “boundary posts” can be planted and certain approaches definitely excluded as too broad.

The widest additional zone of protection is defined by LESSER, who states that the concept appears to mean that the bulk, i.e. 51 % genetic material of the sold variety must have been derived from the initial variety.604 There are compelling arguments against this broad interpretation. Based on the genesis of the provision and the language of 14(5)(b), GREENGRASS, Vice Secretary-General of UPOV at the time of the 1991 Diplomatic Conference, gives the following important clues for the determination of essential derivation:605

“A variety will be essentially derived from another variety only when it retains the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety. Accordingly, a variety will only

600 See WIPO (1997), at 469, point 27.67. Breeders have raised the concern that courts might not have the expertise to assess essential derivation. Some therefore suggest that the plant variety offices should be involved in establishing essential derivation. See SIBLE (2000a), at 8 and SIBLE (2000b), at 30 et seq.601 See KÖLLER (2002), at 59. Yet, the International Seed Federation (ISF) is in favour of the reversal of the burden of proof: “For prima facie proof, the following elements should be sufficient: - strong phenotypic similarities; - only small differences in some simply inherited characteristics; - strong genetic similarity. […] The use of distance coefficients to define the threshold which would be a tigger point for the reversal of the burden of proof is another interesting approach. Up to now, ISF has mainly worked on thresholds based on distances measures by molecular markers.” See ISF (2002), at 13.602 See TRITTON (1996), at 263.603 See DHAR/RAO (1999), at 184.604 See LESSER (1995), at 7.605 See GREENGRASS (1991), at 471.

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be caught by the essential derivation provision when it resembles the initial variety very closely and uses virtually the whole genetic structure of the initial variety apart from specific limited modifications. […] The nature of the essential derivation principle is such that any breeder who embarks upon a programme which will result in a variety that is essentially derived, will know what he is doing […]”

Two key elements can be retained from this definition: close phenotypic resemblance to the initial variety and use of virtually the whole genetic structure of the initial variety. Art. 14(5)(b)(iii) is read to mean that the phenotypic and genotypic differences which result from the act of derivation are “specific” and “limited.” A similar approach is taken by other authors and organisations.606 For establishing the genetic distance threshold, a species-by-species approach will be necessary.607 According to LANGE it emerged from the early discussions that the threshold should be at minimum more than 60%. Generally a genetic conformity of 95% will be required.608

The first available case law also makes a rather cautious application of this new principle. In a dispute between two holders of Community plant breeders’ rights,609 the Civil Court of The Hague in the Netherlands rendered a provisional judgment in October 2002 refusing provisional measures to stop the distribution of an allegedly derived variety.610 The plaintiff claimed that the variety at issue was a mutant of his variety. The Court examined whether the allegedly derived variety “has kept the ‘essential characteristics’ of the genotype of the original variety.” It found differences in the genotypes of the two varieties and differences in essential phenotypic

606 See, e.g. HUNTER (1999): “For the new variety to be Essentially Derived it must meet the criteria of containing ‘virtually’ the entire genotype of one of the parents from which it was developed and, therefore retain the expression of the essential characteristics of the [initial variety].” BYRNE (undated), at 56: “In other words, the derived variety retains almost the totality of the initial variety’s genotype yet it is distinguishable from that variety by a very limited number of characteristics (typically one).” GUIARD (2001), at 19 et seq., explains that conformity in the sense of Art. 14(5)(b)(iii) means that the phenotypic characteristics are the same “except for the characteristic on which the derivation has been established” and predominant derivation in the sense of Art. 14(5)(b)(i) refers to the genetic similarities of the two varieties. The ISF (2002), at 11, suggests that the examination of the “requirement [of conformity to the initial variety in the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety] could be based on reliable phenotypic characteristics: either close relationship in general which could lead to a ‘conformity threshold’ parallel to the minimum distance threshold used for distinctness or only small differences in some simply inherited characteristics.”607 See LANGE (1993a), at 140, referring to a declaration of ASSINSEL of 5.6.1992 in Toronto; GUIARD (2001), at 24, who points out that “[…] it is very important to consider the genetic variability. If, in a given species, the genetic variability is very large, we can imagine that the threshold for EDV would be far from the initial variety. […] But if within a species, breeders are using a very small genetic variability, there is perhaps a necessity to have a very small distance for EDV. Because, if not, any breeding would be completely stopped, no possibility to make progress.”608 LANGE (1993a), at 140.609 Art. 13(6) Council Regulation (EC) No 2100/94 contains a provision almost identical to Art. 14(5)(b) of the 1991 Act. 610 The following is based on the summary of FIKKERT (2002), at 7.

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characteristics that resulted from the genetic material which was not present in the initial variety. The plaintiff failed to convince the Court that these essential differences are related to the act of derivation.

It is seems therefore very improbable that breeding programs involving different crosses of more than two parents will be caught by the provision on essential derivation.611 Other concerns that have been voiced with respect to the consequences of this concept on the seed sector of developing countries are more pertinent. CORREA fears that the introduction of this concept may limit the diffusion of varieties improved by farmers.612 Without this provision seed of selected mutants or other individuals that are clearly distinguishable could be freely sold by farmers independent of the interpretation of the farmer’s privilege, as they would act outside the scope of the breeder’s right. On the other hand, the impact on farmers’ practices of the concept of essential derivation could be neutralized by a broad farmers’ exemption.

d) Implementation difficulties with respect to the concept of “essential derivation”

Whereas many commentators and stakeholders emphasize that some measure was necessary to restrict the registration of “cosmetic” varieties and that the concept of essential derivation is a progress,613 concerns have been voiced with respect to its vagueness and the difficulties of implementation.614 ARDLEY, for instance, raises question of “how practical it is going to be for breeders to actually make use of this particular provision.”615 SAGE points out that only the technological developments of the last decade have made the concept of essential derivation operational. Only during the 1990s, structural genomic maps of a number of major crops have been developed. “[I]f and when, they become widely and cheaply available they will […] lead to the development of sufficient case law on which to base the policing of essential derivation.”616

GUIARD voices concerns about the uncertainties falling on breeders until this EDV threshold will be established in court cases.617 Since it is not always possible to establish clearly, before developing the variety, if it is an EDV or not, there is a risk for the second breeder. This risk may deter him from using new protected varieties, which already has a good performance. While SAGE considers the implementation of

611 See also BYRNE (undated), at 56, who points out that the reference in Art. 14(5) “is meant to ensure that varieties bred by classical methods are not regarded as derived varieties.”612 See CORREA (1999), at 20.613 See, e.g. ROYON (2001), at 16; DESPREZ (2002), at 5.614 See, e.g. ARDLEY (2001), at 13; SIBLE (2000b), at 8/9.615 See ARDLEY (2001), at 13. See also VAN WIJK (1998), at 2 of 5, citing Walter SMOLDERS, patent attorney of Novartis (Switzerland) and Chairman of the Intellectual Property Working Group of ASSINSEL and the Green Industry Biotechnology Platform (GIBIP), who stated that, while the effectiveness of PVP was improved by the concept of essential derivation, the implementation of this principle may turn out to be too complex, particularly for minor crops.616 See SAGE (2001), at 6.617 See GUIARD (2001), at 20.

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the essential derivation principle as feasible, he points to a disadvantage of this new provision as he predicts that “[i]t will […] mean the employment of lawyers in the UPOV system on a scale never needed before.”618 DESPREZ, who likewise welcomes the principle, explains that it forces breeders to identify their own genetic material by tens or even thousands of markers, which generates non negligible new costs.619

These issues, and in particular the fact that wide availability of the technologies mentioned by SAGE is a prerequisite for the application of this concept, need to be considered in the Indian context and need to be weighed against the undeniable necessity to address the problem of cosmetic breeding.

3. Restrictions for reasons of public interest

Finally, it should be mentioned that under Art. 9 of the 1978 Act the exclusive right of the breeder may be restricted for reasons of public interest.620 However, when such restrictions are imposed, the Member State concerned must take all necessary measures to ensure that the breeder receives equitable remuneration. Similarly, the 1991 Act provides for a restriction of the free exercise of a breeder’s right, yet not for reasons other than of public interest and not without equitable remuneration.

Still the above provisions of the UPOV Convention leave a lot freedom to the Contracting States. BYRNE reports that

“[a] concern that the production of food should be restricted unreasonably by the breeder’s right led the legislatures in a number of UPOV countries to legislate such that a compulsory licence is to be had almost it seems for the asking. In the United Kingdom, for example, unless there is a good reason for refusing it, a compulsory licence must be granted where the applicant satisfies the granting authority that the holder of the breeder’s right has unreasonably refused to licence the applicant or has imposed or proposed unreasonable licence terms. […]”621

V. Appreciation of the PBRs system by stakeholders

The debate on appropriate IP protection for plant related innovations got a new impetus by the scientific advances in the field of biotechnological innovations, i.e. the successful application of recombinant DNA technology to plants. While the issue of protection for the results of conventional plant breeding seems to be settled (1), there is a very controversial and intensive debate on the extent to which plant biotechnological inventions should be protected by patents (2).622 This debate goes far

618 See SAGE (2001), at 6.619 See DESPREZ (2002), at 5.620 According to BYRNE (undated), at 68, “legal provisions for compulsory licensing of exclusive rights in the public interest is the norm, not the exception, among the members of UPOV.”621 BYRNE (undated), at 69.622 The debate is a permanent element of the activities of UPOV and WIPO since the 1980s. See e.g. WIPO (1986), 253 et seq.; UPOV Docs. CAJ/XVII/2, CAJ/XVII/9, CAJ/XXIV/4; the Report adopted

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beyond the choice between two systems of protection and involves very complex ethical, policy and legal issues. Some of the policy and legal questions will be outlined in part B of this chapter dealing with patent protection. The focus of the present section will be only on the evaluation of the PBRs system as an alternative to patent protection and on the deficiencies perceived by stakeholders.

1. As protection mechanism for plant varieties

Concerning the protection of a plant variety, i.e. a population of plants that is defined by a unique combination of characteristics resulting from particular genotype or combination of genotypes and that is the result of a crossing and selection process,623

the majority opinion in the European plant breeding community seems to be that this type of subject matter should be protected by PBRs rather than patents.624 The general judgement, at least of crop breeders, is that the plant variety system in its overhauled form of 1991 has worked well.625

by the Committee of experts on the interface between patent protection and plant breeders’ rights, WIPO/UPOV/CE/I/4. In the legal literature see e.g. STRAUS (1984); BYRNE (1986); LUKES (1987); STRAUS (1987); NEUMEIER (1990); MOUFANG (1992); LANGE (1993b); WILLNEGGER (2003).623 These conventional breeding steps may of course be preceeded by genetic engineering or mutagenesis steps to increase the variability of the available breeding material. Nevertheless, the homogene and stable population which is eligible for plant variety protection will be the result of conventional breeding steps. See also LANGE (1993b), at 802. 624 See e.g. EUROPEAN SEED ASSOCIATION (undated); LANGE (1993b), at 802; DESPREZ (2002), President of SICASOV (Société cooperative d’intérêt collectif agricole anonyme des sélectionneurs obtenteurs de variétés végétales) and Vice-President of the GNIS (Groupement National Interprofessionnel des Semences et Plants”); and GROUPE LIMAGRAIN (2002). According to VAN WIJK (1998), at 2 of 5, Joachim WINTER, Secretary General of the Association of Plant Breeders of the European Community (COMASSO), held that the exclusion of plant varieties from patentability is of “vital importance” to breeders. ADCOCK (2001), at 35, reports on the preliminary findings of a survey among European breeding firms from four states (France, Germany, the Netherlands and the UK) that “regardless of company size or country, if an effective plant variety system was in place, the overwhelming majority of plant breeders would protect their products using plant variety rights rather than patents. This strongly suggests that the breeding community still prefers the plant variety right system over the patent system.” The issues which are considered as obstacle to this effectiveness can be derived from the statement of LE BUANEC (2001), at 8. He refers to the limitation of protection to certain genera and species, to the restriction of rights to propagating material and the broad farmer’s privilege under the 1978 Act and concludes that the 1991 Act can be regarded as efficient. However, he is one of those representatives of the breeding industry who do not have a preference for the plant breeders’ rights system, but consider that both models, patent protection and plant breeder’s rights protection, are legitime. In the same vein, SAGE (2001), at 10. A further exception is CIOPORA (International Community of Breeders of Asexually Reproduced Ornamental and Fruit-Tree Varieties), which has claimed the possibility to protect plant varieties by patents already in the 1980s. See UPOV Docs. CAJ/XIX/4, Annex IV, at 2, CAJ/XXIV/5, Annex, at 2.625 See references in the previous footnote; further SAGE (2001), at 5 and 10; WILLNEGGER (2003), at 820, who, however, emphasizes that the system is not apt to accommodate all developments in plant breeding, especially the possibilities offered by mutagenesis and genetic engineering to alter the metabolism of plants. Likewise, breeders of medicinal and aromatic plants point to deficiencies of protection for those specialised plants. See CHLÖDWIG (2001), at 15.

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A major advantage of the PBRs system over the patent system is seen in the breeders’ exemption. The free availability of protected plant varieties as germplasm source for other breeders is generally identified as an indispensable core part of a protection system for plant varieties.626 DESPREZ, President of SICASOV627 and Vice-President of GNIS628 presents the viewpoint of a scientist, user of IP, right holder and licensee at the same time, whose principal activity is plant breeding rather than innovation in the area of biotechnology.629 He considers the breeders’ privilege as “à l’évidence l’atout majeur”630 [evidently the major advantage] of the protection system. This privilege allows breeders to build on the latest innovations and thus contributes to increasing the efficiency of breeding programmes. DESPREZ illustrates this statement with an example analysing the origin of the eight most widely cultivated wheat varieties in France currently: Out of the 16 lines used in their pedigree 11 are protected by PBRs and half of them do not belong to the breeder who has developed the cross.631

Moreover, administrative and technical advantages of the PBRs system are emphasized. The simplicity of the PBRs system is appreciated in the breeding community. DESPREZ points out that until the 90s, breeders in Europe operated exclusively in the simple, practical, well-known framework of UPOV, tailor-made to their needs, without being preoccupied by IP issues or having to develop IP strategies.632 The scientists themselves are able to deal with the application procedurewithout any legal help because the forms are easy and quick to fill in. SAGE observes one of the bigger attractions of the PBRs system has been the fact that it has proved cheap to administer, which is important in an industry of small margins, and is largely lawyer free.633 A further advantage of the plant breeders’ rights system is that the costs of protection itself are reasonable. An application to the European Plant Variety Office costs 900 Euro in the case of cereals, plus 1000 Euro for the testing. The annual fee

626 See LANGE (1993a), at 139; DESPREZ (2002), at 3; ASSINSEL (1993), at 142; WIPO (1997), at 459. See also ADCOCK (2001), at 48/49, reporting on the preliminary results of survey among European breeding companies. On the question “In your opinion should all plant material protected by a PVR be freely available for use in research?”, an overwhelming majority of firms in France, Germany and the Netherlands answered in the affirmative. Interestingly a significant number of firms in UK opposed this free availability. ADCOCK, id., at 48, suggests that this may reflect the fact that many UK companies do not use plant material protected by a third party’s intellectual property. For a contrary view from the biotechnology industry, see SMOLDERS, as quoted by VAN WIJK (1998), at 2 of 5.627 SICASOV (Société Cooperative d’Intérêt Collectif Agricole Anonyme des Sélectionneurs Obtenteurs de Variétés Végétales) is a French independent body managing and protecting PBRs.628 Groupement National Interprofessionnel des Semences et Plantes [National interprofessional group for seeds and plants].629 See DESPREZ (2002), at 3. 630 See DESPREZ (2002), at 3.631 See id., at 4.632 See id., at 3.633 See SAGE (2001), at 5. See also KÖLLER (2001), at 6, arguing that one of the great advantages of the plant variety protection system is the greater legal security. Users of plant varieties do not need to refer to claims, be able to interpret them and analyse issues of exhaustion in order to know the threshold of infringement. KÖLLER is the head of the law section of the German Federal Variety Office.

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amounts to 1000 Euro and permits diffusion in all EC countries. The system is thus a feeble charge in the R&D Budget, in a majority of cases not exceeding two percent of the research expenses.634 Consequently, the system is accessible to and in practice used by small and small to medium companies alike.635

It should not be omitted that breeders continue to criticise certain deficiencies of the PBRs system,636 mostly however without calling into question the principal preference for this system which is easier to handle and cheaper than patent protection and guarantees the free availability of protected varieties for breeding improvement.637

2. As protection mechanism for plant related biotechnological inventions

The actual controversial issue is how plant biotechnological inventions should be protected, more specifically plants comprising genetically modified components.638

The discussion seems little concerned with the acceptability of the protection of genetic engineering tools such as vectors or the patenting of genetic engineering process. The patenting of these aspects of the invention seems to be widely accepted.639 Patents for isolated DNA are subject to critic, yet not in principle but rather with respect to the extent of protection.640 The type of subject matter which raises concerns in the breeding community are plants defined by specific genetic features resulting from the transformation process, because these claims not only concern other genetic engineers but also conventional plant breeders.

At the same time, the legal situation which prevailed in Europe until recently, providing patents only for processes of plant development which are not essentially biological and for isolated genetic components and protecting conventional breeding results merely by PBRs, was considered unsatisfactory by many legal commentators.641 Because the future Indian regime is quite similar in this respect, it seems important to analyse why a strong opinion in the legal literature emphasizes that plant biotechnological inventions are insufficiently protected against reverse engineering by plant variety protection and process patents, and that product patent protection should extend even to transformed plant varieties.

634 In contrast, up to 10% of the research budget for the use of biotechnology in breeding is dedicated to the costs of IP protection. See DESPREZ (2002), at 4 and 7.635 See ADCOCK (2001), at 30, table 1, on the preliminary results of a survey among European breeding companies.636 On deficiencies with respect to enforcement, see e.g. SIBLE (2000b), at 11 et seq., and SIBLE (2000a), at 11/12.637 For a counter-example, see ROYON (2001), at 18/19. 638 WILLNEGGER (2003), at 815, rightly points out that similar issues are raised by mutagenesis techniques.639 See, e.g. EUROPEAN SEED ASSOCIATION (undated), at 3 of 4.640 On the issue of purpose-related or absolute product protection for DNA sequences, see below B.I.4.a).641 See, e.g. HÄUßER (1996), at 332/333; STRAUS (1984), at 435 et seq.

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a) Background: Loopholes in the protection by PBRs

The approaches of PBRs law and patent law to the availability of germplasm remain the decisive differences between the two systems. The patent law withdraws the genetic components which are the subject of the invention from the free use by competitors. The plant variety protection guarantees free access to all genetic components of a new variety and apart from the very limited restriction imposed by the EDV concept leaves plant breeders unimpeded by whatsoever proprietary claims.

Yet, this means that the PBRs system is inefficient when it comes to the protection of the work of genetic engineers which is precisely concerned with making available new components, not recombining existing ones. The work of breeders is the “creation of ‘balanced genetic structures’ constituted by varieties. Genetic engineering […] creates ‘bricks’ and not ‘structures’.”642 This inefficiency may be illustrated by a simple example:643 Breeder A has a license for using a plant biotechnological invention concerning a foreign DNA stably integrated into a target plant expressing trait X. He has made considerable investments in obtaining this technique and applies it in his breeding programme. Yet, as soon as the new variety A is commercialized, breeder B invoking the breeders’ privilege uses this variety to insert the protected trait into his variety B, e.g. by repeated cycles of back-crossing, without incurring the licensing costs. The principle of essential derivation does not remedy this deficiency of plant variety protection, because the variety of breeder B may be genetically and phenotypically completely different from the initial variety A.

The protection merely by process patents or by product patents for tools used in the process is also quite inefficient for the simple reason that biological material can be propagated. STRAUS points out that the protection of a process for the genetic modification of a plant or of the tools used in this process, such as vectors, and even the protection for the immediate results of this processes, i.e. modified plant cells and cell lines, does not prevent anybody from using the modified plant as propagating material and thus benefit from the invention without having to repeat the protected process.644 Only if process protection extends not only to the products directly obtained by such a process,645 but additionally covers “any other biological material derived from the directly obtained biological material through propagation or multiplication […] possessing those same characteristics”, as this is the case under the EC Biotechnology Directive,646 process patent protection becomes interesting for the developers of transgenic plants.

When comparing breeding innovations with biotechnological inventions and their respective needs of protection, it could be argued that the value of a new variety may likewise lay in a particular trait that was stably integrated into the plant grouping in a

642 See CAUDERON (1986), at 43.643 See the similar example given by LANGE (1996), at 590.644 See STRAUS (1987), at 338/339.645 This is indeed required under Art. 28(1)(b) of the TRIPS Agreement.646 See Art. 8(2) of the EC Biotechnology Directive and below, B.V.2.c)cc).

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long and laborious breeding programme. Yet, there is a difference between a situation where a breeder adds to the genetic variability available to breeders and a situation where his success lies in the combination of already existing and accessible traits.647

As the following paragraphs will show, in the second case, breeders seem to attach high importance to free availability, whereas in the first case they accept rewarding the provider of the new genetic component.

b) Balancing access to plant material and protection needs

Commentators point out that genetic modification will continue to become more sophisticated and will inevitably involve the simultaneous use of many patents.648

SAGE, a plant breeder who has gone through the privatisation process of public sector breeding institutions, warns that “[a]t its worst over-emphasis on patents will result in expensive wrangling, over the breadth of patent claims or restrictive cross licensing, which will divert financial resources and severely retard innovation.”649 However, he does not conclude that patent protection should not apply to inventions in the area of plant genetic engineering. To the contrary, he held that “breeders actually need the possibility of using both plant variety rights and patents.”650 The majority of European breeders seems to think that patent protection for genetic components is acceptable,651

at least under certain conditions which, by the way, have been fulfilled by the provisions of the EC Biotechnology Directive. LE BUANEC points out that the DNA sequence must have been isolated and thus made available for the first time, the causal link between the genetic component and a specific characteristic of the plant must have been established and the claims must be sufficiently supported by the description.652

On the other hand, breeders do oppose patent coverage for the entire genome of plants and an application of patent law which could have this effect even where the claim is directed to a plant defined by a specific genetic trait. In fact, while representatives of breeding organizations and breeding firms hold that a patented genetic component should conserve its protection when it is introduced into a plant or plant variety,653

they also emphasize that it has to be possible to freely use such a variety in a crossing

647 See also SIBLE (2000b), at 25.648 See, e.g. SAGE (2001), at 10; LANGE (1993b), at 804, with an example.649 See SAGE (2001), at 10.650 See SAGE (2001), at 10.651 See EUROPEAN SEED ASSOCIATION (undated), at 3; LANGE (1993b), at 803; LANGE (1996), at 589, pointing out that breeders do not mean to use gene constructs provided by genetic engineers without compensation, but merely oppose patents on entire genotypes; VAN WIJK (1998), at 2 of 5, quoting Joachim WINTER, Secretary General of COMASSO (Association of Plant Breeders of the European Community); LE BUANEC (2001), at 9; for a contrary view, see SIBLE (2000b), at 21, quoting the statement of a delegate who wishes to maintain the breeders’ exemption even in cases where the resulting new variety contains a protected genetic component.652 See LE BUANEC (2001), at 9.653 See LE BUANEC (2001), at 9; LANGE (1996), at 589. Commentators also emphasize the necessity to extend patent protection to the following generations produced by natural propagation. See HÄUßER (1996), at 333.

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programme and commercialize the resulting new variety without the authorization of the patent holder, unless it contains and expresses one of the protected genes.654 Free access to genotypes embraced by a standard type claim “plant containing a heterologous DNA …” obviously remains a major concern in the European plant breeding community.655 The legal situation not being entirely clear on this point,656

breeders fear that competitors could deliberately breed patented genes into their varieties in order to prevent others from using their varieties in a breeding programme.657 As a large part of breeding material used by conventional breeders are improved varieties, this strategy could in the long run considerably reduce the choice of breeders. Yet, legal commentators rightly suggest that a generous interpretation of the experimental use exemption should be able to solve this problem. LANGE, for instance, argues in favour of the aforementioned possibility to use a variety containing a protected gene in a breeding programme as long as the protected gene does not appear in the resulting variety.658 This would agree with the fact that the inventive concept does not extend to the whole genotype of the protected plant, but only to the gene construct stably integrated in a plant.659

Regarding access to germplasm for breeding, it is also interesting to note that WINTER, Secretary General of COMASSO (Association of Plant Breeders of the European Union) considers the compulsory (cross-) licensing provision included in the EC biotechnology directive as important.660

Breeders further oppose claims to a trait as such. Alternative genetic approaches for obtaining the same characteristic linked to a patent on a gene-trait relationship should not infringe the patent. 661 Moreover, concerns are voiced about a possible patentability of plant genes in their natural state, indigenous to the genome of the concerned species.662 It is feared that claims to plants containing a specific gene could cover plants of the species where this gene is naturally present and thus already available to traditional breeders.663

654 See EUROPEAN SEED ASSOCIATION (undated), at 3 of 4. See also SIBLE (2000b), at 25, quoting a statement of Joël GUIARD, who expresses concerns about situations where a breeder is convinced that the gene is no longer present in the resulting new variety, while it is in reality not expressed. He explains that primers to recognize a gene are not always in the public domain. 655 See the previous footnote and LANGE (1996), at 589.656 See the discussion in SIBLE (2000b), at 10, 17 and 23 et seq. KREFFT observes that within Europe there is a strong dissent about how strong the research exemption should be. Due to these different approaches it is very unlikely that there will be a European solution to the problem. See id., at 17.657 See SIBLE (2000b), at 10 and 20.658 See LANGE (1996), at 589.659 See id., at 589; see also SIBLE (2000b), at 21 and 23 quoting statements of Tim ROBERTS in the same vein.660 See VAN WIJK (1998), at 2 of 5. 661 See LE BUANEC (2001), at 9. This viewpoint corresponds to the ASSINSEL position since the end of the 1980s. See UPOV Doc. CAJ/XXIII/3, Annex, at 1.662 See EUROPEAN SEED ASSOCIATION (undated), at 3 of 4, supporting expressly only patents for “plants having non-indigenous DNA incorporated into their genome.”663 See SIBLE (2000b), at 4.

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c) The relationship between right holders and farmers

In the USA the arrival of commercial genetically modified crops, containing patented constructs, prompted changes in the legal relationship between the seed purchasing farmers and the seed companies. The patent holder or his licensee enters into a contract with the farmer wishing to grow a GM variety. This contract fixes a technology charge to be paid by the farmer, which is estimated to be half of the increase in crop value resulting from the use of the GM variety instead of a standard variety. It further defines husbandry constraints, including the prohibition of farm-saving seed.664

Farmer representatives in Europe have expressed their preference for the plant variety rights system.665 KLEIN, for instance, strongly advocates the exclusion of plant varieties from patent coverage.666 He argues that farmers apprehend dealing with two different types of IP regimes and eventually two different claims for royalties.667

Farmers further fear that “[i]n view of the natural characteristics of the biological material and, for example, the unavoidable cross-effects, patent protected characteristics could be transferred to adjacent fields, without there being a possibility for the farmer to protect his production”.668

Part of the aforementioned concerns of farmers have been addressed by the EC Biotechnology Directive. As will be seen later in part B, Art. 11 of this Directive provides for a farmers’ privilege which is similar to the exemption under European plant variety protection law. The commercialisation of propagating material to a farmer with the consent of the patent holder implies the authorisation for the farmer to save seed from his harvest for sowing on his own holding against an equitable remuneration fixed by individual contract or agreements between farmers’ and breeders’ organisations. It may also be recalled that small farmers are exempted from this remuneration obligation. In the normal course of things, i.e. when the patented gene was integrated in the sold plant variety with the consent of the patent holder, thisregulation leaves no room for the surprising emergence of a gene patent holder claiming compensation.669 Yet, the unvoluntary contamination of plant populations by the protected gene remains an issue of concern.

3. Conclusion

According to the available evidence, the PBRs system is widely accepted by plant breeders in Europe, at least in its revised shape introducing the concept of essentially

664 See SAGE (2001), at 7.665 See, e.g. KLEIN (2001), at 3.666 See id., at 5.667 See id.668 See id.669 The only exception would be a situation where a seed firm infringes the patent right by integrating a gene in its variety without the authorisation of the patent holder. In this case, the farmers could claim damages from this seed firm, should they be confronted with remuneration claims from the patent holder.

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derived varieties and extending protection to the harvested product. Breeders consider the breeders’ exemption, which prevents exclusive rights to the use of entire genotypes as breeding material, to be essential. They also appreciate the PBRs system for its simplicity, saving them a permanent recourse to legal advice. The essentially derived variety concept is criticized for its vagueness, but there seems to be a consensus among plant breeders that some kind of dependency for genetically very close varieties is necessary. The need for such a provision has increased with the arrival of biotechnology which makes it easier to perform only minute changes in the genetic make-up of a plant.

Most plant breeders in Europe, at least in the private sector, seem to accept, in principle, the idea that there should be some kind of patent protection for plant biotechnological inventions. But they oppose patent protection which extends beyond the genetic component actually made available by the inventor. According to this view, neither entire genotypes nor plant traits per se should be covered by exclusive rights.

Farmers apprehend a situation where they would have to deal with different claims for royalties and where they could unknowingly infringe a patent by using unvoluntarily contaminated seed.

VI. Conclusions of part A

When drawing lessons from the European experience one could be tempted to simply draw a parallel between the situation of the agricultural sector, the seed industry in Europe in the middle of the last century and the present situation in India. The importance of farming as a livelihood and the important role of public sector breeding could suggest such an approach. Yet, it has to be kept in mind that the technological evolution of the last two decades has also impacted the Indian seed industry. While the structure of the agricultural sector and the seed industry may closer correspond to the European stage in the 50s, the technological capacity is far ahead. European countries have adapted their system in the last two decades to these changing possibilities and needs of protection, and these changes should not easily be discarded with the argument, that the current system and the earliest system corresponds to different stages of agricultural and seed sector development. It cannot in particular be ignored that a plant breeder using biotechnology has other IP protection needs than a conventional breeder. On the other hand, as chapter 4 will explain, in a multi-country setting where the industry of one country is technologically lagging behind, it may not always be in the interest of the imitating country to take the needs of the – mostly foreign – technology providers into account.

In any case, the following part B will show that, even if the principle is accepted, patent protection in the area of plant breeding raises numerous controversial issues still unsettled in Europe. Depending on the interpretation, the protection provided by the European patent system could go far beyond the area of plant genetic engineering inventions and could enter into conflict with needs expressed by breeders to freely

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access existing plant genetic traits indigenous to the genome of the concerned species. If, in the long run, patent protection was envisaged, India could learn from the European situation to avoid such ambiguity.

B. PROTECTION OF PLANT RELATED INVENTIONS BY PATENTS

The question of whether biotechnological inventions, in particular higher life forms and their genetic components, should be patentable, under what conditions, and to what extent, is highly contentious in Europe. A majority of political actors at the European Community level are convinced that IP protection in this area is an indispensable prerequisite for giving the European biotechnology sector a chance in the global technology race.670 As will be seen in detail below, the consensus laid down in the EC Biotechnology Directive allows for the patenting of plants and of DNA sequences. At the other end of the opinion spectrum are many activists and commentators who argue that the “biological underpinnings of life” should not be the object of exclusive rights671 and that patent claims on DNA could hamper future research.672 Between these two positions are numerous legal commentators who agree that patent protection for biological material is necessary, but make suggestions on how to keep certain areas free of patent claims and restrict protection to the actual contribution to the art of the inventor. The debate is still going on. While the compromise found at the European level with the adoption of the EC Biotechnology Directive has been transposed into provisions of the Implementing Regulations of the EPC,673 it is implemented only reluctantly by the EC Member States.674

The following sections will describe the patent protection available for plant related inventions in Europe. At the same time, concerns and criticism of stakeholders and commentators pertaining to patentability requirements and legal effects of such

670 See, e.g. EUROPEAN COMMISSION (2003), quoting Internal Market Commissioner Frits BOLKESTEIN: “Unless the 1998 Directive is properly implemented Europe’s biotech sector will be working with one hand tied behind its back and will fall further and further behind.”671 See, e.g. GRAIN (1998), at 1 of 12. 672 See, e.g. GREENPEACE (2001), at 17 and 22. These arguments are often intertwined with the debate about the ethical permissibility of biotechnological techniques as such and of conferring ownership of the building blocks of life. These ethical questions would go beyond the scope of this paper. A good overview on the debate is given in STERCKX (1997).673 See EPO (1999). These new provisions entered into force on September 1, 1999. The Administrative Council is fully competent to adopt and amend legally binding Implementing Regulations (Art. 33(1)(b) EPC). Pursuant to Art. 164(1) EPC, the Implementing Regulations are an integral part of the Convention and hence are equally binding on the EPO’s Boards of Appeal (Art. 23(3) EPC) and on national courts. A different interpretation of the Convention would be possible only if it was specifically established that a particular rule of interpretation is inconsistent with the Convention itself. 674 Despite a deadline on 30 July 2000, the Directive had not been implemented in national law by seven Member States out of 15 in May 2004. See EUROPEAN COMMISSION, MEMO/04/176. However, some of these States have statisfied their transposition obligation in the meanwhile. See, e.g. “Gesetz zur Umsetzung der Richtlinie über den rechtlichen Schutz biotechnologischer Erfindungen”, as above note 149, for Germany and “Loi n° 2004-800 du 6 août 2004 relatve à la bioéthique”, J.O. n° 182 du 7 août 2004, p. 14040, texte n° 1, for France.

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protection will be outlined. The legal analysis will permit in some cases concerns to be invalidated, in some cases the solutions suggested by commentators may point out legislative options to minimize the apprehended effects. Many of these concerns revolve around the consequences for the freedom to operate of competitors and the effects on scientific advance and raise empirical issues. It should be noted that in this chapter these arguments are discussed only from a legal perspective, whereas the limited available empirical evidence on the effects of patents will be addressed in chapter 5.

The analysis of European patent protection for plant inventions and the related legal debate will commence with a short overview of concerns discussed in the civil society and/or by legal commentators (I). In the then following sections an overview will be given on the patentable subject matter (II), the exclusions from patentability (III), the patenting requirements (IV), the rights conferred by the patent (V), and the exceptions to these rights (VI). For the sake of simplicity, the focus of this legal outline will be, where possible, on harmonized European law, i.e. on EPC law and the provision of the EC Directive.675 Only those issues which are still governed by national laws, i.e. issues concerning the rights conferred and infringement, will be analysed with respect to examples from national laws.

I. Concerns expressed with respect to patents for biological material

The concerns on patents for non-human biological material and especially genetic information have revolved around the following principle issues:

675 Three different legal levels play a role for the analysis of patent protection in Europe. The European Patent Convention (EPC), to which inter alia all EU Member States are signatories, provides for a special procedure for the grant of a European patent, which becomes, the moment of its grant, a bundle of national patents with certain specificities valid in the designated European States. Besides this route via the European Patent Office (EPO) the possibility to apply to national patent offices under national law continues to exist. The EPC mainly regulates the procedural and substantial requirements for the grant of a European patent. Other issues of patent law, even as far as “European national patents” are concerned, are in general still governed by national law. Concerns about differing national laws and practices in the area of biotechnology and resulting trade barriers and impediments to the proper functioning of the internal market, led to the harmonisation at the EC level by the adoption of the EC Biotechnology Directive (as above note 388). As granting institution of an independent international organisation, the European Patent Office was not bound to bring its interpretation of the relevant EPC provisions in line with the Directive. Nevertheless, “in order to comply with the requirement for uniformity in harmonised European patent law,” the Administrative Council of the European Patent Organisation adjusted European patent law to the standards of the recitals and Chapter I (Patentability) of the Directive by inserting new Chapter VI entitled “Biotechnological inventions” in Part II of the EPC Implementing Regulations and amending the wording of R. 28(6) EPC. See EPO (1999).

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1. Patenting of genes in their natural state and of plants already available to farmers and breeders

One of the concerns often expressed by NGOs676 is that claims to genomic DNA and to plants partly use formulations that could be read to include unmodified plants in their existing form or DNA segments in their natural state in the source organism. As mentioned in the previous part of this chapter, this concern is partly shared by breeders who fear that genetic components which were already available to breeders within a particular species or plant traits defined independently of their underlying genetic structure could be subject to exclusive rights.677

An example that is often quoted by GREENPEACE678 is claim 1 of EP 744 888, which defined a plant only by general characteristics without reference to genetic manipulation:

“Corn grain having a total oil content of at least 6.0% of the total seed weight, measured at zero percent moisture wherein the oleic acid content is not less than 55% of the total oil content.”

The patentees had obtained the above oil contents by crossing a high corn variety with a corn variety that carries a gene altered through chemical mutagenesis conferring high oleic acid content. This gene was discovered to result in the same increase in oleic acid irrespective of whether the total oil content was low or high.679 The granting of this patent caused strong protest, based on the argument that corn varieties with the above characteristics were already known and used by traditional farmers in Mexico.680 The opposition division has revoked the patent at issue.681

Another case may be mentioned in the present context. The invention initially protected by EP 445 929 provided a soft-milling wheat genotype containing a certain genetic trait conferring low elasticity to dough prepared from this variety.682 This so-called Glu-D1 double nul trait is naturally present in the Indian landrace “Nap Hal”.

676 See, e.g. GREENPEACE (undated a), at point 3 “Biopiracy”: “Communities could now end up having to pay multinational corporations for the right to use something that was previously part of their legacy.”677 See above notes 661 and 662.678 See GREENPEACE (2001), at 18. 679 See description, at para. 23 et seq.680 The patent was opposed by the Government of Mexico, Bischöfliches Hilfswerk Misereor e.V. and Greenpeace Deutschland e.V.. See EPO (2003c), press release.681 See below at IV.3.c) on the lack of inventive step. The Opposition Division further argues that claim 1 which covered the entire range above 6% in relation to oil content and above 55% in relation to the oleic acid content, was not sufficiently disclosed. There were serious doubts, substantiated by verifiable facts, that the invention could not be performed over the whole range claimed. See the decision revoking the patent of 14 July 2003, Grounds for the decision, point 6, available at http://ofi.epoline.org/view/GetDossier or http://my.epoline.org/portal/public (follow the link "File inspection"). The decision has not been appealed. See id. document dated 19 November 2003 "Termination of the opposition proceedings with revocation of patent".682 For a good presentation of the case, see TIFAC (2003), at 3 et seq.

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As becomes clear from the description,683 the claimed soft-milling wheat684 is obtained simply by backcrossing the Indian landrace into a soft-milling variety. This means that the claimed wheat can be obtained by conventional breeding and does not necessitate the isolation of the concerned genetic component. The patent has been revoked in September 2004 at the request of the patentee.685 Nevertheless, this example will permit below an illustration of the limits of patentability of inventions related to genes in their natural state and of the scope of protection conferred by such a patent. It is important to emphasize that the landrace “Nap Hal” itself was not covered by the claims. Different questions raised by Indian commentators need to be addressed:686

The issue of territoriality left aside, would such a patent affect the right of farmers to use any Nap Hal variety? Would the patent have affected the possibilities of domestic exporters to export products made out of a Nap Hal variety to Europe? Or framed more generally, does such a patent hinder breeders/farmers from using germplasm that is already at their disposal?

2. Concerns about undermining the breeders’ exemption

As outlined above, the breeders’ exemption under PVP law, is seen as a fundamental condition for rapid technical advance in plant breeding. Breeders are therefore concerned that patents for genetic components could be extended to the relevant host entity, i.e. a certain genotype in its totality. “Such an extension would prevent the use of the genetic background in further breeding and extinguish the breeders’ privilege.”687 This concern has been partly addressed by the European legislator in the statutory exclusions from patentability: Plant varieties may not be claimed as such. Nevertheless they may fall within the scope of a patent claiming a plant defined by a certain genetic component or certain characteristics. The above concern is therefore of interest when it comes to defining the scope of the rights conferred by such a patent and more particularly interpreting the experimental use exemption.688

3. Patenting products of automatised genome sequencing

The attempts of some institutions or companies, involved in large-scale efforts of sequencing the genome of various organisms, to obtain patent protection for the identified sequences merely based on their sequence characteristics or on speculative functions have raised concerns in the scientific community. The involved issues are principally discussed with respect to so-called ESTs, which are complementary DNA fragments generated by reverse transcription from mRNA of a specific cell type. It was feared that the patenting of ESTs may give disproportionate rewards for routine efforts

683 See para. 32 and 41 et seq.684 Claim 5, for instance, reads as follows: “Soft-milling wheat in which each of the ‘x’ and ‘y’ genes at Glu-D1 is inactive or absent.”685 See the decision revoking the patent of 23 September 2004, available at http://ofi.epoline.org/view/GetDossier, publication number EP445929.686 See, e.g. SHARMA (2003).687 See ASSINSEL (1999), at point 1.1.688 See below, at V.3.d).

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that constitute a minor step on the road to developing a useful product,689 and that over-rewarding the pioneers could have an adverse impact on future research and development by reducing incentives for scientists to identify the corresponding full-length gene and the protein for which the gene codes.690 Another concern was that, due to the broad terms of the EST related claims, partial sequences could be considered as novelty destructive to the full-length gene.691 Whereas the latter issue is not completely settled,692 the first fear has proved unfounded by EPO practice.693

4. Overly broad patent claims

Another bundle of concerns expressed by NGOs694 and legal scholars695 are related to “unduly broad” patent claims. Following the definition of BOSTYN, claims can be qualified as such “when the protection which is claimed is not related to what has been made available, or to what the application teaches to the public or the man skilled in the art.”696 Two issues merit particular attention:

a) Absolute product protection for DNA molecules

A major issue currently discussed in the national drafting processes for the implementation of the Biotechnology Directive is the scope of product claims to DNA molecules. It is felt by many stakeholders and political actors involved in genetic engineering research that granting an exclusive right to all functions of a protected DNA sequence would provide protection which goes beyond the actual contribution of the inventor to the state of the art.697 MARKL, President of the Max Planck Society, for instance, gave the following statement in a presentation:698

“I also want to strongly emphasize that it is definitely desirable to limit the patent rights given to a well-defined and clearly proven useful function, since

689 See HOWLETT/CHRISTIE (2003), at 583, with a reference to statements of the Human Genome Organisation (HUGO) and the American Society of Human Genetics (ASHG). 690 See HOWLETT/CHRISTIE (2003), at 584.691 See BOSTYN (2001), at 139; HOWLETT/CHRISTIE (2003), at 584.692 See below at IV.2.c). 693 See below at IV.1b) and IV.3.d).694 See e.g. GREENPEACE (undated a), point 2. 695 See BOSTYN (2001), at 1 et seq.696 See BOSTYN (2001), at 2.697 See the references in STRAUS (2001), at 1016 et seq., to statements in the first discussion in the German Bundestag of the draft legislation for implementing the EC Biotechnology Directive (BT-Dr 14/5642), and to statements of the Presidents of three eminent German research organisations, Prof. Hubert MARKL of the Max Planck Society, Prof. Ernst-Ludwig WINNACKER of the German Research Association [Deutsche Forschungsgemeinschaft] and Prof. GANTEN of the Helmholtz Association [Helmholtz Gemeinschaft]. He further refers to statements of the Nobel price winner Prof. Harmut MICHEL and the former President of the Human Genome Organization Prof. Thomas CASKEY.698 See the presentation on “Genes for Properties, Property of Genes” held at the Symposium “Who Owns the Human Genome?” on 28 June 2001 in Munich, Germany, as quoted in STRAUS (2001), at 1017.

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we know that each single gene […] may be involved in the production of a ten or twenty fold number of functional proteins, and many such proteins may be enmeshed in a number of different functions of an organism’s body. Assigning broadly defined patent rights to a specific gene plus its protein, for which only one function has been described, in such a way that all additional functions described in the future are also covered […] could be ruinous to an economic landscape of biotech startups, because the actual inventor of a completely new marketable use would immediately be subjected to license-serfdom under someone else who did not contribute his own creative intellectual or practical efforts to that sort of new development.”

Even if, due to the rules set out by the EC Biotechnology Directives, patent specifications now have to indicate the precise biological function of a DNA sequence, it is controversial whether the Directive allows for a national implementation obliging patent applicants to limit the scope of their claims to the disclosed function.

b) Patent protection for plants defined by characteristics obtainable by alternative approaches

As mentioned above, ASSINSEL urges that “alternative genetic approaches to achieve the same characteristic or trait in crops shall not infringe a prior patent”.699 Yet, there are examples, at least in the application stage, of claims which define the invention only by the resulting plant characteristic. This means that any plant with this characteristic, even if developed by a different method using different germplasm, would be caught by the claim. Claim 1 of the Nap Hal patent700 was a case in point.701

The above cited claim 1 of the revoked EP 744 888 would have been another example, as no reference was made to the mutation on which the invention was based.702

Another example for a claim which has been criticized for going beyond the contribution to the art is claim 17 of the patent EP 301 749. The invention relates to a method for particle-mediated transformation of soybean plants and lines. Yet, claim 17 refers not only to soybeans modified by physically introducing genetic material but to

“A soybean seed which will yield upon cultivation a soybean plant comprising in its genome a foreign gene effective to cause the expression of a foreign gene product in the cells of the soybean plant.”703

Since the Opposition Division arrived at the conviction that the patentee for the first time provided such a transformed soybean plant, it found this claim to be in line with

699 See, e.g. UPOV Doc. CAJ/XXIII/3, Annex, at 1.700 EP 445 929, as mentioned above, at point B.I.1.701 “1. Soft-milling wheat having an SDS-sedimentation volume, measured as in Experiment 2 described herein and corrected to 11% protein, of not greater than about 30ml.”702 See above point B.I.1.703 See EP 301 749 B1, available at http://www.espacenet.com/access/index.en.htm, or the statement of grounds of appeal of 23 December 2003, at 6, para. 15, available at http://ofi.epoline.org/view/GetDossier, publication number EP301749.

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the EPC.704 This is consistent with established practice in other areas, for instance chemicals. The decision has been appealed by the NGO ETC Group, arguing that the contribution of the art of the patentee was only a single method of achieving artificially genetically-modified soya and that “Article 83 and 84 EPC are designed to reflect a principle that the terms of a claim should be commensurate with or be justified by the invention”.705 Critic has also been voiced by plant breeders.706

5. Implications for farmers

Patent opponents are further concerned with the impact that patents could have on the activity of farmers. It is feared, in particular, that patents on crop genetic components could lead to cases of innocent infringement as the protected components could be transferred to adjacent fields by pollen flow. As will be seen below, cases of occasional contamination have to be distinguished from cases where a farmer has not intentionally acquired the protected variety in the first place, but has consciously selected for the protected plant trait once his population is contaminated.

More generally, notwithstanding the issue of whether infringement is voluntary or not, patent critics argue that patents on plants infringe on the basic rights of farmers to save and exchange harvested seed. However, Art. 11 of the EC Biotechnology Directive demonstrates that this restriction on practices of farmers is not an intrinsic feature of patent protection.

6. Biopiracy

NGOs and commentators finally criticise that allowing “life-form” patents supports the practice of “biopiracy” in which traditional knowledge and genetic resources taken from developing countries become “owned” by corporations.707 A case which well illustrates the involved issues is the aforementioned revoked patent EP 445 929, which involved a genetic trait of the Indian landrace “Nap Hal”.708 In this context it is crucial to distinguish two issues: The first is whether patents granted under a regime such as the EPC regime could prevent farmers and breeders from continuing an activity they are already undertaking. The second issue is whether such a patent can deprive them of an option of delayed, but independent technological progress. Therefore, in the following sections particular attention needs to be paid to what exactly was the subjectmatter of the granted patent claims: The existing landrace, the plant trait, the gene, the breeding result obtained when crossing the Nap Hal trait into elite germplasm, or a specific use of any Nap Hal variety in a breeding programme? The issue at stake was not the “ownership” or coverage of the existing landrace by the scope of the claims

704 See Interlocutory decision in the opposition proceedings of 28 August 2003, grounds for the decision, point 12, available at http://ofi.epoline.org/view/GetDossier. 705 See Statement of grounds of appeal of 23 December 2003, para. 22, available at http://ofi.epoline.org/view/GetDossier.706 See LE BUANEC (2004), at 11.707 See e.g. the literature survey of DUTFIELD (2000b), at 35 et seq., with references; Greenpeace (2001), at 18/19.708 On the following see the European Patent Specification EP 445 929.

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which clearly referred only to soft-milling wheat, whereas Nap Hal is hard-milling. But the patent could have had implications for the use of the previously freely available landrace in conventional breeding programmes.

II. Patentable subject matter: Invention

1. Examples of claimed subject matter

The following elements have inter alia been claimed in patent applications for plant related inventions:

- Proteins having their natural amino acid sequence;709

- Genomic DNA isolated from its natural environment, including entire genes, either of plant origin or isolated from a micro-organism;710

- Molecular markers, which are either defined by their sequence characteristics or their link to a target gene or by the sequences flanking the polymorphous DNA regions;711

- Promoters or DNA regulatory regions, which are plant derived;712

- Plants defined by a combination of genetic components they contain, each of which is naturally occurring in this species.713

Claims to DNA, RNA and proteins that have been derived by isolation from a natural origin or which have at least the same nucleotide sequence or amino acid structure as the natural occurring components and plants obtained by selection breeding raise the question whether such material can fall under the concept of “invention” and where the borderline should be drawn between an invention and a discovery which is excluded from patentability under Art. 52(2)(a) EPC.

2. A priori patentability of biological material

The invention concept has evolved over time and a definition in patent laws has been avoided in order to leave granting offices and courts a margin to adapt the requirement to new technological developments.714 The key word which is often used to resume the invention concept is “technical teaching” or “Lehre zum technischen Handeln”, whereby this concept has been reframed as “a teaching to methodically utilize controllable natural forces to achieve a causal, perceivable result” by the German Federal Supreme Court in order to accommodate inventions in the sphere of animate nature.715

709 See, e.g. claim 12 of EP 1 076 093 (Sakuranetin synthase gene). 710 See, e.g. EP 1 003 364, claim 14 or EP 1 076 093, claim 1(a).711 See, e.g. EP 998191, claim 1 and 3; EP 1 003 364, claim 8; EP 835 324, claim 1.712 See, e.g EP 1 076 093, claim 9.713 See, e.g. EP 445 929, as briefly described above at point I.1.714 See e.g. SCHULTE (2001), at 8, on § 1 German Patent Law.715 See BGH (German Federal Supreme Court), decision of 27.03.1969 - “Red Dove”, reproduced in English in IIC 1970, 136 et seq.

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The EPC does not contain any definition of the term “invention”.716 But according to the Examination Guidelines of the EPO717 and case law718 it can be concluded from the list of subject matter which shall not be regarded as inventions and from the relevant rules of the Implementing Regulations that an invention must be of a concrete and technical character. “[T]he invention must be of ‘technical character’ to the extent that it must relate to a technical field (Rule 27(1)(a)), must be concerned with a technical problem (Rule 27(1)(c)), and must have technical features in terms of which the matter for which protection is sought can be defined in the claim (Rule 29(1)) […].”719

Another formulation of the same approach is that an invention constitutes a solution to a technical problem.720

Applying the above definition to biological material721 does not pose a problem if one accepts that technical may not be understood as opposed to biological. The question whether biological material or processes using or producing such material can be technical in the sense of the invention concept was certainly controversial in the beginning,722 but was very soon answered in the affirmative by the pertinent case law.723 Under current European patent law there exists no prohibition or exclusion which precludes a priori the patentability of biological material or related processes.724

This principle, well established by case law,725 has been affirmed by Recital 15 and Art. 3(1) of the EC Biotechnology Directive and by R. 23b EPC. Sciences concerned with biological matters, such as genetic engineering and plant breeding, are recognized as technical fields. Moreover, with the increasing understanding of and control over the chemical reactions at the basis of biological processes, innovations in this field can now be defined by technical features.

716 See EUROPEAN PATENT OFFICE (2003a), “Guidelines for Examination in the European Patent Office”, C.IV.2.1.717 See id.718 See, e.g. T 22/85, point 2 of the reasons: “Whatever their differences, these exclusions have in common that they refer to activities which do not aim at any direct technical result but are rather of an abstract and intellectual character.”719 See EUROPEAN PATENT OFFICE (2003a), C.IV.1.2(ii).720 See, e.g. Opposition Division, V 8/94 (Relaxine/HOWARD FLOREY INSTITUTE), decision of 8.12.1994, reasons, point 5.4; Technical Board of Appeals, T 158/88, point 3 of the headnote and point 3.1 et seq. of the reasons.721 Art. 2(1)(a) of the EC Biotechnology Directive defines “biological material” as “any material containing genetic information and capable or reproducing itself or being reproduced in a biological system;” see also R. 23b EPC.722 See, for instance, on the German doctrine NEUMEIER (1990), at 70 et seq. and NACK (2002), at 178 et seq.723 See, e.g. for Germany, BGH (Red Dove), as above note 715, at 136 et seq.724 See EC Biotechnology Directive, Recital 15. 725 See, for instance, T 49/83 (Propagating Material/CIBA GEIGY), point 2 of the reasons, which based its view on “Art. 52(1) in conjunction with Art. 53(b) after the semi-colon, and rules 28 and 28a EPC.”

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3. Demarcation between invention and discovery

a) Solution to a technical problem

Inventions in the sphere of animate nature not being unpatentable as such, certain types of biological material could nevertheless fall out of the ambit of patent law, if they are covered by the concept of “discovery”. One way to draw the line between inventions and discoveries is based on the following definition:

“In our common usage of the term, a ‘discovery’ is the acquisition of knowledge of a new but already existing fact about the world. An ‘invention’, on the other hand, is something that someone creates or develops which did not previously exist.”726

An isolated gene or protein has not been created or developed. The molecule pre-existed in nature and its isolation and description would thus be considered a mere discovery, even if the description includes information about its functions.

Yet, the EPO takes a different approach. Pursuant to the above definition, the decisive criterion for the demarcation is that an invention must provide a solution to a concrete technical problem. The idea behind this requirement is that an invention extends human ability, whereas discovery only extends human knowledge.727 As formulated in British case law, “[i]nvention necessarily involves also the suggestion of an act to be done and it must be an act which results in a new product, or a new result, or a new process, or a new combination for producing an old product or an old result.”728 In this view, it is this suggestion of an act impacting the exterior world,729 which gives the invention “a concrete and technical character”, and which opposes it to the concepts excluded from patentability under Art. 52(2) EPC.

726 See NUFFIELD COUNCIL ON BIOETHICS (2002), at 23. For early citations from the German patent literature in the same vein, see NACK (2002), at 228/229. 727 See e.g. SCHULTE (2001), at 82, para. 61, with respect to gene-based inventions. See also CRESPI (1999/2000), at 200, citing an English judgement of 1903.728 See id., at 200.729 Interesting in this context is the case law of the EPO Boards of Appeal on the patentability of computer-related inventions. T 208/84 (VICOM), para. 5 of the reasons; T 1173/97 (Computerprogramme product/IBM), at point 5.1 et seq. of the reasons.

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This approach, which is partly criticised in the legal literature for its boundlessness, 730

allows naturally occurring biological material to be the subject of an invention based on two lines of argument:731 Firstly, a discovery can be converted into an invention by the teaching of a technical effect that this discovered material produces. In order to illustrate the delimitation of discovery and invention, the Guidelines for Examination in the EPO explain that “[t]o find a previously unrecognised substance occurring in nature is […] a mere discovery and therefore unpatentable. However, if a substance found in nature can be shown to produce a technical effect it may be patentable”.732

The question of whether the patented material already existed in nature is therefore not decisive for the invention definition.733 The crucial point is that the control of the technical effect adds to human capacity by providing a solution to a technical problem. The Guidelines cite as examples a substance occurring in nature which is found to have an antibiotic effect, or a micro-organism found to produce an antibiotic.734

“Similarly, a gene which is discovered to exist in nature may be patentable if a technical effect is revealed, e.g. its use in making a certain polypeptide[735] or in gene therapy.”736

Secondly, the qualification as an invention may be based on the fact that biological material has been isolated from its natural habitat by technical means. It is argued that in its isolated state, it is not a discovery,737 but “the result of technical processes used to identify, purify and classify it […], techniques which human beings alone are capable of putting into practice and which nature is incapable of accomplishing itself

730 NACK (2002), at 165 et seq., observes generally with respect to the problem-solution approach that possible problems are as diverse as the totality of human existence and that it is questionable whether any subject matter may exist that can not be conceived as a solution to a problem. He concludes that there remains only a very small area where this concept unambiguously constitutes a bar to patentability. Only where a problem is claimed without disclosing a solution, it cannot be subject matter of a patent. In the same vein, VIVANT/ BRUGUIÈRE (2003), at 286, hold that the criterion “technical” does not lead to any delimitation of the circle of patentable innovations, as “tout peut être dit technique”. SELLNICK (2002), at 123, points out that inventions in the sense of technical teaching and scientific theories do not differ in their logic or their knowledge content, but in their purpose [“Zweckrichtung”], which for inventions lies in a particular industrial application. He therefore suggests that the envisaged industrial application should be an integral part of the invention concept. VIVANT/BRUGIÈRE (2003), at 288 propose the same approach. Interestingly, the Opposition Division in its decision of 08.12.1994, V 8/94, point 5.4 of the reasons, stated that “[an invention] should constitute an industrially applicable technical solution to a technical problem”. (Emphasis added.)731 See also OSER (1998), at 650.732 See EUROPEAN PATENT OFFICE (2003a), at C.IV.2.3.1.733 See also EUROPEAN PATENT OFFICE (2003a), C.IV.2a.2; SELLNICK (2002), at 122.734 See EUROPEAN PATENT OFFICE (2003a), C.IV.2.3.1.735 A polypeptide is a linear series of amino acids linked together with peptide bonds, also called protein, protein chain. See GLICK/PASTERNAK (1998), at 650. 736 See EUROPEAN PATENT OFFICE (2003a), C.IV.2.3.1.737 See id.

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[…].”738 The technical problem to be solved by the invention is seen in the provision of a new useful isolated material.

b) Patentability of biological material in its original state

There is a large consensus in the patent community, that biological material may be considered as an invention where both of the above arguments apply, i.e. where it has been made available for the first time by a technical process and a technical effect has been disclosed. The typical example used in the specialised literature for explaining the invention concept in the area of biotechnology is isolated DNA with a defined biological function. In the case of human gene sequences or micro-organisms the naturally occurring material in its natural state is not usually suitable for the technical use found by the inventor. Only their isolation and, in certain cases, further steps make it available and usable for the claimed purpose.739 This permits the opposition of the discovery of material in its natural environment and the invention referring to isolated material with a useful function, while at the same time maintaining the above approach, which bases the demarcation on the technical character of the invention. In these cases, it seems fully consistent with the above invention concept to allow the inventor to claim not only the technical effect he has contributed to the art, but also the means for producing this technical effect, i.e. the substance or microorganism or gene, as aspect of the invention.

Yet, in the area of plant breeding inventions the supposed antagonism between “the mere finding of something freely occurring in nature” and “an industrially applicable technical solution to a technical problem”,740 is less clear-cut. One could, for instance, argue that a previously unavailable naturally occurring plant population containing a resistance gene constitutes an industrially applicable solution to a technical problem (that of providing plants with good yields under pathogen stress). It could be concluded that the plants as such may be claimed.

There has been little practice on this problem to date, as the issue of patentability of plants under Art. 53(b) EPC has been settled only quite recently. But, it is important to note that there seems to be a consensus in the doctrine that finding biological material freely occurring in nature, i.e. material which does not have to be made available by a technical procedure, is not an invention, even if it is characterized for the first time.741

738 See EUROPEAN PATENT OFFICE (2003a), C.IV.2a.2, with a reference to recital 21 of EC Dir. 98/44/EC. The EPO Boards of Appeal can now base their decisions on R. 23c(a) and 23e(2) EPC, which were introduced in 1999. R. 23c(a) EPC provides that: “Biotechnological inventions shall be patentable if they concern: (a) biological material which is isolated from its natural environment or produced by means of a technical process even if it previously occurred in nature”. R. 23e(2) refers in quite similar terms to the elements of the human body. For a decision invoking R. 23e(2) rather than discussing the concepts of "invention" and "discovery", see e.g. T 272/95, points 6/7 of the reasons.739 See TESCHEMACHER (1987), at 306, with respect to microorganisms.740 So the formulation of the Opposition Division in V 0008/94, point 5.4. 741 See GOEBEL (2000), at 179; SCHULTE (2001), at 87, para. 84; POLLAUD-DULIAN et al.(1997), at 47. See also VIVANT/BRUGUIÈRE (2003), at 292, arguing in favour of purpose-bound claims, where the claimed product was freely available in nature.

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An additional legal argument in favour of this view can now be derived from Art. 3(2) of the EC Biotechnology Directive. If biological material “which is isolated from its natural environment or produced by means of a technical process” may be the subject of an invention in spite of the fact that it previously occurred in nature, e contrario it has to be concluded that biological material which previously occurred in nature, but does not need to be isolated or produced by a technical process may not be considered an invention. Further, it can be concluded from this Article that genomic DNA in its natural, i.e. non-isolated, state cannot be claimed as such.

Yet, this does not solve the issues raised by the Nap Hal case outlined earlier. The Nap Hal patent did not directly claim pre-existing plant populations or a plant genetic trait as such. Prior to the invention soft-milling wheat strains containing the double-null trait were not available. The pertinent question here is whether the exclusion of discoveries might also apply to claims which cover the product of the use of traditional plant germplasm in a conventional breeding programme. Not surprisingly, the EPO has answered this question in the negative in the Nap Hal case. The problem of this approach is that the permitted claims can have an effect quite similar to the effect that a claim directed to the naturally existing non-isolated plant genetic trait would have. In the Nap Hal case only the product of a specific use falls within the ambit of the patent, as it concerns only crosses with soft-milling wheat. But another example taken from an international application recently filed by Monsanto shows that claims could be formulated in such a way that virtually all economically interesting uses of a genetic trait are covered.742 It will be interesting to see how the European Patent Office will deal, for instance, with claim 33, which refers to

“[a] Glycine max plant, which exhibits an enhanced yield compared to a first parent, said Glycine max plant comprising a genome homozygous or heterozygous with respect to genetic alleles that are native to a second parent selected from a group consisting of Glycine soja PI407305 and progeny thereof and non-native to a first parent, wherein said first parent is an elite Glycine max plant.”

In soybean, the gene pool used for breeding consists of the adapted Glycine max soybean strains and its wild counterpart Glycine soja, which can be mated and produce viable fertile hybrids.743 At the core of the invention is the identification of a number of molecular markers which are linked to the quantitative trait loci associated with enhanced yield naturally present in the Glycine soja introduction PI407305 originating from China. As in the Nap Hal case, PI407305 which naturally contains these allele and markers associated with enhanced yield is not covered by the patent claim. Yet,

742 International publication number WO 00/18963, international publication date 6 April 2000. It should be noted that while this application has designated European Patent Convention States, the width of some of its claims, partly referring to plants defined by their entire genome can only be explained against the background of the current practice in the US. (See for instance claim 64: “A Glycine max plant or part thereof selected from the group consisting of C83-1, C83-2, C83-3 and C83-75 or progeny thereof.”) These claims are not indicative of what is patentable in Europe.743 See WO 00/18963, “Background of the Invention”, at 2.

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what is ultimately covered is the product of the use in any conventional breeding programme aiming at introgressing the enhanced yield trait into Glycine max plants. The naturally occurring trait, even though it has not been directly claimed is thus removed from the domain of freely accessible germplasm.

If one applies the above invention concept, this result seems to be legally consistent with the current interpretation of Art. 52(1) and (2)(a) EPC. It may be recalled that a filter is provided by the requirements that the claimed product must further be novel in the sense of having been made available for the first time to the public and must in addition be inventive. Especially in cases where the naturally occurring trait has already been known and used in conventional breeding, this latter requirement could play a crucial role. Art. 53(b) EPC is no obstacle to claims of the above type as the technical feasibility of the claimed invention is not confined to a particular plant variety. The essentially biological process is not claimed, only its results. De lege latathis outcome is tenable. De lege ferenda, however, it should be emphasized that it raises not only equity issues as long as no compensation mechanism for germplasm providers from the South is in place, but also seems an unsatisfactory result against the background of the strong attachment of breeders to the breeders’ exemption and their opposition to the patentability of plant genes indigenous to the genome of the claimed species.

In summary, according to the dominant view, European patent law does not permit product claims to biological material in its original state. But claims directed to specific uses of this biological material, e.g. in a conventional crossing programme, and the results of such uses are not excluded from patentability under the exception of Art. 52(2)(a) EPC. Further, proteins having their natural amino acid sequence but produced outside the source organism or genomic DNA isolated from its natural environment are not considered to be discoveries.

c) Absolute product protection for DNA sequences

Whereas the possible qualification as invention of a teaching to use a naturally existing plant genetic trait in achieving a certain breeding result has been rarely discussed so far, the admissibility of product claims directed to isolated DNA molecules without any reference to a technical effect, i.e. to a biological function, has received a lot of attention since the coming into force of the EC Biotechnology Directive. The fundamental role of the biological function in determining the patentability of DNA sequences led stakeholders and legal commentators to suggest that the function should be systematically included as limiting feature in any claim to DNA sequences.744

Yet, in EPO practice, while such limitations can be found in individual cases, they are not imposed as a general rule.745 This corresponds to the long-standing practice in the

744 This suggestion is, for instance, reported by SCHATZ (2002), at 9.745 See SCHATZ (2002), at 9. For examples of types of claims which can be used in patent applications for DNA sequences, see also BOSTYN (2001), at 105.

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area of chemical or pharmaceutical product inventions.746 The technical problem solved by the inventor of a chemical product invention is seen in the provision of a new chemical compound of a defined constitution, not in the provision of the technical or therapeutical effect, even though the indication of such an effect is necessary for the compound to meet the industrial applicability requirement. Even in these technical fields this approach, or at least its systematic application, has met criticism.747

In the area of biotechnology, proponents of a function limitation in claims argue that assimilating genes to ordinary chemical compounds is a misconception. MARKL, for instance, explains why the formulation of the problem to be solved should be different in the area of DNA sequences:748

“We should, however, be carefully aware that it is not the chemical formula of a gene but the functional information which is truly patentable content and only from providing access to such a functional process – and not from the genetic substance itself, as in a natural biochemical compound, for instance an anti-biotic – can the marketable benefit be derived.”

However, the invention concept as applied today under European patent law does not integrate the question from what exactly the marketable benefit will be derived, i.e. ultimately on the industrial applicability requirement.749 Industrial applicability is dealt with separately and does not limit the claims. The critic of this approach certainly merits reflection.750

Other authors agree that, with modern bioinformatics, isolating and purifying a gene sequence or partial gene sequence can, in general, no longer be considered an

746 See SINGER/STAUDER (2000), at 103, para. 9; see also STRAUS (2001), at 1017/1018, with reference to one of the cases founding this approach, BGH, GRUR 1972, 541 – “Imidazoline”.747 See, e.g. NACK (2002), at 167, who criticizes that the formulated problem is rather abstract. See also CORNISH (1996), at 158/159. He concludes that “[t]he present approach is nonetheless acceptable for its simplicity, so long as one assumes that for the most part first discoveries represent the most important breakthroughs.” Very interesting in this context is also the argumentation in T 939/92 “Triazoles/AGREVO”, reasons, point 2.5.748 Presentation on “Genes for Properties, Property of Genes” held at the Symposium “Who Owns the Human Genome?” on 28 June 2001 in Munich, Germany, as quoted in STRAUS (2001), at 1017.749 It is interesting, however, to note that “industrial applicability” does appear from time to time in invention definitions used in EPO case law. See e.g. T 854/90 (Lecteur de carte/IBM), point 2.1 of the reasons; Opp. Div. V8/94, point 5.4 of the reasons, defining invention as “industrially applicable technical solution to a technical problem”. Yet, in these decisions this inclusion did not have any limiting effect on the invention concept. Furthermore in T 953/94, point 3.11 of the reasons the Board clearly stated that the requirement of claimed subject matter being an invention was distinct from the requirement of the claimed invention being “susceptible of industrial application”. 750 See SELLNICK (2002), at 123, who argues that it is only the industrial applicability which permits to distinguish the invention from scientific theories, which are excluded under Art. 52(2)(a) EPC. This is also suggested by VIVANT/BRUGUIÈRE (2003), at 288, which reference to other authors. SCHERTENLEIB (2003), at 127, holds that it is the industrial application of an isolated gene which converts the discovery into an invention. However, by basing his conclusion on the recitals 20 et seq.of the Biotechnology Directive, he implies that this cannot be deduced from the invention concept as generally applied.

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inventive contribution to the art and that, in such constellations, the inclusion of the function in the claims as a limiting feature is only consistent with the current approach of patent law.751 Without this reformulation of the technical problem, the invention would in fact not meet the inventive step requirement. Yet, STRAUS emphasizes that this cannot justify a systematic limitation of claims in the area of DNA molecules. He calls for a differentiation between standard cases and situations where the isolation of the DNA molecule and the identification of its sequence as such necessitated an inventive effort.752

The question of whether this general legal approach under European patent law has been modified by the provisions of the EC Biotechnology Directive is controversial.753

On the one hand, Recital 23 points out that “a mere DNA sequence without indication of a function does not contain any technical information and is therefore not a patentable invention”. On the other hand, Art. 3(2) states that “biological material which is isolated from its natural environment or produced by means of a technical process may be the subject of an invention […]”. This seems to suggest that it is the biological material itself, not only the disclosed use for this material based on its function which may be covered by the patent.754 In Recital 23, Recital 22, last sentence,755 and Art. 5(3),756 the Directive lays down the requirement to indicate in the patent application a technical effect or a function with respect to sequences or partial sequences of genes. But it remains ambiguous whether this is a problem of industrial applicability or of the definition of the technical problem to be solved. Whereas the aforementioned recital 23 seems to point to the latter approach, recital 24 seems to indicate that the indication of the function as required by the Directive concerns the industrial applicability requirement.757

It also has to be taken into account that according to Recital 34, the Directive “shall be without prejudice to concepts of invention and discovery, as developed by national, European or international patent law”. The Implementing Regulations of the EPO have

751 See STRAUS (2001), at 1020; SCHATZ (2002), at 11, explaining the view of proponents of purpose-bound claims.752 See STRAUS (2001), at 1020.753 See e.g. BOSTYN (2001), at 104, note 25, on the various interpretations to which Art. 5(3) EC Biotechnology Directive gives rise; SCHATZ (2002), at 11/12; GUTMANN (2003), at 348. Interestingly, the EU Comission, in its Report “Development and implications of patent law in the field of biotechnology and genetic engineering”, avoids to take position. See EUROPEAN COMMISSION (2005), at point 2.1.754 See also CRESPI (1999/2000), at 200/201, who argues that the possibility of gene per se claims has been confirmed by Art. 5(2) of the Directive which is substantially identical to Art. 3(2), but concerns elements of the human body. 755 Recital 22, last sentence, reads as follows: “whereas the industrial application of a sequence or partial sequence must be disclosed in the patent application as filed;”756 Art. 5(3) reads as follows: “The industrial application of a sequence or a partial sequence of a gene must be disclosed in the patent application.”757 Recital 24 reads as follows: “[…] in order to comply with the industrial application criterion it is necessary in cases where a sequence or partial sequence of a gene is used to produce a protein or part of a protein, to specify which protein or part of a protein is produced or what function it performs.”

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opted for the “industrial applicability”-solution,758 which corresponds to the practice of the EPO. National legislators have partly opted for purpose-bound claims.759

III. Exceptions to patentability

Art. 53 EPC lays down two exceptions to patentability that are significant in the present context. Both exceptions are restated and clarified in the Biotechnology Directive.

1. Inventions contrary to “ordre public” and morality

Under Art. 53(a) EPC inventions the publication or exploitation of which would be contrary to ordre public or morality are excluded from patentability. The proviso of the 2nd half-sentence specifies that “the exploitation shall not be deemed to be so contrary merely because it is prohibited by law or regulation in some or all Contracting States.”760 The EC Biotechnology Directive expressly excludes a list of processes and products in the field of genetic engineering from patentability as contrary to ordrepublic and morality.761 However, referring merely to manipulation of genetic material of human beings and animals these exclusions will not affect plant breeding research in any way.

NGOs have repeatedly invoked Art. 53(a) EPC in opposition proceedings to plant related patents on grounds that the environmental and socio-economic consequences of GM crops and the monopolisation of germplasm by patents infringes on ordre publicand morality.762 Most of their arguments were not accepted by the Boards of Appeal. While emphasizing the necessity of a case-by-case assessment, they retreated to a very cautious control in order to leave fundamental societal decisions, which go far beyond issues of patentability, to the competent bodies, especially the legislator.

758 See R. 23c(a) and 23e(3) EPC.759 See above note 149.760 According to EPO Guidelines (EUROPEAN PATENT OFFICE (2003a), C.IV.3.2), one reason for this is that a product could still be manufactured under European patent for export to States in which its use is not prohibited. In the Case C-377/98, concerning the legal action by the Netherlands Government before the European Court of Justice against the Directive 1998/44, the Advocate General Jacobs stated on the very similar Art. 6(1), 2nd sentence, of the Directive that even though (at the time of giving his opinion) there was a moratorium on EU regulatory approvals for the planting of genetically modified (GM) crops, this did not mean that the grant of patents in respect of GM crops was excluded on ordre public or morality grounds. As cited in CURLEY/SHARPLES(2002), at 566.761 See Art. 6(2) of the Directive.762 See e.g. interlocutory decision in opposition proceedings related to EP 301 749, grounds for the decision, at point 2.1 of the reasons, available at http://ofi.epoline.org/view/GetDossier; statement on grounds for opposition against EP 445 929, dated 16/03/2004, available at http://ofi.epoline.org/view/GetDossier, (link: patent document cited during the patent procedure).

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a) Case by case assessment of ethical and environmental issues

In the “Onco-mouse” case,763 the Examining Division had concluded that patent law was not the right legislative tool for resolving ethical and environmental issues.764 The Technical Board of Appeal, however, emphasized that precisely in a case involving genetic manipulation of animals there are compelling reasons to consider the implications of Art. 53(a) EPC and remitted the case.765 The suffering caused to the animal, as well as the danger that genetically manipulated animals, if released into the environment, might result in unforeseeable and irreversible adverse effects, had to be considered by the department of first instance.766 As a guideline the Board introduced a balance approach: “The decision as to whether or not Article 53(a) is a bar to patenting the present invention would seem to depend mainly on a careful weighing up of the suffering of animals and possible risks to the environment on the one hand, and the invention’s usefulness to mankind on the other.”767 Yet in the decision “Plant Cells”,768 the competent Board reduced the significance of this approach by observing that “such a ‘balancing exercise’ is not the only way of assessing patentability with regard to Article 53(a) EPC, but just one possibility, perhaps useful in situations in which an actual damage and/or disadvantage (e.g. suffering of animals as in the case of decision T 19/90 supra) exists.”769

b) The concept of morality applied to genetic engineering

“The concept of morality is related to the belief that some behaviour is right and acceptable whereas other behaviour is wrong, this belief being founded on the totality of the accepted norms which are deeply rooted in a particular culture.”770 Accordingly, Art. 53(a) EPC excludes from patentability inventions the exploitation of which “is not in conformity with the conventionally-accepted standards of conduct pertaining in this culture.”771

With respect to inventions concerning living organisms or relating to processes for their production, the Board observed in the “Plant cells” decision that the mere fact

763 The case at issue in decision T 19/90 (Onco-Mouse II/HARVARD COLLEGE) involved the genetic manipulation of mammalian animals by insertion of an activated oncogene, which makes the animal abnormally sensitive to carcinogenic substances and consequently prone to develop tumors.764 See summary by the Technical Board of Appeal of the main arguments of the Examining Division, T 19/90, point II (c) of the summary of facts and submissions. 765 See id., point 5 of the reasons.766 See id.767 See id.768 The object of the invention disputed in T 356/93 (Plant Cells/PLANT GENETIC SYSTEMS) was to develop plants and seeds resistant to a particular class of herbicides by stably integrating into their genome a DNA sequence encoding a protein capable of inactivating or neutralising the herbicides.769 See id., point 18.8 of the reasons.770 See id., point 6 of the reasons.771 See id. The Guidelines (EUROPEAN PATENT OFFICE (2003a), C.IV.3.1) formulate the same idea as follows: “A fair test to apply is to consider whether it is probable that the public in general would regard the invention as so abhorrent that the grant of patent rights would be inconceivable.”

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that these inventions relate to living matter772 or the argument that plant genetic resources should remain the “common heritage of mankind” did not preclude them from patentability.773 The Board equally rejected the appellants’ view that plant genetic engineering techniques as such could be contrary to morality. In the Boards judgement, “plant biotechnology per se cannot be regarded as being more contrary to morality than traditional selective breeding because both traditional breeders and molecular biologists are guided by the same motivation, namely to change the property of a plant by introducing novel genetic material into it in order to obtain a new and, possibly, improved plant.”774 The Board recognized that genetic engineering allows a “more powerful and accurate control of genetic modifications. […] The impressive potential of these techniques is at the origin of the concerns and apprehensions expressed by public opinion […]”775 The Board also acknowledged that plant genetic engineering can be used for constructive and destructive purposes, yet remarked that this is equally true for any other science.776 Therefore in each individual case it had to be established whether or not the claimed subject matter related to a misuse or to a destructive use of plant biotechnology.777 Applying the standard of conventionally accepted conduct of European culture, the Board concludes that the protection of plants by herbicides is a normal practice in agriculture and that consequently the subject matter was not misusing plant biotechnology techniques.778

These principles were confirmed in the decision of the Enlarged Board of Appeal “Transgenic Plant/NOVARTIS II”.779 Replying to an argument of Greenpeace, the Board emphasized that “the EPO has not been vested with the task of taking into account the economic effects of the grant of patents in specific areas and of restricting the field of patentable subject-matter accordingly.”780 Recalling the standard to apply under Art. 53(a) EPC the Board concluded that “although the positions adopted in society on genetic engineering are controversial […], there is no consensus in the Contracting States condemning genetic engineering in the development of plants under the aforementioned criteria.”781

c) The concept of ordre public applied to genetic engineering

According to established case law, the concept of “ordre public” covers the protection of public security and the physical integrity of individuals as part of society. This

772 See T 475/01 (Phosphinothricin-Resistenzgen/BAYER), point 9 of the reasons.773 See T 356/93 (Plant Cells/PLANT GENETIC SYSTEMS), point 10 of the reasons.774 See T 356/93 (Plant Cells/PLANT GENETIC SYSTEMS), point 17.1 of the reasons.775 See id.776 See id.777 See id.778 See id., point 17.3 of the reasons.779 In G 1/98 the Enlarged Board of Appeal had to deal with an invention referring to transgenic plants comprising in their genome foreign genes, the expression of which results in the production of an antipathogenically active substance. 780 See id., point 3.9 of the reasons.781 See id. See also T 475/01 (Phosphinothricin-Resistenzgen/BAYER), point 10 et seq. of the reasons, invoking the consensus expressed in Art. 4 of the EU Biotechnology Directive.

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concept encompasses also the protection of the environment.782 “Accordingly […] inventions the exploitation of which is likely […] to seriously prejudice the environment are to be excluded from patentability as being contrary to ‘ordre public’.”783

In principle, the implications of Art. 53(a) EPC for an invention involving genetic engineering have to be considered in each case. However, in the decision “Plant Cells” it becomes clear that – for valuable reasons – the EPO exercised only a very limited control.784 The Technical Board preferred to leave the assessment of permissible environmental risks to the competent regulatory authorities and bodies. It based its argument on the nature of the right conferred by a patent785 and the limited means and functions of patent offices,786 which are often not able to anticipate potential risks of the exploitation of an invention merely on the basis of the disclosure in the patent specification. In contrast, specialized national regulatory authorities and bodies both have a duty and are in a position to carry out realistic assessment of the risk. The Board concluded that exclusion from patent protection on the grounds that the exploitation of the invention would seriously prejudice the environment “presupposes that the threat to the environment be sufficiently substantiated at the time the decision is taken by the EPO.”787 Applying these principles to the case at issue in “Plant Cells”, the Board held that no conclusive evidence in this respect had been presented by the appellants.788 Most of the appellants’ arguments were based solely on the possibilitythat some undesired events (e.g. transformation of crops into weeds, spreading of the herbicide resistance gene to other plants, damage to the ecosystem) might occur.

2. Exclusion of plant varieties

The exception under Art. 53(b) of the EPC789 is restated in slightly different terms in Art. 4 of the Directive.790 However, the Directive does not confine itself to simply reiterating these exceptions, but seeks to settle a number of controversial issues that have occupied legal commentators and EPO Boards for years. This discussion,

782 See, e.g. T 356/93 (Plant cells/PLANT GENETIC SYSTEMS), point 5 of the reasons.783 See id. The definitions provided in T 356/03 were confirmed as “working definitions” in T 315/03 (Transgenic animals/HARVARD), point 10.10 of the reasons. However, the Board in T 315/03 emphasized the difficultires of establishing such a standard.784 It has to be kept in mind, that the standard example for inventions which fall under Art. 53(a) EPC are “inventions likely to induce riot or public disorder, or lead to criminal or other generally offensive behaviour” such as “letter-bombs” and “anti-personnel mines”. See EUROPEAN PATENT OFFICE (2003a), C.IV.3.1. This high threshold is thus not a particularity of the field of biotechnology. 785 A patent may only be exploited in the framework defined by national laws and regulations. 786 See T 356/93, points 18.1 – 18.4 of the reasons. 787 See id., point 18.5 of the reasons.788 See id., point 18.6 et seq. of the reasons.789 Art. 53 reads in its relevant parts as follows: “European patents shall not be granted in respect of […] (b) plant or animal varieties or essentially biological processes for the production of plants or animals; this provision does not apply to microbiological processes or the products thereof.”790 Art. 4 reads in its relevant parts as follows: “1. The following shall not be patentable: (a) plant and animal varieties; […]. 2. Inventions which concern plants or animals shall be patentable if the technical feasibility of the invention is not confined to a particular plant or animal variety.”

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crystallised in several landmark decisions of the Boards of Appeal took place parallel to the drafting of the EC Directive. In “Transgenic Plants/NOVARTIS II”, the Enlarged Board of Appeal finally adapted the interpretation of Art. 53(b) to the will expressed in the Directive by a majority of EPC Member Countries.

a) Claims directed to plant varieties

There is a general agreement in case law791 and the legal doctrine that the concept of “plant varieties” has been borrowed from the UPOV Convention. Applying this concept, the Board of Appeal in “Propagating material/CIBA-GEIGY” found that “a claim directed to a propagating material, treated with chemical agents, […] without specific varieties being claimed individually does not contravene the prohibition on the patenting of plant varieties in Article 53(b) EPC.”792 The main argument was that Art. 53(b) EPC prohibited the patenting of plants or their propagating material only in the genetically fixed form of the plant variety.793 Likewise, but erroneously, hybrid plants were found not to fall under the prohibition of Art. 52(b), 1st half-sentence.794

Even more than from the UPOV 1961 definition, it becomes clear from the 1991 definition that the term plant variety refers to a multiplicity of plants that is defined by its entire genetic constitution. The shared characteristics result from a given genotype or combination of genotypes. This is also emphasized by Recital 30 of the Biotechnology Directive.795 To this concept, Recital 31 opposes a “plant grouping which is characterised by a particular gene (and not by its whole genome)”.796 Plants defined by a combination of traits, which are however not sufficient to determine the phenotypic or genetic constitution of the plant are clearly not plant varieties in this sense. As concerns, for instance, the “Nap Hal” patent, this is true for most, yet not all, of the claims.797

791 See T 320/87 (Hybrid plants/LUBRIZOL), point 12 et seq. of the reasons; T 49/83 (Propagating material/CIBA-GEIGY), point 2 et seq. of the reasons; T356/93 (Plant Cells/PLANT GENETIC SYSTEMS), point 23 of the reasons; G 1/98 (Transgenic plants/NOVARTIS II), point 3.1 of the reasons.792 See T 49/83 (Propagating material), headnote.793 See id., point 3 of the reasons. 794 While F1 hybrid populations do not remain stable after propagation in all their desired features, according to current UPOV practice they are nevertheless regarded as varieties. The hybrids themselves, not only parental lines can thus be protected by PBRs. See e.g. UPOV Doc. TG/2/6 + Corr., at 3 et seq.; LANGE (1996), note 38.795 Recital 30 reads as follows: “[…] A variety is defined by its whole genome and therefore possesses individuality and is clearly distinguishable from other varieties.”796 The same distinction is made in the decision G 1/98 (Transgenic Plant/NOVARTIS II), point 3.1 of the reasons.797 See claims 1 to 7. In contrast, claim 8 relating to “[s]oft-milling wheat having the essential genetic characteristics of strain NCIMB 40251” and claim 9 relating to “[w]heat of strain NCIMB 40251” should not be admissible under Art. 53(b) EPC. The argument that the strain does not constitute seed that would be regarded as a true registrable variety (see EP 445 929, Description, para. 29) is not pertinent as the UPOV 1991 Act makes a clear difference between the concept of “plant variety” and eligibility for protection under the DUS requirements.

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It was made further clear in recent case law and also follows from Recital 32 of the Biotechnology Directive that this definition applies to all types of plant varieties, “irrespective of the way in which they are produced,”798 i.e. also to genetically engineered plant varieties.799

b) Claims to plants, embracing but not individually claiming plant varieties

There is no doubt that claims directed to a plant variety in the above sense are excluded from patentability under Art. 53(b), 1st half-sentence, EPC and Art. 4(1)(a) of the EU Directive. The actual controversial issue is the meaning of the phrase “patents shall not be granted in respect of”.800 The discussion culminated in the question referred to the Enlarged Board of Appeal whether “a claim which relates to plants but wherein specific plant varieties are not individually claimed ipso facto avoid[s] the prohibition on patenting in Article 53(b) EPC even though it embraces plant varieties?”801

The Directive gives its answer in recital 31: “[…] a plant grouping which is characterised by a particular gene (and not its whole genome) is not […] excluded from patentability even if it comprises new varieties of plants.”802 One of the arguments against this approach to the interpretation of Art. 53(b), 1st half-sentence, EPC was that the patentability would then depend on the verbal skills of the patent attorney.803 The Directive counters this argument by specifying in Recital 29 and Art. 4.2 that “inventions which concern plants […] shall be patentable if the technical feasibility of the invention is not confined to a particular plant […] variety.” This was confirmed in the leading decision G 1/98 (Transgenic Plant/Novartis II),804 and is now established case law of the Boards of Appeal.805

798 G 1/98 (Transgenic Plant/Novartis II), headnote III.799 The idea that Art. 53(b) EPC could not apply in respect of animals and likewise plants which are genetically engineered was first suggested in decision T 19/90, point 4.8 of the reasons. It was argued that neither the drafters of the Strasbourg Convention nor those of the EPC could envisage this possibility. This argument was refuted by the referring Board in T 1054/96 (point 89 et seq. of the reasons) and the Enlarged Board of Appeal in G 1/98 (point 5 et seq. of the reasons).800 See Art. 53(b), 1st half-sentence EPC (emphasis added by the author). Art. 4(1) of the Directive avoids the terms “in respect of” and merely states that plant and animal varieties “shall not be patentable.”801 See T 1054/96 (Transgenic Plant/NOVARTIS I), question No. 2.802 Emphasis added by the author.803 See T 1054/96, point 20 of the reasons.804 See esp. point 3.1 of the reasons.The aforementioned decision “Propagating Material” had pointed in this direction when it referred to “the genetically fixed form of the plant variety” (T 49/83, point 3 of the reasons). However, in the decision T 356/93 (Plant cells/PLANT GENETIC SYSTEMS) the competent Board had taken a different approach (see points 40.7/8 of the reasons). Deciding on a claim directed to plants, which were characterised only by an integrated foreign DNA sequence encoding for a “non-variety specific” enzymatic activity, the Board held that “a claim which encompasses plant varieties” was not allowable under Art. 53(b), 1st half-sentence, EPC. The same view was taken by the Board in “Transgenic Plants/NOVARTIS I” referring the above question to the Enlarged Board. This dispute is now legal history, since the Implementing Regulations to the

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c) Genetic components of plants

The interpretation of Art. 53(b) EPC above opens the way to patenting specific genetic traits of plants. The subject matter excluded from patentability by the term “plant variety” is a genotype (or a population defined by a combination of genotypes). Genetic elements of plants are consequently patentable if they meet the general patenting requirements.806

While this legal approach has been developed to confer protection to biotechnologically engineered plant traits, its implications go far beyond the field of genetic engineering. It is unsure if the European legislator has been aware of the fact that the provisions of the Directive may not only permit the grant of exclusive rights for inventions which increase the genetic variability available to conventional plant breeders, but also for inventions which consist in a combination of two or more naturally occurring genetic characteristics indigenous to the concerned species, thus reducing the freely available genetic variability.807 The invention concept does not exclude this kind of subject matter; neither does the novelty criterion, as the combination of traits is made available for the first time. The inventive step requirement may function to a certain degree as a filter. Notwithstanding, the concern of breeders that genetic components which are indigenous to the target species could be claimed seems to be justified. A thorough examination de lege ferenda on the question of whether the identification of such plant traits deserves patent protection would be necessary.

d) Plant cells

Claims to plant cells generally refer to isolated plant cells and plant cells in tissue culture from which entire plants can be subsequently regenerated. In “Plant Cells/PLANT GENETIC SYSTEMS”, the Board concluded that “plant cells as such, which modern technology allows to culture much like bacteria and yeasts, cannot be considered to fall under the definition of a plant or of a plant variety”.808 This view has never been challenged.

As regards claims directed to plant cells “which are contained in a plant,” the same Technical Board of Appeal decision points out that

European Patent Convention, which have adopted this approach, are an integral part of the Convention and as such binding for all institutions applying the Convention. 805 See e.g. T 149/98 (Resistance development/BAYER), point 1 of the reasons; T 179/01 (Herbicide resistant plants/MONSANTO), point 9 of the reasons; T 475/01 (Phosphinothricin-Resistenzgen/BAYER), point 6 et seq. of the reasons; T 539/04 (Transgenic plants/SYNGENTA), where the Board orders the grant of a patent on the basis of, inter alia, a claim directed to a plant containing a specific genetic component, but does not consider it necessary any more to discuss Art. 53(b) EPC.806 See, e.g T 1054/96 (Transgenic plant/NOVARTIS I), point 34 of the reasons.807 See, e.g. claim 33 of WO 00/18963, cited above at II.3.b).808 See T 356/93 (Plant cells/PLANT GENETIC SYSTEMS), point 23 of the reasons; see also headnote 3.

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“plant cells contained in a plant are differentiated cells which are morphologically and functionally organised to constitute the plant. Thus, the subject-matter of [the concerned] claim irrespective of the way the latter is drafted, is nothing but a plant, and this claim does not exclude from its scope plant varieties […].”809

Plant cells contained in a plant thus share the fate of the plant material they are part of. If they are defined by their whole genetic make-up and not only by a specific genetic component, the claims will amount to a claim to a plant variety.

3. Exclusion of essentially biological processes

Art. 53(b), 1st half-sentence, restated in a slightly different language in Art. 4(1)(b) of the EC Biotechnology Directive, excludes “essentially biological processes for the production of plants” from patent protection. While there seems to be an agreement that the Contracting States drafting Art. 53(b) of the EPC wanted to exclude “classical breeders' processes” from patentability,810 the concrete application of this concept to the emerging new techniques and especially multi-step processes was the subject of controversial opinions expressed in legal doctrine811 and EPO case law.812 The ECBiotechnology Directive provides in its Art. 2(2) that “[a] process for the production of plants […] is essentially biological if it consists entirely of natural phenomena such as crossing or selection.”813 The same definition is laid down in R. 23b (5) EPC and the updated EPO Guidelines.814

Consequently, the character of a multistep process would now be determined by a single non-biological step irrespective of its importance. In the decisions T 356/93 the Technical Board of Appeal had still required that the essential technical step, which is part of the process for the production of plants, “has a decisive impact on the final result.”815 The Boards might see a conflict between R. 23b(5) and Art. 53(b), 1st half-sentence in certain instances.816

According to the approach of Art. 2(2) of the Biotechnology Directive any process involving a step of tissue culture or induced mutation or recombinant DNA technology

809 See T 356/93, point 42 of the reasons. 810 See, e.g. T 320/87 (Hybrid Plants/LUBRIZOL), point 8 of the reasons; NEUMEIER (1990), at 183, with reference to the genesis of Art. 2(2) of the Strasbourg Convention which served as model for Art. 53(b) of the EPC.811 For a detailed analysis of the possible meanings of this concept see, e.g. NEUMEIER (1990), at 183 et seq.812 See especially the referral decision T 1054/96 (Transgenic Plants/NOVARTIS I), point 24 et seq. of the reasons. The Enlarged Board of Appeal did not address this issue.813 Emphasis added by the author.814 See EUROPEAN PATENT OFFICE (2003a), C.IV.3.4.2.815 See 356/93, point 28 of the reasons. See also T 320/87, headnote 1 and point 6 of the reasons, referring to “the essence of the invention”.816 An allusion to this possible conflict has e.g. been made in T 1054/96 (Transgenic Plant Novarts III), at point 3 of the reasons.

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is as a whole considered patentable. In most cases, especially those that involve genetic engineering, this narrow interpretation of essentially biological processes should make no difference, as the technical DNA transformation step will be essential and have a decisive impact. Yet, the danger of this approach could be that any process which in its essence relies on steps of selection and crossing could be complemented with non essentially biological steps, e.g. a cloning step, in order to make it eligible for patent protection. It is not yet clear, where the EPO Boards will draw the line.

4. Exception to the exception: Microbiological processes and products thereof

Art. 53(b), 2nd half-sentence, of the EPC as well as Art. 4(3) of the EC Biotechnology Directive provide that the exclusion from patentability does not apply to “microbiological processes” and “products thereof.”817 As the narrow interpretation of “essentially biological processes” shows, this supplement is understood as a clarification rather than a real exception to the exception.818

Pursuant to Art. 2(1)(b) of the EC Biotechnology Directive and R. 23b(6) EPC “‘microbiological process’ means any process involving or performed upon or resulting in microbiological material”. There is no express definition of microbiological material in either the Directive or the Implementing Regulations. But according to Board of Appeal case law819 and the Guidelines,820 the term micro-organism is understood in a broad sense and includes:

“bacteria and other generally unicellular organisms with dimensions beneath the limits of vision which can be propagated and manipulated in a laboratory (see T 356/93, OJ 8/1995, 545), including plasmids and viruses and unicellular fungi (including yeasts), algae, protozoa and, moreover, human, animal and plant cells.”821

Again the question arises how a multi-step process is to be dealt with. The significance of this question stems from the protection of “products thereof”, which could lead to the patentability of plant varieties if they were considered products of microbiological processes. The Guidelines state that

“[…] the term ‘microbiological process’ is to be interpreted as covering not only processes performed upon microbiological material or resulting in such, e.g. by

817 Art. 4(3) additionally refers to “inventions which concern […] [an]other technical process.” See also R. 23c EPC: “Biotechnological inventions shall also be patentable if they concern: […] (c) a microbiological or other technical process, or a product obtained by means of such a process other than a plant or animal variety.”818 See e.g. T 356/93 (Plant Cells/PLANT GENETIC SYSTEMS), at point 29 of the reasons.819 See id., point 34 of the reasons. See also the confirmation of this view in G 1/98 (Transgenic Plant/NOVARTIS II), at point 5.2 of the reasons.820 See EUROPEAN PATENT OFFICE (2003a), at C.IV.3.5.821 See id., at C.IV.3.5.1.

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genetic engineering, but also processes which as claimed include both microbiological and non-microbiological steps.”822

This definition means that any process comprising a step, where breeders or biotechnologists manipulate/use isolated plant cells, bacterial vectors or isolated DNA is caught by this exception.

Consequently, even a genetically engineered regenerated plant or its progeny could be regarded as a product of a micro-biological process and thus be patentable, provided Art. 53(b), 2nd half-sentence overrides the exclusion of plant varieties from patentability. While the Board of Appeal had taken this view in the Oncomouse case,823 it was rejected by the Enlarged Board of Appeal.824 This interpretation is in line with the Directive stating in its Recital 32 that:

“[…] if an invention consists only in genetically modifying a particular plant variety, and if a new variety is bred, it will still be excluded from patentability even if the genetic modification is the result not of an essentially biological process but of a biotechnological process.”

The same principle is now clearly stated in R. 23c(c) of the Implementing Regulations which refers to “products obtained by means of such a [microbiological or other technical] process other than a plant or animal variety.”825

5. Summary

To give a short summary, it can be concluded that the exclusion from patentability only prohibits the following plant related claims:

- claims that are directed to a plant variety either because they define the entire genotype of the claimed plant or because the technical feasibility of the invention is confined to a particular plant variety; and

- claims that refer to a process for the production of plants that consists entirely of classical breeding steps such as crossing or selection.

All other inventions in the sense outlined above are patentable provided they fulfil the patenting requirements.

822 See EUROPEAN PATENT OFFICE (2003a), at C.IV.3.5.1. It is noteworthy that the Board in T 356/93 (Plant Cells/PLANT GENETIC SYSTEMS), point 37 et seq. of the reasons, had still taken the opposite position. It held that the notion of “microbiological process” may not be extended to all steps of a multistep process, even if one essential step is of a microbiological nature. To support its position the Board argued that, in contrast to the concept in the 1st half-sentence, the 2nd half-sentence refered merely to “microbiological processes” not to “essentially microbiological processes.” Id. point 38 of the reasons.823 See T 19/90 (Onco-mouse II/HARVARD), point 4.10 of the reasons.824 See G 1/98 (Transgenic plant/NOVARTIS II), point 5.3 of the reasons. On the same question, see also T 1054/96 (Transgenic plant/NOVARTIS I), point 48 et seq. of the reasons.825 Emphasis added. See also EUROPEAN PATENT OFFICE (2003a), C.IV.3.6.

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IV. Patenting requirements

The EC Biotechnology Directive emphasizes that the general provisions of patent law “remain the essential basis for the legal protection of biotechnological inventions.”826

Thus the four basic patent requirements of Art. 52(1) EPC have to be met:

(i) There must be an “invention”, requirement that has already been discussed earlier;(ii) The invention must be “susceptible of industrial application”; (iii) The invention must be “new”; (iv) and finally it must involve an “inventive step”.

Two further provisions, which contain notwithstanding their position in the EPC substantive requirements,827 have an important bearing on the grant of patents in the field of biotechnology. Pursuant to Art. 83 EPC, the application must disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art. Art. 84 further requires that the claims define the matter for which protection is sought, are clear and precise and supported by the description.

The specific issues raised by biotechnological inventions in view of these patenting requirements will be discussed in turn in the next sections.

1. Industrial applicability

There is no doubt that inventions referring to agricultural plants are “susceptible of industrial application” in the sense of Art. 57 EPC, which requires that the invention “can be made or used in any kind of industry” and specifies that “industry” includes agriculture.828 In the discussion on patenting of biological matter, problems with respect to the criterion of industrial applicability have been identified merely for inventions relating to gene sequences and partial sequences, as well as proteins with unknown function.829 As outlined above, it is currently controversially discussed

826 See Recital 8; see also Recital 22, 2nd sentence, with respect to sequences or partial sequences of genes.827 With respect to the disclosure requirement, see NEUMEIER (1990), at 106. With respect to the requirement of unambiguous definition of the invention in the claims, see German Federal Supreme Court (Trioxane/In re Farbwerke Hoechst A.G) decision of 06.07.1971, point II.A.2a of the reasons (as translated in IIC 1972, 226 et seq.): “Since patents establish for their owners an exclusive right to the subject matter of the invention (Sec. 6) thereby enabling exclusion of a third party from commercial use of the protected invention, it is necessary for the content of the invention to be unambiguously defined so that the patent owner and the interested public will recognize which invention is granted protection. For this reason the question of unambiguous identification of an invention belongs to the substantive requirements of patentability.” With respect to the support requirement, see T 694/92 (Modifying plant cells/MYCOGEN), point 5 of the reasons, pointing out that claims which are supported by the description from a formal point of view may still not be considered allowable under Art. 84. 828 See also EUROPEAN PATENT OFFICE (2003a), at C.IV.4.1.829 The patenting of proteins with unknown functions is relevant above all in the area of pharmaceutical research. On this problem, which will not be addressed here, see e.g. EPO/JPO/USPTO (2001). See also T 870/04. In this case the application described a polypeptide,

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whether the function of a gene is an integral part of the invention concept or merely a question of industrial applicability. The EPO treats DNA molecules just as any other chemical compound and has therefore chosen the second approach permitting absolute product protection.830 Some very controversial issues raised by the patenting of DNA molecules are thus transferred into the industrial applicability requirement.

a) Indication of a function

In particular, it has been discussed whether the indication of the biological function of the gene or EST is/should be required or whether the suitability for other tasks which do not necessitate knowledge of the actual function of this sequence in producing a protein or part of a protein or regulating gene expression is sufficient.831 JAENICHEN et al. observe that “there should actually be no doubt that a DNA sequence which is the result of random sequencing ‘can be made or used in any kind of industry’”.832

Indeed, based on this definition, routine functions for which every EST can be used or the fact that the synthesis of oligonucelotides for the account of other laboratories has become a commercial activity should be sufficient to fulfil the industrial applicability requirement.

Yet, this common broad interpretation of the “industrial applicability” conflicts with the approach chosen in the EC Biotechnology Directive.833 As Recital 23 specifies “a mere DNA sequence without indication of a function does not contain any technical information and is therefore not a patentable invention”. Furthermore, Recital 24 stipulates that “in order to comply with the industrial application criterion it is necessary in cases where a sequence or partial sequence of a gene is used to produce a protein or part of a protein, to specify which protein or part of a protein is produced or what function it performs”. BALDOCK rightly points out that this recital does not exclude the patentability of DNA sequences which have applications that do not involve the use of the sequence to produce a protein or part of a protein.834 The Guidelines give the exhibition of a certain transcription promoter activity as an additional example for a possible technical function.835 It is not entirely clear, however, whether the term “function”, as used in the Directive, means “biological function”. OSER argues that it can be concluded from the drafting history of the

means and methods for making it, as well as its prospective use for basic science activities, but no practical way of exploiting it in at least one field of industrial activity. The possible role of the polipeptide in cellular "housekeeping" and in certain types of cancer was only hypothesized. The Board of Appeal pointed ou that “a vague and speculative indication of possible objectives that might or might not be achievable by carrying out further research with the tool as described is not sufficient for fulfilment of the requirement of industrial applicability. The purpose of granting a patent is not to reserve an unexplored field of research for an applicant.” See T 870/04 (BDP1 Phosphatase/MAX-PLANCK), point 18 et seq. of the reasons.830 See SCHATZ (2002), at 10.831 See, e.g. OSER (1998), at 651; BALDOCK (1999), at 20/21.832 See JAENICHEN et al. (2001), at 35.833 This conflict is also emphasized by OSER (1998), at 651.834 See BALDOCK (1999), at 21.835 See EUROPEAN PATENT OFFICE (2003a), C.IV.4.5.

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Directive that the term “function” may not be equalled to “biological function”.836 On the other hand, Recital 23 suggests that it has to be a function specific to the concerned DNA fragment, not a general routine function, which applies to all ESTs.837

In a comparative study on the patentability of DNA fragments in the framework of the trilateral cooperation of EPO, USPTO and JPO, the EPO considered the industrial applicability of a cDNA obtained from a human liver cDNA library without a description of the function or biological activity of the DNA and its corresponding protein “questionable”.838

“In following the conventional interpretation of Article 57 EPC one could take the position that the claimed polynucleotide […] clearly can be made and therefore the requirement of industrial application is fulfilled. However, Article 57 EPC could also be interpreted differently by putting more weight on the ‘industrial’ aspect thereof. Along these lines it could be argued that the right question to ask under this provision is whether ‘one would indeed make ESTs in any kind of industry if a specific usefulness is not known for them and therefore there is no motivation at all to make them’.”839

This argumentation opens the way to harmonise EPO case law and national case law applying the standards of the EU Directive by requiring the disclosure of a specific function. A claim to a DNA sequence used as a probe to locate and identify genes of unknown function will therefore not satisfy the requirement of industrial applicability.840

b) Required technical content of applications

It is also controversial which standards should be applied to the technical content of applications for sequences or partial sequences of genes. This technical content ranges from the merely speculative indication of possible functions, the assumption of a function for the disclosed sequence on the basis of homologies found with known sequences, to the demonstration of a specific function of a disclosed sequence by proving it on the basis of experimental data.841 Interestingly, on this latter issue, the EPO has adopted the most restrictive approach. It derives from R. 23e(3) EPC the requirement that the function of the encoded protein is experimentally established and proven and not “merely alleged” in the application as filed.842 This rule, which takes

836 See OSER (1998), at 651. He explains that Recital 16b of the Directive as approved in the first lecture had expressly required the indication of a biological function and was later removed.837 Such a specific function, which is not a biological function, could for example be the use of the claimed DNA sequence as molecular markers. See BOSTYN (2001), at 138.838 See EPO/JPO/USPTO (2000), follow link “answers of the EPO”.839 See also the similar statement in T 870/04, at point 4 of the reasons, with respect to polypeptides.840 See also BOSTYN (2001), at 138.841 See JAENICHEN et al. (2001), at 30.842 See JAENICHEN et al. (2001), at 35. R. 23e(3) EPC reads as follows: “The industrial application of a sequence or partial sequence of a gene must be disclosed in the patent application.” See also T 870/04 (BDP1 Phosphatase/MAX-PLANCK), where the Board had considered the indication of the

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up the principle stated in Recital 22, last sentence,843 and in Art. 5(3) of the EU Directive,844 establishes a particular treatment of these inventions in two respects, without however necessarily implying the strict interpretation by the EPO.845 Firstly, whereas generally Art. 57 permits the completion of the application after filing during the patent grant procedure in order to establish industrial applicability, where it is not obvious from the description,846 R. 23e(3) EPC requires that the industrial application must be disclosed in the patent application. Secondly, in the German and French version, R. 23e(3) EPC stipulates that the industrial applicability has to be “described/disclosed in concrete terms”.847 While some in the legal doctrine, supporting the position of the EPO, conclude from this formulation that detailed explanations and observations founded by experimental examples are necessary,848

others hold that the terms of R. 23e(3) EPC do not justify this position.849

2. Novelty

a) Defining the state of the art

According to Art. 54(1) “an invention shall be considered to be new if it does not form part of the state of the art.” The state of the art comprises “everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing of the European patent application,”850 and, pursuant to paragraph 3, the content of European patent applications as filed, of which the dates of

possible cellular function of the claimed enzyme to be speculative and insufficient to fulfill the requirement of industrial applicability. The application had identified and characterized several protein phosphatases and kinases. Notwithstanding a common activity and shared general function (cellular signal transduction), the application had shown that every product has unique properties that might reflect specific functions. It further disclosed that the claimed enzyme was expressed high in epithelium origin cells and cancer cell lines. However, the Board found that due to the high complexity of the cellular signal transduction pathways and in view of the fact that every phosphatase has unique specific properties, the indication of the possible role of the claimed polypetide in down-regulating the catalytic activity of protein kinases involved in cell proliferation was to vague and speculative to indicate a practical way of exploitation in at least one field of industrial activity.843 The relevant passage reads as follows: “[…] whereas the industrial application of a sequence or partial sequence must be disclosed in the patent application as filed.” 844 Art. 5(3) reads as follows: “The industrial application of a sequence of a partial sequence of a gene must be disclosed in the patent application.”845 This interpretation is with good legal arguments criticised by JAENICHEN et al. (2001), at 35 et seq., who insist on the difference between the terms “disclosed” and “demonstrated”. Yet, against the background of the concerns explained above the cautious approach of the EPO towards patenting seems right from a policy point of view.846 See JAENICHEN et al. (2001), at 35.847 The German text reads as follows: “Die gewerbliche Anwendbarkeit einer Sequenz oder Teilsequenz eines Gens muß in der Patentanmeldung konkret beschrieben werden.” (Emphasis added.) The French text states: “L’application industrielle d’une séquence ou d’une séquence partielle d’un gène doit être concrètement exposée dans la demande de brevet.” (Emphasis added.)848 See OSER (1998), at 651.849 See JAENICHEN et al. (2001), at 35 et seq.850 See Art. 54(2) EPC.

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filing are prior to the date of filing or priority date of the European patent application.851

aa) “Making available”

“Making available” in the sense of Art. 54(2) EPC requires an enabling disclosure with respect to the claimed subject matter.852 The information content derived from the prior art document or the prior use must enable the skilled person to recognize a reproducible technical teaching. A substance, for instance, must not only have been described, but also made available to the public by providing a reproducible method for obtaining it.853 The novelty of a method for genetically modifying a plant cell is prejudiced only by a disclosure reporting both, the method steps and the technical effect produced. Thus, novelty is not destroyed when the effect of a particular invention is anticipated merely in theory in prior art, but not disclosed in an enabling manner.854 In these cases, the actual issue is the fulfilment of the inventive step requirement.

Only subject matter which is derivable directly and unambiguously from prior art is disclosed in this sense.855 This means that the prior disclosure must correspond in all

851 See Art. 54(3) EPC.852 See, e.g. T 206/83 (Pyridine herbicides/ICI), point 2 of the reasons.853 See BOSTYN (2001), at 68, with a reference inter alia to T 206/83 (Pyridine herbicides/ICI).854 See T 694/92 (Modifying plant cells/MYCOGEN), at point 27 of the reasons. A claim to a method for genetically modifying a plant cell was not considered to be anticipated by a disclosure describing the construction of a DNA vector having the features as stated in the claim but not reporting the final experiments because these had not yet been completed. See also T 612/92 (Monocotyledonous plants/RIJEKSUNIVERSI-TEIT LEIDEN), point 4 et seq. of the reasons, esp. point 8, where the claim at issue, claim 1 of EP 159 418, referred to: “A process for the incorporation of foreign DNA into the genome of monocotyledonous plants by infecting the monocotyledonous plants or incubating the protoplasts thereof, with Agrobacterium or Rhizobium bacteria containing a virulence region and at least one T-region originating from a Ti-plasmid or a Ri-plasmid or both, which T region is provided with said foreign DNA.” The patent did not disclose a new technique in itself, but applied a technique already known for the incorporation of foreign DNA into the genome of dicotyledonous plants to monocotyledonous plants. The inventors were not the only ones to explore this approach at that time. The closest prior art document contained a study on the host range of agrobacterium B6 performed on 48 species from 39 genera in monocotyledonous families. The Appellants had argued that the observed swelling effect could not but be due to the introduction of said plasmid into the monocotyledonous plants. Yet only few of the performed inoculations resulted in tumor formation. The Board found that the prior art document does not teach the person skilled in the art that monocotyledonous plants can be infected with Agrobacterium, let alone that the T-DNA would be incorporated into the genome of said plants. See further T 78/96 (PCR/HOFFMANN LA-ROCHE), point 9 of the reasons, and T 179/01 (Herbicide resistant plants/MONSANTO), esp. point 14 of the reasons. However, combined with common general knowledge (including certain data bases containing sequence information), a document that suggests inter alia a chimeric gene comprising a coding sequence obtainable in this data base but does not provide experimental data on this specific embodiment of the invention, nevertheless anticipates a claim to this chimeric gene. See T 890/02 (Gène chimère/BAYER).855 See, e.g. EUROPEAN PATENT OFFICE (2003a), C.IV.7.2; T 838/97 (Translation inhibition/RESEARCH FOUNDATION), point 9 of the reasons, with references to other case law.

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its technical features to the subject matter as claimed.856 The novelty of a protein, for instance, is only prejudiced by the previous disclosure of the same molecule. It is not sufficient that a previously described enzyme, isolated in the same manner from the same origin is closely related and has the same functional properties.857 The same “photographic novelty approach”858 applies to DNA molecules859 and micro-organisms.860 On the other hand, novelty destroying prior art can be constituted by subject matter that has not been disclosed by its chemical composition, i.e. in the field of biotechnology its sequence, as long as its identity to the claimed subject matter is established.861

bb) “To the public”

Subject matter is available “to the public” under two conditions: Members of the public have been able to gain knowledge of the subject matter and there was no bar of confidentiality or secrecy agreement restricting the use or dissemination of the disclosure.862 Availability to the public by prior use supposes that a person has produced, offered, marketed or otherwise exploited a product or offered or marketed a process and that this has enabled members of the public, e.g. a client, to gain knowledge of the subject matter.863 The Guidelines highlight the width of the definition in Art. 54(2):

“There are no restrictions whatever as to the geographical location where or the language or manner in which the relevant information was made available to the public; also no age limit is stipulated for the documents or other sources of information.”864

856 See, e.g. T 838/97 (Translation inhibition/RESEARCH FOUNDATION), point 9 of the reasons, T 1006/02 (Selection of transformed cells/SYNGENTA), point 7 of the reasons.857 See, e.g. T 479/97 (Expression System/NOVARTIS AG), point 17 et seq. of the reasons, esp. 22. For another case in point, see T 1095/00 (EPSPS/AVENTIS CROP SCIENCE), T 90/03 (Phytase/BASF), point 10 of the reasons.858 Illustrative term used e.g. by JAENICHEN et al. (2001), at 30.859 See, e.g. T 886/91 (Hepatitis B virus/BIOGEN), point 8.1.2 of the reasons; T 296/93 (HVB antigen production/BIOGEN), point 6 of the reasons; T 838/97 (Translation inhibition/RESEARCH FOUNDATION), point 9 of the reasons.860 See T 1231/01 (Porcine virus/SOLVAY), where the prior art documents had not disclosed the nucleotide sequence of the virus described and identity of the prior art virus and the claimed virus could only be assumed on the basis of probability but not proved. 861 See, e.g. T 1054/97 (Insect control/AVENTIS), point 14 et seq. of the reasons, with a reference to the Enlarged Board of Appeal decision G 1/92 which had developed this principle with respect to chemical products, concluding that the chemical composition of a product is state of the art when the product as such is available to the public and can be analysed and reproduced by the skilled person irrespective of whether or not particular reasons can be identified for analysing the composition.862 See EUROPEAN PATENT OFFICE (2003a), C.IV.5.1 and D.V.3.1.3.1.863 See EUROPEAN PATENT OFFICE (2003a), D.V.3.1.3.1.864 See EUROPEAN PATENT OFFICE (2003a), C.IV.5.1.

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It is especially important to emphasize this in view of the issue of biopiracy.865 Yet, the prior art that will be taken into account for the patent grant will mainly consist of the documents listed in the search report.866 This means that mostly written disclosures will be considered at this stage of the procedure. Other kinds of prior art will rather be introduced in opposition proceedings by third parties, i.e. after the patent grant.

b) Naturally occurring material

Without knowledge of the aforementioned interpretation, in the context of biotechnological inventions, the term “novelty” could suggest that an objection arises under Art. 54 in so far as the claimed biological material exists already in nature. But the definition of novelty in Art. 54 makes clear that it is the availability of the claimed subject matter to the public which is decisive. Perfectly in line with this approach, R. 23c(a) EPC stipulates that the fact that biological material isolated from its natural environment previously occurred in nature is not as such novelty-destroying.867 A fortiori, biological material is considered new if it has been synthesized by a technical process even if the material has a structure identical to that of a natural element.868 The presence of a DNA sequence in a DNA library does not anticipate the isolated molecule, if the existence of the compound had not recognisably been made available to the public.869 On the other hand, DNA sequences contained in data bases that fulfilcertain conditions (in particular which are known to the skilled person as an adequate source of information), are part of the common general knowledge. Consequently the disclosure in a prior art document of a chimeric gene with a specific coding sequence, on which all necessary information is available in the data base, is novelty destroyingeven if there is no actual example of a chimeric gene with this coding sequence in the prior art document.870

In the context of plant breeding, NEUMEIER raises the question whether or not it is a novelty-destroying use of a gene, e.g. a resistance gene, to use a parent carrying this

865 It is interesting to note that the "Minimum Documentation" under R. 34.1(B)(III) of the Regulations under the PCT, which has to be consulted by an International Search Authority now includes the "Indian Journal of Traditional Knowledge" and the "Medical and Aromatic Plants Abstracts". See WIPO (2005), at 34. A planned agreement between the EPO and the Indian Union Ministry of Science and Technology would give the EPO access to a digital database of Indian traditional medecine. See PRASAD (2005a) and (2005b).866 See EUROPEAN PATENT OFFICE (2003a), C.IV.5.1.867 R. 23c(a) EPC reads as follows: “Biotechnological inventions shall also be patentable if they concern: (a) biological material which is isolated from its natural environment or reproduced by means of a technical process even if it previously occurred in nature;” See also Art. 3.2 EC Biotechnology Directive: “Biological material which is isolated from its natural environment or produced by means of a technical process may be the subject of an invention even if it previously occurred in nature.”868 See also BOSTYN (2001), at 102.869 See T 301/87 (Alpha Inferons/BIOGEN), point 5.8 of the reasons. In T 301/87, the Board of Appeal found that this requirement was not met in the case at issue since there was neither an indication that the genomic DNA library comprised of such sequences, nor did the public have a reasonable chance to trace out such DNA by means of their hybridisation properties. See id., at point 5.2 et seq. of the reasons.870 See T 890/02, points 1 et seq.

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gene in a conventional breeding programme.871 He comes to a negative answer arguing that in view of the complexity of biological processes, the use of a specific pathogen resistant plant could not be equalled to the use of the gene responsible for the resistance. In the field of biological material, the purposeful use of particular plant traits did not presuppose the knowledge of the underlying genetic structures. There is certainly no doubt that in its isolated form the material was not available to the public merely because the physiological characteristic was used.872 However, the situation is different where a claim is directed to “ a plant comprising gene X” or “a plant having characteristic X”. CLAES rightly points out that if the claimed gene X has the same sequence as a naturally occurring gene

“any proper examination of this application for [a claim to a plant comprising ‘gene X’] should result in an objection [for] ‘lack of novelty’, because the original variety from which – or the original plant from which – the gene has been isolated in principle was known in the art. So you will have to re-word your claim wording ‘plant comprising ‘gene X’’ so as to exclude in principle, the existing plant from which you got the gene. You could of course get a maize plant comprising a rice gene.”873

The last sentence should not be misunderstood. To escape the novelty objection, it is not necessary to provide a plant comprising a target gene of a different species. A “plant comprising gene X and gene Y” is novel, whenever plants combining both genetic characteristics have not been available before, even if both genes are indigenous to the claimed species. Very often, however, such a combination will not be inventive.874

The fact that the European novelty concept focuses on the availability to the public rather than the previous existence or the knowledge of the previous existence, is well illustrated by the earlier mentioned case relating to “corn grains and products with improved oil composition”. While one of the prior art documents disclosed four samples of corn grown during a four year period exhibiting oil content which falls within the parameters of claim 1 of the patent, the Opposition Division held that this document did not anticipate the subject matter of any of the claims of the main request.875 The Opposition Division argued that the document did not contain a reproducible teaching which makes the corn grains at issue available to the public, as it neither discloses any method for obtaining the maize grains, nor does it contain any reference to a deposit of said grains, nor permit the reader to link the reported samples with particular strains or varieties of maize. In its reasoning, the Opposition Division follows the line of T 576/91, where the Board of Appeal held that where biological

871 See NEUMEIER (1990), at 80.872 See also BOSTYN (2001), at 68 et seq. on the novelty of a substance for the first time isolated from its surroundings.873 See CLAES (2001), at 7. 874 See below, point 3.c).875 See Opposition Division (E.I. DU PONT DE NEMOURS & COMPANY INC), decision of 14.07.03, point 5 of the reasons, esp. 5.7, available at http://ofi.epoline.org/view/GetDossier.

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material is concerned, although an unwritten rule may exist within the scientific community whereby biological material referred to in a scientific publication can be freely exchanged, this does not amount to an obligation with the result that any biological material which is the subject of a publication can be considered as being publicly available.876 It should be noted that this situation can only arise under very specific circumstances. Where it is established that a plant population exhibiting the claimed characteristic or containing the claimed gene has been used in agriculture prior to the application, this use is certainly novelty destroying. Where the applicant has isolated the concerned gene from a sample obtained from a public collection, the plant has clearly been publicly available. Notwithstanding, this could be an issue where the Indian legislator could choose to lay down a less restrictive approach taking into account the actual willingness of the publishers of the prior art document to make the concerned subject matter available.

c) Relationship of partial gene sequences and full-length gene

Where the technical features of the prior art subject matter and of the claimed invention are the same, it is sufficient for loosing novelty that the claims embrace the previously disclosed subject matter.877 A question that is often raised in this context is what happens in cases where prior art and the claim at issue both refer partly but not entirely to the same sequence. This is particularly relevant in cases where a partial sequence derived from mRNA, i.e. an EST, is first identified and only later the entire sequence of the gene.878 Would a patent for a partial gene sequence be novelty destructive for the later discovered full length gene, which may have much greater scientific and commercial potential than the partial sequence? BOSTYN notes that this question was one of the burning issues during the drafting process of the Directive.879

Yet, recital 25, which addresses this issue, only solves part of the problem:

“Whereas, for the purposes of interpreting rights conferred by a patent, when sequences overlap only in parts which are not essential to the inventions, each sequence will be considered as an independent sequence in patent law terms.”

This provision could, for instance, apply to cases where flanking sequences are included in the claims in order to assure that these include certain regulatory sequences. Yet, in the case of ESTs and full-length genes it would seem that the coding sequences are essential to both inventions. Notwithstanding, there is a

876 See T 576/91 (Plasmid pTR 2030/NORTH CAROLINA STATE UNIVERSITY), point 2.2 et seq.of the reasons, with reference to other case law.877 An example for a generic claim that was anticipated by the previous description of a specific protein is T 93/98 (TNF-hemmendes Protein/BASF). See point II of the summary of facts and point 8 et seq. of the reasons. For a claim to a protein avoiding this objection see e.g. claim 3 of EP 451 878 as filed on 24.02.2000.878 On this issue see BOSTYN (2001), at 137/138.879 See BOSTYN (2001), at 139.

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widespread opinion that a public disclosure of an EST does not prejudice novelty of a claim to the full length gene sequence.880

Neither should the disclosure of a full-length gene sequence be novelty destroying for a claim to a section of it, if the latter is appropriately claimed, i.e. in the form of a selection invention.881 In contrast, a claim to a partial sequence in the form “DNA comprising a sequence of nucleotides as shown in SEQ ID No X” will be anticipated by the previous disclosure of the full length gene sequence.882

3. Inventive step

Given the strict requirements for anticipation described above, the actual filter which avoids that somebody can claim an exclusive right to subject matter that was within reach of the scientific community even without his contribution is the inventive step requirement.

Art. 56 EPC requires that the invention, i.e. anything falling within the terms of the claims,883 “having regard to the state of the art, […] is not obvious to a person skilled in the art.”884 According to the Guidelines, the term “obvious” refers to

“that which does not go beyond the normal progress of technology but merely follows plainly or locally from the prior art, i.e. something which does not involve the exercise of any skill or ability beyond that to be expected of the person skilled in the art. In considering the inventive step, as distinct from novelty […], it is fair to construe any published document in the light of subsequent knowledge and to have regard to all the knowledge generally available to the person skilled in the art at the priority date of the claim.”885

The practice of the EPO is to apply a problem-solution approach comprising four steps:886 First, the closest prior art is determined. Secondly, the technical results or effects achieved by the claimed invention when compared with the closest prior art are assessed. Thirdly, the technical problem to be solved by the invention is established.

880 See British Group of AIPPI (International Association for the Protection of Intellectual Property), http://www.aippi.org/reports/q150/gr-q150-e-greatbritain, as quoted by BOSTYN (2001), at 139, note 29; HOWLETT/CHRISTIE (2003), at 602; OSER (1998), at 652.881 See BOSTYN (2001), at 139; OSER (1998), at 652. This view was confirmed in the case T 1054/97, where the Board saw no novelty issue once the claim was directed to a specific DNA sequence (coding for part of the Bt2 protein), whereas the prior art had referred to an entire plasmid carrying said DNA sequence. See T 1054/97, point 24 and 25 of the reasons.882 See id., point 20 and 21of the reasons.883 See EUROPEAN PATENT OFFICE (2003a), C.IV.9.3.884 According to Art. 56, 2nd sentence, EPC, the above definition of “state of the art” also applies when considering the inventive step, with the exception that European applications, published on or after the date of filing of the examined patent application, are not included in the examination.885 See EUROPEAN PATENT OFFICE (2003a), C.IV.9.3. On the combination of different prior art documents, see id., C.IV.9.7. The combination is permissible, but only where such combination would have been obvious to the person skilled in the art.886 See EPO (2001), at 101.

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For this purpose, “‘technical problem’ means the aim and the task of modifying or adapting the closest prior art to provide the technical effects that the invention provides over the closest prior art.”887 And fourth, it is assessed whether solving the problem by the claimed technical features, starting from the closest prior art, would have been obvious to the skilled person.888

a) Reasonable expectation of success

According to the case law of the Boards of Appeal in the field of biotechnology the solution provided by the claimed subject matter to the so defined technical problem is obvious in the above sense if there is “reasonable expectation of success” to solve the problem by proceeding in the way disclosed in the application.889 The skilled personhas no such expectation if there is no recognisable pointer or incentive in the state of the art,890 or if there are various (contradictory) proposals.891 Even if there is a pointer

887 See EUROPEAN PATENT OFFICE (2003a), C.IV.9.5. Typical problems to be solved by biotechnological inventions, are:

- isolating a DNA encoding a further enzyme of a certain type from a given species, in the case concerned of pectin lyase of A. niger (T 479/97 “Expression system/NOVARTIS”, point 9 of the reasons);

- the provision of plasmid cloning vectors which lead to improved gene expression (T 680/98 “Expression Vectors/BIOGEN”, point 7 of the reasons);

- the provision of an alternative approach for regulating expression of proteins in a host cell (T 838/97 “Translational inhibition/RESEARCH FOUNDATION”, point 12 of the reasons);

- to provide a method for the expression and thus production of a physiologically active mammalian gene in plant cells (T 338/97 “Molecular Farming/CALGENE”, point 8 of the reasons);

- finding a way to predict whether a locus associated with the trait “yield” is likely to be present and thus expressed in individual maize plants (T 1051/96 “Genetic linkages/PIONEER”, point 5 of the reasons)

providing and characterizing an insecticidal gene of B.t. berliner 1715 (T 1054/97 “Insects control/AVENTIS”).888 See EUROPEAN PATENT OFFICE (2003a), C.IV.9.5. For a general characterisation of the skilled person, see id., C.IV.9.6: “The person skilled in the art should be presumed to be an ordinary practitioner aware of what was common general knowledge in the art at the relevant date. He should also be presumed to have had access to everything in the ‘state of the art’, in particluar the documents cited in the search report, and to have had at his disposal the normal means and capacity for routine work and experimentation. If the problem prompts the person skilled in the art to seek its solution in another technical field, the specialist in that field is the person qualified to solve the problem. The assessment of whether the solution involves an inventive step must therefore be based on that specialist’s knowledge and ability […]. There may be instances where it is more appropriate to think in terms of a group of persons, e.g. a research or production team, than a single person.”889 See, e.g. T 1054/97 (Insect control/AVENTIS), point 43 of the reasons; T 333/97 (Somatic changes/MONSANTO), point 6 of the reasons; T 338/97 (Molecular farming/CALGENE), point 14 of the reasons; T 425/96 (Tomato plants/MONSANTO), point 9 of the reasons; T 694/92 (Modifying plant cells/MYCOGEN) point 28.5 of the reasons; and BOSTYN (2001), at 64, with further references. 890 See e.g. T 626/00 (Framework-mutated antibodies/WELLCOME), point 31 of the reasons; T 699/99 (Cell adhesion peptides/LA JOLLA CANCER RESEARCH FOUNDATION), point 38 et seq.

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in prior art, a difference has to be made between an “obvious” solution and a solution that is merely “obvious to try”:892

“‘[A] reasonable expectation of success’ should not be confused with the understandable ‘hope to succeed’ […]. In fact, while it can be said that, in the light of document (5a) [the closest prior art document], the experiment in question was “obvious to try” for the skilled person, it is not necessarily true that this person would have had any reasonable expectation of success when embarking on it.”893

The previous announcement by another scientist that such an experiment was in progress in his laboratory was not in itself a guarantee in this respect.894 On the other hand, “reasonable expectation of success may not be confused with “certainty”:

“Of course, there were, as always in this area of technology, some uncertainties such as the level of expression and toxicity in the plant cells or plants, however this was nothing out of the ordinary that would not be expected to be solved by way of routine testing or of an acceptable amount of trial and error experimentation.”895

This threshold situated somewhere between “hope to succeed” and “certainty” to provide a certain technical effect can only be defined in each individual case, while it always has to be kept in mind that the skilled person is expected to overcome routine problems. Certain secondary indicia may suggest the existence of an inventive step but do not imply any automatic qualification as inventive.896 In genetic engineering cases,

891 See e.g. T 787/00 (Erythropoietin/KIRIN-AMGEN), point 38 et seq. of the reasons, T 351/98 (HIV-I/CHIRON CORPORATION), point 73 et seq.892 See also T 539/04 (Transgenic plants /SYNGENTA) point 12 et seq. of the reasons.893 See T 694/92 (Modifying plant cells/MYCOGEN), point 28.5 of the reasons.894 See T 694/92 (Modifying plant cells/MYCOGEN), point 28.5 of the reasons; T 296/93 (Hepatitis B virus antigen production/BIOGEN), point 7 of the reasons.895 See T 380/94 (Insect Control/PGS), point 12 of the reasons. In this case, the prior art had outlined an experimental approach for the preparation of insect resistant plants. The application of this strategy to a specific fragment of the Bt gene was also disclosed. Claim 1 of the main request referred in quite general terms to a plant cell transformed so as to contain stably integrated in its genome and capable of being expressed in differentiated cells a DNA fragment encoding a Bt polypeptide toxin of approximately 60kD to approximately 80kD or having a substantial sequence homology thereto (see summary of facts, point IV). Since it was known that only part of the Bt protoxin was necessary for insecticidal activity, and experiments in E.coli had shown what DNA sequences were required and that these encoded a toxic peptide with a molecular weight within the range cited in claim 1, and since technology for achieving plant cell transformation was available in the art, the Board rejected inventiveness. See reasons, point 5 et seq. The difference between reasonable expectation of success and certainty was also emphasized in T 338/97 (Molecular farming/CALGENE LLC), point 14 of the reasons. See also T 1115/97 (Herbicide resistant plant/MGI), at points 12 et seq., where the Board highlights the importance of this difference in the context of a generally know random phenomenon, such as mutagenesis.896 For a general overview on these secondary indicia, see EPO (2001), at 133 et seq.

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the Boards considered in particular the overcoming of a prejudice in prior art,897 and surprising effects of the invention.898

The biotechnology related cases of the last decade, which involve priorities dating back to the beginnings of the 1980s, would give an outdated picture of what techniques have passed into the category of “routine optimization”. But it is interesting to note that part of the decisions referring to this timeframe already considered that most of the way towards routinely expressing chimeric genes in plant cells had already been travelled. In T 387/94, the Board considered that the person skilled in the art using a promoter known to be active in the target tissue had reasonable expectation of success that the expression of a specific foreign gene could be achieved.899 Today the fundamental techniques of foreign gene expression in plant cells are part of the state of the art. In particular, the design of a vector used to transfer exogenous genetic material into a plant is generally within the skill of the art.900 Likewise, the technology for introduction of DNA into cells is well known to those skilled in the art.901

Furthermore, practitioners are familiar with the standard resource materials which describe specific conditions and procedures for the construction, manipulation and isolation of macromolecules (e.g. DNA molecules, plasmids, etc.), the generation of recombinant organisms and the screening and isolating of clones.902 Similarly, upstream from these transformation inventions, it will be more and more difficult for inventions identifying the open reading frame of a gene and attributing a possible function based on sequence homologies to meet the inventive step requirement.903 This considerably reduces the dangers of broad patents which could (possibly) slow down research progress in an entire field of technology by forcing second-generation inventors to take licenses for the breakthrough invention.

With respect to the inventiveness of products of conventional plant breeding, the reasoning of the Opposition Division in the earlier mentioned case relating to corn grains with improved oil composition is interesting.904 It did not follow the argument

897 See T 680/98 (Expression Vectors/BIOGEN), point 9 of the reasons, containing important clarifications on this concept. See also T 78/96 (PCR/HOFFMANN-LA ROCHE), where the inventor had given new life to a long-abandoned line of research.898 For an example, see T 215/96 (Plant Breeding/S&G SEEDS B.V.), point 7 et seq. of the reasons, esp. 14. The claimed method of transferring to a target species desired traits from another species using techniques of embryo rescue was considered inventive because, even if the skilled person had thought of combining the prior art documents, he would not have expected that the claimed method would be more effective than the method already applied to the concerned species (ovule culture). See also T 1231/01 (Porcine virus/SOLVAY), point 11 of the reasons.899 See 387/94 (Chimeric genes in plant cells/MONSANTO), point 12 of the reasons.900 See, e.g. WO 0018963, description, at 53.901 See id., at 58.902 See id., at 64.903 See also STRAUS (2001), at 1019/1020, who emphasizes, however, that given the present state of the art it cannot be categorically assumed that the identification of complete gene sequences and of their function is without exception a matter of routine. 904 See above, B.I.1. On the following see Opposition Division, decisionof 14. July 2003 (E.I. DU PONT NEMOURS&COMPANY INC.) point 8 et seq. of the reasons.

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of the patentee that the skilled person would have had serious doubts against the background of prior art that high oleic acid traits could be combined with a high oil trait to achieve the claimed result. As there was a direct teaching in the art that such a combination would follow the normal rules of classical breeding, the skilled person would have considered the proposed solution obvious.

b) Theoretical anticipation in prior art

In the assessment of inventive step, the degree to which a technical field is already explored, the technical contribution to the art of the invention and the breadth of the claims play a major role. In this context it is interesting to analyse the way the Boards of Appeal deal with a frequent constellation in the area of biotechnology: Often, the claimed technical effect had been anticipated in theory in previous publications and the invention is only the experimental verification of these suggestions. The fact that the solution had been described theoretically in prior art or the announcement by other scientists that such an experiment was in progress in his laboratory does not automatically lead to lack of inventiveness.905 If there are still significant obstacles to overcome, it may be merely “obvious to try”.906 But, the Boards of Appeal generally take a very reserved approach to acknowledging inventive step in these cases.907

Particular attention is given to the relationship between technical contribution to the art and scope of the claims.908 In the case T 338/97 (Molecular farming/CALGENE), for instance, the Board used the arguments of the patentee in favour of a broad scope of protection against the inventive step:

“[I]n accordance with the case law […] a proper balance must be found between the actual technical contribution, if any, to the state of the art disclosed in a patent or patent application and the scope of protection claimed. A patentee cannot ask the board to disregard prior art as giving rise to no reasonable expectation of success, while at the same time asking for protection of much broader scope than has been proved to work according to the information in his own patent, when he has made no technical contribution beyond showing that the prior art suggestion actually works in one case.”909

905 See, e.g. T 694/92 (Modifying plant cells/MYCOGEN), point 28.5 of the reasons; T 296/93 (Hepatitis B virus antigen production/BIOGEN), point 7.1 et seq. of the reasons.906 See T 694/92, point 28.5 of the reasons; T 875/02 (Microbial phytase/BASF), point 5 et seq. of the reasons.907 See, e.g. T 338/97 (Molecular farming/CALGENE); T 333/97 (Somatic changes/MONSANTO); T 743/98 (Target proteins/PHARMING); T 1066/00 (Protoplasten-Transformation/SYNGENTA), point 15 of the reasons, T 1198/01 (Vaccines expressed in plants/PRODIGENE), points 9 et seq. of the reasons.908 On this issue see also T 743/98 (Target proteins/PHARMING), point 4 of the reasons; T 1198/01 (Vaccines expressed in plants/PRODIGENE), points 10/11 of the reasons.909 See T 338/97, point 15 of the reasons. The broadly formulated claim at issue generically referred to the expression of mammalian proteins in plant cells, even though the patent specification only described the expression in plant cells of human interferon-ã. The closest prior art document had

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Finally, even this contribution was considered obvious by the Board, as the combined teachings of the prior art documents would lead the skilled person at the filing date to think that by following the indicated path, there existed a reasonable expectation of success that the corresponding protein will be produced in active form.910

c) Claims merely formulating the objective technical problem to be solved

As outlined above, the patent relating to “Corn grains and products with improved oil composition”, which had caused indignation in the civil society, passed the hurdle of novelty, and the demarcation between invention and discovery was not considered relevant in this case where the gist of the claimed invention was in fact a plant newly developed by the patentee. However, the fact that the broad claims of the patentee went way beyond this contribution to the art is taken into account by the Opposition Division in the framework of the inventive step requirement.911

The Opposition Division pointed out that the claimed grains were defined only by parameters which in themselves do not indicate how the grains should be obtained. They represented merely a reformulation of the problem.912 The Division held that for such type of claims to meet the inventive step requirement it is necessary that the formulation of the problem itself is not obvious. “In other words, such a claim can only be considered inventive if the invention is a ‘problem invention’.”913 Yet, according to the Opposition Division, the advantageous properties of natural oils with high oleic acid levels were common knowledge in the art. The Opposition Division concludes that

“the granted claims [at issue] lack all connection with the technical contribution which enables the desideratum to be achieved. In its opinion only the inclusion of such a feature could lead to recognition of an inventive step.”914

already shown that a chimeric construct containing the bacterial gene encoding for neomycin phosphotransferase under control of regulatory signals which are recognized by plant cells can be expressed in plant cells. The expression of a mammalian coding sequence was also contemplated and the construction of a chimeric gene comprising the coding sequence for bovine growth hormone coupled to a plant promoter and a termination signal from Agrobacterium tumefaciens was described. In other documents it was stated, although not experimentally shown, that the expression of mammalian genes in plant cells had been achieved from chimeric constructs containing regulatory signals recognized by plant cells. See id., esp. point 3 of the reasons. 910 See T 338/97 (Molecular farming/CALGENE LLC), point 11 of the reasons.911 For the following, see Opposition Division, decision of 14.07.03 (E.I. DU PONT NEMOURS & COMPANY INC.) revoking the patent EP 744 888, point 7.3 et seq. of the reasons.912 The objective problem was defined by the Opposition Division as “provision of corn plants capable of bearing corn grains with an improved total yield of high oleic acid corn oil”. For the wording of claim 1, see above, B.I.1.913 Id., reasons, 7.3, with a reference to point C.IV.9.4. of the Guidelines for Examination at the EPO.914 Id., reasons, 7.3.

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d) Inventiveness of gene sequences

Three different aspects could possibly play a role in conferring inventiveness to the provision of a new DNA molecule: (1) the chemical structure, (2) the unexpected success of the method used to isolate the gene fragment; or (3) the technical effect of the gene or partial gene sequence. It would seem that “the structural originality has nointrinsic value or significance for the assessment of inventive step unless that structure is responsible for a valuable property of the molecule.”915 This approach is generally taken by the Boards of Appeal with respect to chemical compounds916 and should also be applicable in the present context.917 The inventiveness will therefore either stem from the technical effect produced using the DNA molecules, which could not have been predicted from prior art, or from the inventive character of the isolation and identification process.918

With respect to the technical effect both, BALDOCK and BOSTYN rightly point out that the ability of a particular DNA molecule to be used as a probe, i.e. to hybridise with its complementary sequence, cannot be considered as an unexpected technical effect.919 Thus a specification describing only this property would neither fulfil the industrial application requirement, nor the inventive step requirement. This is also the position of the EPO in the Trilateral Project.920 Likewise, the EPO regularly considers that it does not involve inventive skills to randomly sequence DNA molecules and to allocate to the obtained sequences a function due to homology of already known sequences.921 On the other hand, new genes and partial gene sequences that have been disclosed together with unexpected properties were considered inventive, regardless of whether the DNA fragments were isolated and characterised entirely by routine means.922 A case in point is T 301/87 “Alpha inferons/BIOGEN”.923 Prior art did contain DNA sequences that were used as probes in order to isolate by way of hybridisation other fragments with a similar structure and function.924 Yet, unexpectedly, the isolated fragments, when used for transformation of a host, had a desired enzymatic activity which was 30 times higher than that of the known protein,

915 See BALDOCK (1999), at 19.916 See BALDOCK (1999), at 19, referring to the cases T 22/82 and T 939/92.917 See BALDOCK (1999), at 19/20; OSER (1998), at 652.918 See e.g. T 1054/97 (Insect control/AVENTIS); T 475/01 (Phosphinothricin-Resistenzgen/BAYER), point 18 of the reasons; OSER (1998), at 653; JAENICHEN et al. (2001), at 31, with references to case law. For examples of case law, see further the next two paragraphs.919 See BALDOCK (1999), at 19; BOSTYN (2001), at 138 et seq.920 See EPO/JPO/USPTO (2000), Case A. The EPO builds its argument on the Board of Appeal decision T 939/92.921 See JAENICHEN et al. (2001), at 34, who criticise this strict approach.922 See BALDOCK (1999), at 20; BOSTYN (2001), at 106 and 139.923 See further T 303/95 (Gène chimérique/RHÔNE-POULENC), where the use of chimeric genes comprising specific promoters was held to be inventive because of the unexpected effect to increase the quality of the desired herbicide resistence, even though a prior art document had suggested the use of these known promoters. Id. reasons, point 11. See also T 182/03 (Phosphodiesterase/SMITHKLINE BEECHAM), point 12 of the reasons.924 See T 301/87 (Alpha Interferons/BIOGEN), point 7.11 et seq. of the reasons.

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which according to the Board indicated that the structural differences at the DNA and amino acid levels conferred valuable properties to the claimed subject matter.925

Where the encoded protein, its function and its amino acid sequence are already state of the art, such an unpredictable technical effect could also be that a particular DNA sequence out of all possible degenerate DNA sequences coding for the known protein turns out to be more suitable for expression of the desired protein in a particular host.926

Inventiveness of a gene sequence can also be derived from the effort needed to isolate the gene, the technical effect of which is known and desired.927 The isolation of a further gene having a certain biological function, using DNA having the same biological function disclosed in prior art as a probe, is increasingly regarded as a matter of routine.928 Nevertheless, the Board in T 272/95 (Relaxin/HOWARD FLOREY INSTITUTE) acknowledged inventiveness in a case where the skilled person had reasons to doubt that a homology would exist between the probe and the gene to be isolated.929 Furthermore, inventiveness will generally be given, where a probe is not yet available. Where prior art does not provide an amino-acid sequence which could be a basis for a probe, nor an isolated gene, the cloning of the gene with the desired technical effect “becomes a research program”, while “the average skilled person in the field of biotechnology would not be expected to solve technical problems through scientific research”.930

925 See id., point 7.12 of the reasons.926 See BOSTYN (2001), at 107; RAUH/JAENICHEN (1987), at 758. For case law confirming this approach, see e.g. T 475/93 (IFN-II/CHIRON), point 9 of the reasons.927 For further recent case law see BOSTYN (2001), at 108 et seq., point 4.3.2.928 See e.g. T 479/97 (Expression System/NOVARTIS), point 12 of the reasons, where the Board held that in 1988, the isolation of a gene encoding a known protein with a homologous DNA probe, had become a matter of general common knowledge. See also OSER (1998), at 652.929 The appellants had argued lack of inventive step on the basis that isolation of a DNA fragment from a target species by hybridisation of the cloned DNA to a DNA probe encoding the same protein in another species was a technique well-known at the priority date. Yet, according to the Board, a reasonable expectation of success that the claimed human relaxin encoding DNA may be isolated using this technique would have required that “there was some reason to expect that the sequence of both DNAs may be somewhat homologous or at least […] no reasons existed to suspect an absence of homology.” Based on the absence of significant hybridisation between rat and porcine relaxin DNAs the Board found that the skilled person would have had reasons to doubt that such a homology would exist between the human and rat or porcine relaxin DNAs. See T 292/95, point 14 of the reasons. Interestingly, in the Trilateral Project B3b, the EPO holds that “[t]he use of a known rat insulin gene as probe to identify and isolate at least parts of the corresponding human insulin gene by the use of known cross-hybridisation techniques from a cDNA library constructed from human liver must, in view of the high (95%) homology between rat and human DNA sequences, be considered only as routine matter.” See EPO/JPO/USPTO (2000), Case B. 930 See T 479/97 (Expression System/NOVARTIS), point 29 of the reasons, with a reference to well-established case law on the “average skilled person in the field of biotechnology”.

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e) Inventiveness of proteins

The inventiveness of proteins follows a similar path. The inventive step requirement can be met by disclosing the properties of a protein type previously unknown or by showing unexpected technical properties of a new variant of a known protein type, such as higher activity or greater stability.931 Modified proteins may also be inventive if the alteration brings about such a surprising effect.932

Inventiveness may also be based on the difficulties to isolate or produce a protein of a certain known type. In the decision T 479/97, for example, the Board was dealing inter alia with a claim to different pectin lyases in pure form,933 i.e. of proteins of a known type having known properties. The objective problem, as defined by the Board, was “to provide further pectin lyases in pure form.”934 The Board held that the necessary cloning of the genes encoding the pectin lyases amounted to a research program since a probe or an amino-acid sequence of a pectin lyase for preparing such a probe were not yet available.935

4. Sufficiency of disclosure, support by description and clarity

The purpose of the sufficiency of disclosure requirement under Art. 83 EPC is twofold: firstly, to ensure that the application, as a whole, including description, claims and drawings, contains sufficient technical information to enable a skilled person to put the technical teaching into practice without the burden of an undue amount of experimentation or the application of inventive ingenuity;936 secondly, it guarantees that the reader of the patent specification will be able to understand the contribution to the art which the invention as claimed has made.937

Art. 84 contains two principles. The clarity requirement means that a claim must be non-ambiguous and comprehensible and, additionally, that all essential features of the claimed invention have to be indicated in the claim, these being the features necessary

931 See BOSTYN (2001), at 86. For case law, see e.g. T 495/92 (Interferon-gamma/CANCER INSTITUTE), point 6 et seq. of the reasons: “[…], there does not seem to exist any reliable way to predict which specific change in a primary structure of a protein will lead to a change in biological activity. Thus, the isolation of the specific Gln9-interferon variant can be considered unexpected if said variant is shown to have altered biological properties.” (Id. point 8) See also T 179/01 (Herbicide resistant plants/MONSANTO), at point 29 of the reasons.932 See BOSTYN (2001), at 86. Not every changed amino acid sequence constitutes a new and inventive subject-matter, since the skilled person is aware of the fact that variations of a given primar amino acid structure of a protein can result in molecules whose essential physical and biological characteristics remain unaffected. 933 See T 479/97 (Expression system/NOVARTIS AG), points III and IV of the summary of facts.934 See id., point 26 of the reasons.935 See id., point 29 of the reasons.936 See EPO (2001), at 148 and 150, with references to Boards of Appeal case law; T 694/92 (Plant gene expression/MYCOGEN PLANT SCIENCE), point 5 of the reasons; T 891/02 (Potato starch/BASF), point 3 of the reasons; T 1026/02 (Oilseed Brassica/PIONEER HI-BRED), point 2 of the reasons; VOSSIUS (1997), at 12.937 See EUROPEAN PATENT OFFICE (2003a), C.II.4.1.

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to obtain the desired effect.938 With respect to the support requirement the Guidelines point out “that there must be a basis in the description for the subject matter of every claim and that the scope of the claims must not be broader than is justified by the extent of the description and drawings and also the contribution to the art.”939

a) The ratio of the requirements of sufficient disclosure and of support by the description

The requirements of sufficiency of disclosure (Art. 83) and of support by description (Art. 84) are closely linked as they both “reflect the same general principle, namely that the scope of a granted patent should correspond to its technical contribution to the art.”940 In other words, “the need for a fair protection governs both the considerations of the scope of claims and of requirements for sufficient disclosure.”941 Fair protection has two aspects: On the one hand, it has to be taken into account that an inventive concept may have applications far beyond what has been shown to work in the experimental part of the description.942 Most claims are therefore generalisations from one or more working examples where the inventor has verified the invention. In order to provide fair protection for the inventor who discloses a general principle a certain degree of generalisation must be permitted943 and is clearly envisaged by Art. 84.944

On the other hand, rules are necessary to prevent the inventor from claiming subject matter which after reading the description still would not be at the disposal of a skilled person.945 Besides the inventive step criterion, Art. 83 and 84 are the major instruments used by Technical Boards of Appeal to address issues of overly broad claims.

Art. 83 and 84 approach the problem of fair protection from different angles, but aim for the same compromise between necessity of allowing for generalizations and the need “to ensure that the extent of protection conferred by the granted claims is justified by the actual technical contribution to the art”.946 Art. 83 takes the “invention”, i.e. all

938 See T 694/92 (Modifying plant cells/MYCOGEN), point 4 of the reasons.939 See EUROPEAN PATENT OFFICE (2003a), C.III.6.1, with reference to T 409/91. 940 See T 694/92 (Modifying plant cells/MYCOGEN), point 5; See EUROPEAN PATENT OFFICE (2003a), C.III.6.4: “Both requirements are designed to reflect the principle that the terms of a claim should be commensurate with, or justified by, the invention.” For a detailed explanation of the relationship between Art. 83 and 84 EPC, see BOSTYN (2001), at 153 et seq.941 See T 292/85 (Polypeptide expression/GENENTECH I), reasons, point 3.1.5.942 This is emphasized by BOSTYN (2001), at 288.943 See BOSTYN (2001), at 288.944 See T 133/85 (Amendments/XEROX), point 5 of the reasons: “[...] Article 84 EPC cleary envisages (by the use of the word ‘supported’) that the ‘matter for which protection is sought’ can be defined in a generalised form, compared to the specific description of the invention. The permissible extent of generalisation from the description to the claims, having regard to the requirement of Article 84 EPC, is a question of degree and has to be determined, having particular regard to the nature of the invention which has been described, in each individual case.”945 See T 26/81 (Containers/ICI), point 4 of the reasons.946 See, e.g. T 289/96 (Detecting sequences/ZENECA), point 2 of the reasons; see also T 409/91 (Fuel oils/EXXON), headnote and point 3.5 of the reasons; T 619/01 (Immunotoxins/RESEARCH DEVELOPMENT FOUNDATION), point 2 of the reasons.

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subject matter encompassed by the claims, as a fixed point and contains requirements that have to be met by the patent specification as a whole, especially by the description. The specification must contain sufficient technical information “to perform the invention over the whole area claimed without undue burden and without needing inventive skill.”947 Art. 84, on the other hand, “states a requirement in respect of the claims and not of the description”.948 This provision is a safe-guard that claims do not cover any subject matter which, after reading the description, still would not be at the disposal of a skilled person.949

How much generalisation is permissible, or from a perspective of Art. 83, what amount of technical information is necessary in the application to sufficiently disclose the invention as claimed? If the working examples refer only to maize, can the claims cover all other important crop species? Or if only one method to obtain a plant with certain phenotypic characteristics, e.g. producing specific levels of secondary products, has been described, may the invention be defined in functional terms rather than by structural features (i.e. by the relevant genetic components), thus covering plants later developed using a different technical approach which does not draw on the teaching disclosed in the first invention? In the following, some principles developed by the Technical Boards of Appeal for the assessment of the requirements of sufficient disclosure and support by description in the area of biotechnology will be outlined and illustrated by case law. In a number of cases, the Boards of Appeal have exercised quite a stringent control in the framework of Art. 83 and 84 EPC.950 Especially, the link to the standards applied when assessing inventive step permits balanced solutions, which may attenuate some of the concerns related to overly broad patent claims. On the other hand, claims which define the invention only by the desired technical result are an area where raising the patenting threshold could be desirable. Otherwise, this could lead to the patenting of plant traits independent of the underlying genetic structure, which forms the actual contribution of the inventor to the art.

b) The extent to which the invention must be reproducible

A first landmark decision in the area of biotechnology which concerned the extent of permissible generalization of claims and the extent to which the claimed invention must be reproducible was T 292/85 “Polypeptide expression/GENENTECH”. The invention at issue related to the expression of desired heterologous polypeptides in a bacterial host under the control of a homologous regulon, i.e. the bacterium's own

947 See EUROPEAN PATENT OFFICE (2003a), C.II.4.9. 948 See T 26/81 (Containers/ICI), point 4 of the reasons.949 See id.950 For cases where the experimental plan given in the description was considered too general, placing an undue burden on the skilled person see, for instance, T 1092/98 (Gene Switch/SYNGENTA),T 639/95 (Biopolymers/MIT), T 1052/98 (Gene Switch/SYNGENTA), at point 1 et seq. of the reasons. On the extent to which the invention must be reproducible, see T 612/92 (Monocotyledonous plants/RIJEKSUNIVERSITEIT LEIDEN); T 187/93 (Vaccines/GENENTECH). On the interrelation between Art. 83, 84 and 56, see T 694/92 (Modifying Plant Cells/MYCOGEN).

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regulon. Claim 1 of the new request finally granted by the Board of Appeal was directed to

“A recombinant plasmid suited for transformation of a bacterial host wherein the plasmid comprises a homologous regulon, heterologous DNA, and one or more termination codon(s), the heterologous DNA encoding a desired functional heterologous polypeptide or intermediate therefor which is not degraded by endogenous proteolytic enzymes, said DNA being positioned in proper reading frame with said homologous regulon between said regulon and the termination codon(s), whereby on translation of the transcription product of the heterologous DNA in a suitable bacterium, the resulting expression product is said desired functional polypeptide or intermediate therefor in recoverable form.”951

The Board of Appeal rejected the existence of a rule saying that Art. 83 requires that all embodiments within the claims should be reproducible at will by the skilled person without having to make an invention.952 It held that the non-availability of some particular variants or unsuitability of some unspecified variants was immaterial as long as there are suitable variants known which provide the same technical effects,953 and concluded that “[a]n invention is sufficiently disclosed if at least one way is clearly indicated enabling the skilled person to carry out the invention.”954

Yet, later case law clarified this general statement, which should not be misunderstood. When determining the extent to which a biotechnological invention must be reproducible, the Boards distinguish between two types of situations based on the essence of the invention:955 In T 292/85, the essence of the invention was to obtain a specific product, namely a polypeptide which is produced in a bacterial host and not degradable by endogenous proteolytic enzymes.956 As long as this desired technical result is obtainable, the non-availability of some hosts falling within the scope of the claims is not an obstacle to a generic claim formulation. These principles were confirmed, for instance, in T 386/94 (Chymosin/UNILEVER), where the technical purpose of the invention was also to achieve the production of certain proteins in microorganism, or in T 984/00 (Ti-plasmid vectors/MAX-PLANCK-GESELL-

951 See T 292/85, point IV. of the summary of facts and submissions.952 See T 292/85, point 3.3.1. et seq. of the reasons. This rule had been suggested by the Examining Division.953 T 292/85, headnote 1 and point 3.1.4. and 3.2.1 of the reasons.954 T 292/85, headnote 1.955 See EPO (2001), at 150.956 See also T 1241/03 (Human growth hormone/GENENTECH), at point 18 et seq. of the reasons, where the Board emphasizes the limited scope of the “one way”-statement in T 292/85. The Board in T 292/85 had only stated that the non-availability of some particular variants of a functionally defined component feature of the invention was immaterial to sufficiency as long as there were suitable variants known to the skilled person, which provide the same effect for the invention. The decision T 1241/03 concludes that “the disclosure of one way of performing the invention is only sufficient within the meaning of Article 83 EPC if it allows the person skilled in the art to perform the invention in the whole range that is claimed (cf. decision T 409/91 [...]).”

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SCHAFT), where the invention lay in the use of the T-region of the Agrobacterium without the genes of the T-region of wild type Ti-plasmids to avoid the deleterious effects of these genes non the target plant.

In contrast, if the essence of the invention is the achievement of a given technical effect in different areas of application and serious doubts exist as to whether this effect could readily be obtained for the whole range of applications claimed, more technical details and more than one example may be required.957 A case in point is T 612/92 (Monocotyledonous plants/RIJEKSUNIVERSITEIT LEIDEN).958 The applicant claimed

“a process for the incorporation of foreign DNA into the genome of monocotyledonous plants by infecting the monocotyledonous plants [or]incubating the protoplasts thereof, with Agrobacterium or Rhizobium bacteria containing a virulence region and at least one T-region originating from a Ti-plasmid or a Ri-plasmid or both, which T region is provided with said foreign DNA.”959

The contribution of the invention lay in the suggestion of a new application for a known technique for incorporation of foreign DNA into plants and experimental verification of this technique for Liliaceae and Amaryllidaceae.960 After quoting the “at least one way” statement of “Polypeptide expression/GENENTECH”, the Board clarifies that the principle that “the skilled person [must] be given sufficient guidance for performing the invention in the whole range claimed without undue burden” is still valid as it serves to “give effect to the legal principle that the scope of the patent should be justified by the technical contribution to the art.”961 In the case at issue, the technical problem to be solved was the application of a known technique to plant species which had not responded to this treatment so far. The aim was not to provide a certain end-product in a host which was exchangeable without affecting the solution of the technical problem. The technical problem was to genetically modify a certain species. Therefore “the information in the patent and common general knowledge must also enable the skilled person to carry out the method throughout the novel technical

957 See id.958 See further the cases T 694/92 (Plant gene expression/MYCOGEN PLANT SCIENCE) and T 187/93 (Vaccines/GENENTECH).959 See T 612/92 (Monocotyledonous plants/RIJEKSUNIVERSITEIT LEIDEN), at point I of the summary of facts and submissions.960 As a background, it is important to know that for quite some time the infection of monocotyledonous plants with tumefaciens had not succeeded but the idea had been anticipated in prior art.961 See T 612/92, point 13 of the reasons.

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field of application claimed, that is for all monocotyledous plants”.962 This approach was confirmed by several other decisions.963

In order to permit break-through inventions which open up a whole new field to obtain fair protection, the stringent rules laid out above are attenuated by the fact that the Boards require the Examining Division or opponent objecting an application for lack of sufficiency to establish that there are serious doubts as to the reproducibility of the invention in certain areas. In T 612/92 (Monocotyledonous plants/RIJEKSUNIVERSITEIT LEIDEN), the Board quotes the “Onco-mouse”-decision stating that “… the mere fact that a claim is broad is not in itself a ground for considering the application as not complying with the requirement for sufficiency of disclosure under Article 83. Only if there are serious doubts, substantiated by verifiable facts, may an application be objected for lack of sufficient disclosure.”964

These serious doubts were rejected in the Onco-mouse case, but acknowledged by the Board in the case “Monocotyledonous plants”, as the transformations with Agrobacterium of certain cereal plants were achieved only between 1990 and 1995, none however, by the protocol described in the patent in suit.965 The Board concluded that the information in the patent was insufficient to allow the invention to be carried out with the majority of monotyledonous plants.966

c) Anticipation of the technical effect at the theoretical level in prior art

Whereas the above approach requiring “serious doubts, substantiated by verifiable facts” seems justified in cases where the invention discloses a new concept, the Board had to develop a check for avoiding overly broad patent claims in cases where the contribution to the state of the art by the invention disclosed resides only in the actual realization of a technical effect anticipated at a theoretical level in prior art. In order to find a fair balance between the actual technical contribution to the art and the manner of claiming, the Board considers the interrelationship between the requirements of Art. 84, 83 and 56 EPC.967

962 Id., point 16 of the reasons.963 See T 694/92 (Modifying Plant Cells/MYCOGEN), point 5 of the reasons; T 187/93 (Vaccines/GENENTECH), point 2 et seq. of the reasons; T 1241/03 ( Human growth hormone/GENENTECH), at point 18 of the reasons.964 See T 19/90, point 3.3 of the reasons, as quoted by T 612/92 (Monocotyledonous plants/RIJEKSUNIVERSITEIT LEIDEN), point 14 of the reasons; confirmed e.g. in T 694/92 (Modifying plant cells/MYCOGEN), point 5 of the reasons; T 363/00 (Beer adsorbant/PQ), at point 1 of the reasons; T 505/00 (Assay of free and complexed prostate-specific antigen (PSA), at points 6 et seq.; T 315/03 (Transgenic animals/HARVARD), at 13.7; T 843/03 (Human papillomavirus/THE UNIVERSITY OF ROCHESTER), at point 6 et seq. of the reasons; T 877/03 (Anti-CD30 antibodies/ROCHE), at point 24 of the reasons.965 See T 612/92 (Monocotyledonous plants/RIJEKSUNIVERSITEIT LEIDEN), point 18 of the reasons.966 See id., point 24 of the reasons.967 See T 694/92 (Modifying plant cells/MYCOGEN), point 3 of the reasons.

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This control exercised on the breadth of claims by the Boards of Appeal is well illustrated by the decision T 694/92 (Modifying plant cells/MYCOGEN). Claim 1 is generally directed to a method for genetically modifying a plant cell by transferring into it a combination T-DNA/plant promoter/plant gene such that expression of the protein encoded by the foreign gene is detectable. It contained virtually no structural technical features.968 In contrast with this broad claim, the description only disclosed experimental support for the transfer and expression into plant cells of a DNA sequence encoding phaseolin under the control of its own promoter. Closest prior art had already reported the construction of such a DNA vector comprising T-DNA having inserted therein the entire phaseolin gene including its own promoter regions, but the final experiment had not yet been completed.969 The Board considered that the “technical contribution [to the state of the art by the disclosure] is not a new general technique for achieving expression of a plant structural gene in a plant cell, but the successful completion of the experiment anticipated [in prior art] […]”.970 It further highlighted that

“[n]o specific details are given in the claim in respect of the structural arrangement of the combination T-DNA/plant promoter – plant gene, except for the self-evident indication that the plant promoter is adjacent to the 5’-end of the structural gene which is downstream from the promoter in the direction of transcription […]. […] Failing any limitations in respect of the kind of plant cell and/or plant gene and/or plant promoter, the claim is thus directed to a method whenever it works (see feature ‘such that’…) for a whole range of applications.”971

The question of whether the skilled person would have been in a position at the priority date to carry out the method for the whole range of applications claimed without undue burden is answered by the Board with reference to the interrelation with Art. 56, which had already been emphasized in the “Molecular farming/ CALGENE”-case described above.972

“If it is maintained that the achievement of the technical effect (expression) is the inevitable result of the technical measure of placing a plant structural gene into a T-DNA vector adjacent and downstream from a plant promoter, then

968 Claim 1 of the patent as maintained in amended form by the Opposition Division read as follows: “A method for genetically modifying a plant cell, comprising the steps of:

(a) inserting a plant gene comprising a plant promoter and a structural gene into T-DNA, thereby forming a T-DNA/plant gene combination, the plant promoter being adjacent to the 5’-end of the plant structural gene and the plant structural gene being downstream from the plant promoter in the direction of transcription; and

(b) transferring the T-DNA/plant gene combination into a plant cell, such that expression of the protein encoded by the said structural gene is detectable in said plant.”

See T 694/92, point III. of the summary of facts.969 See T 694/92, points 9 et seq. of the reasons.970 See id., point 11 of the reasons.971 See id., point 12 of the reasons.972 See above, point IV.3.b).

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substantiation by way of one example could be considered sufficient, but there would indeed be little merit in such a proposition because this measure has already been anticipated in explicit, though predicative terms by document 5a. […] If the achievement of the technical effect is by no means certain, especially when working in areas of application other than the one given by way of example, and possibly requires more work than the simple placing of a structural gene downstream from a plant promoter, then although merit could possibly be seen in the specific achievement concerned, more technical details would be required to support a claim to the whole range of envisaged applications.”973

The only generalisation finally considered fair by the Board was that to variants of the phaseolin gene and promoter.974

d) Defining the invention in functional terms975

The cases just outlined above involved in one way or the other the use of functional terminology in the claims. In T 292/85 (Polypeptide expression/GENENTECH), the claims at issue referred to a recombinant plasmids suited for the transformation of a bacterial host defined in addition to certain structural features by functionally termed components.976 A particularity of the use of functional terms in defining the protected subject matter is that the claims comprise of an indefinite abstract range of possible alternatives.977 The Examining Division had considered it contrary to Art. 83 that the functionally termed claims included variants which were not available to the skilled person as they also encompassed plasmids, regulons and polypeptide coding DNA sequences which were still unknown and as a result not at the disposal of the skilled person. Yet, as seen above, the Board of Appeal held that “the non-availability of some particular variants or unsuitability of some unspecified variants of a functionally defined component feature of the invention is immaterial to sufficiency as long as there are suitable variants known to the skilled person […] which provide the same effect for the invention.”978 The Board argued that patent protection would be ineffectual “unless variants of components are also embraced in the claims, which are now or later on, equally suitable to achieve the same effect in a manner that could not have been envisaged without the invention”.979

This is in line with established case law, where the Boards have repeatedly found that using functional features defining a technical result in a claim is permissible if, from an objective viewpoint, “such features cannot otherwise be defined more precisely

973 See T 694/92, point 14 of the reasons.974 See id., point 26 of the reasons.975 “Functional” means that a feature is characterised by means of its effect. See VOSSIUS (1997), at 13.976 See above, b).977 See VOSSIUS (1997), at 13.978 T 292/85, headnote 1.979 T 292/85, point 3.1.5 of the reasons.

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without restricting the scope of the invention”, and if these features provided instructions which were sufficiently clear for the expert to reduce them to practice without undue burden.980

In cases such as T 292/85, where the functional definition concerns a component feature, the application of this established case law leads to a fair generalization of the teaching disclosed in the examples. As highlighted by the Board in T 292/85, the particular choice of a variant within the functional terms “bacteria”, “regulon” or “plasmid” is irrelevant in the end.981 The acceptable burden to find workable candidates depends on the

“relevance of such functional features to the inventive step, i.e. its essentiality to the quantity or quality of the effect obtained and thereby to its distinguishing power against the relevant prior art. As the bacteria had only a supplementary role as a housing for expression, the Board found it unreasonable to impose, besides the functional restriction, an additional limitation to its scope for the reason alone that some of the specimen may not be suitable at all.”982

More problematic are cases where the gist of the invention itself is defined in the claims only in terms of the achieved technical effect. In “Modifying plant cells/MYCOGEN”, the Board pointed out that the claims were finally directed to a “method whenever it works”.983 The Board found a satisfactory solution in this particular case by referring to the interrelation of the sufficiency requirement with inventive step requirement, but did not solve the general problem of claims which define the subject matter in terms of the desired technical result. Should a pioneering inventor be entitled to such a functionally termed claim, thus covering possibly alternative approaches? Patent opponents and breeders984 agree that the examiners accepted overly broad claims when granting for instance the often cited Agracetus patent which claimed all transgenic soybeans.985 This is probably not an exceptional case. The “Nap Hal”986 and the “oil maize”987 patent where the plant characteristics rather than their direct causative agents were claimed raise similar issues.

The results in these cases do not seem to be in line with the general standards stated in case law, according to which the applicant is not totally free in his choice to use functional terms. The essential technical features may only be expressed in general

980 See T 292/85 (Polipeptide expression/GENENTECH), point 3.1.2. of the reasons, quoting the leading decision T 68/85 (Synergistic herbicides/CIBA-GEIGY); see also T 391/91 (Ice nucleating/UNIVERSITY OF CALIFORNIA), point 3.1.2 of the aresons; T 484/98 (Modified yeast/ELSWORTH), point 4 of the reasons. See also EUROPEAN PATENT OFFICE (2001), at 162, with further references.981 See T 292/85, point 3.1.3 of the reasons.982 See id., point 3.2.2 of the reasons.983 See point 12 of the reasons.984 See LE BUANEC (2004), at 11.985 See EP 301 749 granted in March 1994, as mentioned earlier, in point B.I.4.b).986 See above point B.I.1, EP 445 929.987 See above point B.I.1, EP 744 888.

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functional terms “if, from an objective point of view, such features cannot otherwise be defined more precisely without restricting the scope of the claim […]”,988recalling that the scope of the claims has to be justified by the technical contribution to the art of the inventor. The Board in T 292/85 hits the crucial point when it speaks of the necessary protection for “variants of components […] suitable to achieve the same effect in a manner which could not have been envisaged without the invention.”989 The balance between providing fair protection to the inventor for his technical contribution and leaving space for alternative technical approaches for achieving the same technical effect may not always be easy to find. But it would seem that the cases highlighted earlier in this context would have offered the possibility to limit the claims by reference to structural features which would have reflected the actual contribution of the patentee to the state in the art. In the “Nap Hal”-case, for instance, there is no apparent reason why the claims had to refer to “soft-milling wheat having an SDS-sedimentation volume […] of no greater than [X] ml”990 rather than merely to “soft-milling wheat in which each of the ‘x’ and ‘y’ genes at Glu-D1 is absent”. The actual contribution of the inventor to the state of the art are plants that can be structurally defined by the absence of these genes. Again, this could possibly be an area where the patent office could be guided more stringently by the legislator in order to avoid patents which could be regarded as overly broad.

e) Deposit of living material

The difficulties of living organisms meeting the reproducibility requirement were briefly mentioned in part A of this chapter. Under R. 28 EPC and Art. 13 of the ECBiotechnology Directive, it is possible for applicants to rely on a deposit in order to ensure enabling disclosure. These provisions also regulate the access to the deposited material through the supply of samples.991 The deposit is only mandatory “if an invention involves the use of or concerns biological material which is not available to the public and which cannot be described in the European patent application in such a manner as to enable the invention to be carried out by a person skilled in the art”.992 In contrast, a deposit cannot be required with the argument that the repetition of the long and laborious route to obtain the claimed biological material disclosed in the description would represent an undue burden.993

988 See T 694/92 (Modifying plant cells/MYCOGEN), point 4 of the reasons; see also EPO (2001), at 162; SINGER/STAUDER (2000), at 352, para. 33.989 See T 292/85 (Polypeptide expression/GENENTECH I), point 3.1.5 of the reasons, emphasis added by the author.990 See claims 1 to 3 of EP 445 929.991 See R. 28(3) EPC; Art. 13(2) and (3) EC Biotechnology Directive. After the first publication of the application the material is accessible to anyone requesting it, only if the applicant has not requested that access be limited to an independent expert. After the grant of the patent, the material is accessible to anyone requesting it. The person requesting the sample undertakes inter alia to use it only for experimental purposes, unless the applicant for or proprietor of the patent waives this obligation.992 See R. 28 EPC.993 See JAENICHEN et al. (2001), at 32, with a reference to T 412/93 (Erythroproietin/AMGEN), point 76 of the reasons.

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Problems in describing and disclosing biological material arise in particular where the desired technical effect is produced by the entire genetic constitution of an organism. On the other hand, organisms defined only by a single or a few genetic traits which govern the technical effect provided by the inventor, can generally be reliably obtained by the process disclosed by the inventor. Genetic engineering techniques and marker-assisted breeding permit sufficient control in arriving repeatedly at such a broader defined result. An exception may be microbiological processes involving mutations.994

Deposit may also be required if the invention teaches the use of genomic DNA and the starting material is not yet publicly available. Concerning short DNA molecules, such as ESTs, the sequence information alone is considered a sufficient enabling disclosure by the EPO due to the ease of chemically synthesizing small polynucleotide sequences with the help of DNA synthesizer machines.995

V. Scope of protection and of rights conferred

While the question of patentability and of grant of a European patent is in detail regulated by the EPC, the rights conferred and the issue of infringement are mainly dealt with by national law and exclusively tried by national courts. Art. 64(1) EPC merely states that a European patent shall confer to its proprietor rights which are equivalent to those that would derive from a national patent. Art. 64(2) contains the only substantive rule on the scope of patent rights: “If the subject-matter of the European patent is a process, the protection conferred by the patent shall extend to the products directly obtained by such process.” Art. 69 and the Protocol on its interpretation seek to harmonize the extent of protection, i.e. the technical space that is covered by a patent, by indicating the approach to follow in claim interpretation,996 but its implementation is left to national courts. In the area of biotechnology, the EC Biotechnology Directive harmonizes the national laws with regard to certain issues of scope of protection. For the rest, quite often, diverging national laws and practices apply.

Again, the concerns expressed in the civil society and partly also in the legal community will receive particular attention in the following analysis, recalling that the concerns revolve around reduced access of breeders to the genetic background of a transgenic variety, the possibility of breeders continuing to use germplasm that was already at their disposal, the rights of farmers to save and exchange seeds, and the unvolunatry infringement of patents by farmers using seed occasionally contaminated by transgenes.

994 See EUROPEAN PATENT OFFICE (2003a), C.II.4.11.995 See EPO/JPO/USPTO (2000), Case A.996 See below, 2.b).

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1. Types of infringing activity

a) General rules

Generally speaking, the effects of a patent are to reserve the right to use the invention to the patent holder. In quite similar terms, the British997, French998 and German999

patent laws, for instance, confer on the proprietor of a patent the right to prevent all third parties not having his consent from a number of acts of direct use: Where the subject matter of a patent claim is a product, the making, offering, putting on the market or using the product or of importing or stocking the product for these purposes are prohibited save the consent of the patentee. Absolute product protection is a necessary consequence of this enumeration of infringing acts, whenever the inventor is allowed to define the technical problem as “providing the new product X”. Since any “making” and “using” the product may be prevented, product protection covers all functions, effects, usages and advantages of the product even if they are not stated in the patent and even if they are not yet known by the inventor.1000 A third person who finds a new and inventive application of the product may only obtain a dependant patent. Where the subject matter of a patent claim is a process, third parties are prevented from using this process or offering it for use. The patentee may further prohibit disposing of, using, or importing any product obtained directly by a process which is the subject matter of the invention or importing or stocking any such product. This latter provision puts national laws in line with Art. 64(2) EPC. The scope of protection thus extends to the directly obtained product, even where the product itself is excluded from patentability. In principal, the “direct product” is either the end product of the patented process or a product that in spite of further modifications retains its essential characteristics.1001

Additionally, third persons are prohibited from undertaking certain acts of indirect use, i.e. they may not, without the consent of the patent holder, supply or offer to supply a person not entitled to exploiting the invention with “any of the means, relating to an essential element of the invention, for putting the invention into effect”.1002 In contrast to infringement by direct use, indirect use requires additionally a subjective element.1003 The prohibition only applies, when the third party knows, or it is obvious in the circumstances, that these means are suitable and intended for putting that invention into effect. Staple commercial products are excluded from this prohibition,

997 See Art. 60(1) of the British Patents Act of 1977.998 See Art. L613-3 Code de la propriété intellectuelle [French Intellectual Property Code], available in English at http://www.legifrance.gouv.fr/html/codes_traduits/cpialtext.htm.999 § 9 Patentgesetz [German Patent Act].1000 See SCHULTE (2001), at 303, § 14, para. 78.1001 See SCHULTE (2001) §9, Rz. 27; On British case law on the meaning of “directly”, which draws on German law, see CLARK (2000/2001), at 249.1002 See Sec. 60(2) of the British Patents Act of 1977; similar provisions are set out in Art. L613-4 Code de la propriété intellectuelle [French Intellectual Property Code] and § 10 Patentgesetz [German Patent Act].1003 See id.

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unless the third party induces the person supplied to commit prohibited acts of direct use.

b) Application in the area of plant biotechnology

When applying these provisions in the area of plant biotechnology, several issues deserve specific attention:

aa) Innocent infringement by farmers

The direct infringer of a patent does not necessarily know that he is using patented technology. The user of technology is supposed to inform himself about exclusive rights concerning the area of technology he is operating in. Where a farmer has purchased technology directly from the patent holder or a licensee this will not pose any problem. Where he has purchased the technology from a competitor firm which turns out to infringe a patent, he will normally be able to recover his damages from his contractual partner. But a third constellation may occur in the area of patents related to transgenic plants where a farmer uses patented technology, yet without having intentionally acquired it: Farmers may have received the protected subject matter by pollen flow.

A case which is cited by patent critics as an illustration of this kind of situation stems from Canada.1004 Mr. Schmeiser, a farmer from Saskatchewan, defends himself against the claims of the patent owner Monsanto by arguing that he has never deliberately planted, or caused to be planted, any seeds licensed by the plaintiffs containing the patented gene for glyphosate-resistance. Yet, the court established that, for the growing season at issue, the defendant had planted farm-saved seed harvested in the previous season from plots that he knew to be glycosate-resistant. The court found that it was not a case of occasional or limited contamination.1005 A very high percentage of the samples tested during the infringement proceedings turned out to be resistant to spraying with the concerned herbicide.

This kind of situation is not expressly addressed by the provision on the farmers’ privilege in the EC Biotechnology Directive.1006 It seems reasonable to assume that in a constellation similar to the Schmeiser case, the farmer would have to pay the statutory remuneration. The Canadian court assumed a case of voluntary selection of resistant plants, not a case of occasional contamination. This result seems justified as Mr. Schmeiser knew that the trait he selected for was protected by a patent. More of a concern are situations where the effect of a gene can be observed but not easily attributed by a farmer to a certain protected technology. It is conceivable, for instance, that a disease resistance gene spreads under selection pressure in subsequent seasons thus leading to a high concentration of a protected gene in a population. In principle,

1004 See Federal Court of Canada, decision of 29.03.2001 – “Monsanto Canada Inc. and Monsanto Company (Plaintiffs) and Percy Schmeiser and Schmeiser Enterprises Ltd (Defendants).”1005 See id., at para. 123 et seq.1006 For details, see below 3.e).

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the patent holder would be in a position to prevent the farmer from marketing the harvested grains covered by the patent or from using it as seed for the next growing season. It is interesting to note that the Canadian court reports in the Schmeiser decision that other farmers who found volunteer Roundup tolerant plants in their fields obliged Monsanto to remove the undesired plants at its expense. This seems to be the most probable scenario in cases where farmers discover contamination in an early stage and are not interested in using the protected technology. On the other hand, it is unclear how courts will deal with cases where a farmer has knowingly used a plant trait for years because he found it economically advantageous, but without knowing that the genetic causative agent was covered by a patent. If the Indian legislator decides to provide for product protection for transgenic plants, this issue should be specifically addressed.1007

bb) Use of the genetic background of transgenic plant varieties

Since any act of use is covered, it would seem that a claim to “a plant comprising a gene X” in principle prevents competitors from using such a plant in a breeding programme, even if the resulting cross does not contain the patented gene. While today in Europe the scenario that breeders depend on germplasm covered by patents seems perhaps far-fetched, these types of questions may appear in the long-run if newly developed varieties, which in turn form the basis for further breeding, more systematically contain foreign genes. The result would be that a breeder infringes the patent in question in spite of the fact that he is neither interested in the technical effect of the gene as stated in the patent claims nor in any other function of the gene. The resulting unsatisfactory situation could be remedied by an appropriate interpretation of the experimental use exemption.1008 Yet, as long as the application of this exemption to the constellation discussed here is controversial, concerns of breeders that patent protection could conflict with free access to plant varieties as a basis for further varietal development cannot be entirely dispelled. Again this is a problem which could easily be solved de lege ferenda and should not speak against patent protection per se.1009

1007 The German legislature has introduced a provision addressing the issue of gene flow in 2005, which, however, leaves many questions open. The new § 9c(3) German Patent Act reads as follows: “§ 9a Abs. 1 bis 3 gilt nicht für biologisches Material, das im Bereich der Landwirtschaft zufällig oder technisch nicht vermeidbar gewonnen wurde. Daher kann ein Landwirt im Regelfall nicht in Anspruch genommen werden, wenn er nicht diesem Patentschutz unterliegendes Saat- oder Pflanzengut angebaut hat.” [“§ 9a, paragraphs 1 to 3, does not apply to biological material, that has been acquired in the field of agriculture by chance or in a technically unavoidable way. Therefore, as a rule, a farmer is not liable if he has used seeds or propagating material that does not fall under the provisions of this Act.” Translation by the author]1008 See below, 3.d).1009 The German legislature has introduced a provision in order to solve this problem. This provision, however, should not be taken as a model, as it is not clearly framed and could be misunderstood to exempt also the use of the protected genetic component in breeding, which would render the patent protection for these inventions meaningless. The new § 11 No. 2a of the German Patent Act exempts “die Nutzung biologischen Materials zum Zweck der Züchtung, Entdeckung und Entwicklung einer

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2. Extent of protection conferred

a) The role of the claims

A major difference between the plant variety protection regime and the patent system is the subject matter that will be protected against certain acts of third persons. Whereas the extent of plant variety protection is strictly limited by the legislative wording to certain types of subject matter and relates always to one single variety, the inventor defines the scope of his invention in his patent claims by enumerating the processes and products to be protected in more or less general terms depending on the contribution of his invention to the art. Thus the patent system leaves a bigger margin to balance the interests of the inventor and his competitors and to provide a just reward to the inventor. Yet, this also leaves more room for abuse and misjudgement.

b) Art. 69 EPC

The search for an equitable reward continues in infringement proceedings where claim interpretation in the light of description and drawings permits adding to the technological space delimitated by the literal meaning of the claims a zone in which the infringer uses the concept of the invention even if he does not literally infringe the claims. According to Art. 69(1) of the EPC, “[t]he extent of protection conferred by a European patent or a European patent application shall be determined by the terms of the claims. Nevertheless, the description and drawings shall be used to interpret the claims.” As clarified in the Protocol on the Interpretation of Article 69 of the Convention,1010 this provision sets out a middle path between two approaches to claim interpretation. Neither is the extent of protection conferred by a European patent defined merely by the strict, literal meaning of the wording used in the claims, nor may the claims be regarded only as a guideline and the actual protection be extended to what, from a consideration of the description and drawings by a person skilled in the art, the patentee has contemplated. Art. 69 has to be interpreted as “defining a position between these extremes which combines a fair protection for the patentee with a reasonable degree of certainty for third parties.”1011 Although in a diverging manner and with different results, courts in the different Member States thus give consideration to variants which do not literally fall within the claims but are equivalent to elements specified in the claims.1012

neuen Sorte;” [“the use of biological material for the purpose of breeding, discovering or developing a new variety;” Translation by the author].1010 The Protocol was adopted at the Munich Diplomatic Conference for the setting up of a European System for the Grant of Patents on 5 October 1973. Pursuant to Art 164 (1) of the EPC it is an integral part of the EPC.1011 See Protocol on the Interpretation of Article 69 of the Convention.1012 For a general overview see SINGER/STAUDER (2000), at 244, para. 34 et seq.; TRITTIN (2002), at 82, para. 2-039 et seq.; for a detailed discussion of British and German case law, see WESTERLUND (2001), at 201 et seq. Following the Diplomatic Conference of November 2000, a second paragraph will be added to the Protocol stating expressly that “[f]or the purpose of determining the extent of protection conferred by a European patent due account shall be taken of any element

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Again, if compared to the inflexible, strict approach of the PBRs system the patent law approach leaves a margin to take the objective technical contribution to the art into account. On the other hand, this flexibility certainly also leaves more space for conflictand generates an enormous amount of litigation. Given the costs of enforcement and litigation, the approach of the patent system renders the economic power of the parties involved in the dispute more significant.

c) EC Biotechnology Directive

But the legislator has the possibility to restrict this flexibility. This may work in both directions, to the advantage of third parties or in the interest of the patentee. He may,for instance, prevent the patentee from claiming inventions in a certain way. The French legislator, for instance, has limited patent protection for an element of the human body, including gene sequences, to the technical application of a function of this element.1013 Total or partial sequences of a human gene taken as such is excluded from patentability.1014 As far as the principle scope of protection is concerned, with one exception,1015 the European legislator has preferred to take the opposite direction and provided for guidance that adjusts the scope of protection in a way favourable to the patentee. Certain types of subject matter are included in the scope of protection even if the patentee has omitted to specifically claim them.1016 At the same time, the European legislator has introduced important exceptions and derogations to the rights conferred by a patent, which will be outlined below in part 3 of this section.

aa) Inclusion of the progeny of self-reproducing material

By confirming that patent rights extend to the progeny of self-reproducing material, Art. 8(1) of the EC Biotechnology Directive restates a fundamental principle of product patent protection: Irrespective of the method used to produce a product, it falls under the relevant claim whenever it shows all technical features defined therein.1017

Consequently, the patent protection for biological material possessing specific characteristics as a result of the invention extends “to any biological material derived from that biological material through propagation or multiplication in an identical or divergent form and possessing those same characteristics.”

which is equivalent to an element specified in the claims.” For an example in the area of biotechnology which well illustrates the issues involved, see GILBERT/WILSON (2000/2001) and WELCH (2003), at 592 et seq., both explaining the AMGEN case. See also the discussion in WESTERLUND (2001), at 219 et seq. and 236 et seq., referring to typical constellations in the field of biotechnology. On recent developments, see BALLESTER RODÉS et al. (2004), at 168 et seq.,containing abstracts of the relevant case law of European courts up to September 2004 and MEIER-BECK (2005), on the German approach. See further the decision of the House of Lords, dated 21 October 2004 - Kirin-Amgen Inc. v. Hoechst Marion Roussel Ltd, points 23 et seq..1013 See Art. L 611-18 of the French Intellectual Property Code, which refers to “une invention constituant l’application technique d’une fonction d’un element du corps humain”.1014 See Art. L 611-18, para. 3d).1015 See below point dd).1016 See below points aa), bb), cc).1017 For German law see, e.g. SCHULTE (2001), § 14, point 77.

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bb) Extension of protection conferred by a process patent

Art. 8(2) of the EC Biotechnology Directive extends protection conferred by a patent on a “process that enables a biological material to be produced possessing specific characteristics as a result of the invention” beyond “products directly obtained by such process”. The provision seeks to neutralize the fact that biological material can be re-produced without using the inventive concept. It aims at putting the inventor of such a process in the same position as the inventor of a non-biological process. Pursuant to this Article, the protection conferred by a patent on said process involving biological material extends to “any other biological material derived from the directly obtained biological material through propagation or multiplication in an identical or divergent form and possessing those same characteristics.” Thus a process patent covers all products directly obtained from the patented process and additionally its progeny, provided the latter contains the protected technical features.1018 This provision is of particular significance for conventional breeders and farmers, as it prevents them, if no exemption applies, from using the progeny of genetically engineered plants retaining the characteristics resulting from the invention, irrespective of whether the invention is protected by a product or a process patent.

cc) Extension of protection to all material in which the product is incorporated

Art. 9 of the Directive deals with cases where the patented product is part of a larger unity. Pursuant to this Article “protection conferred by a patent on a product containing or consisting of genetic information shall extend to all material […] in which the product is incorporated and in which the genetic information is contained and performs its function.”1019 Consequently, the scope of a patent directed to a certain chimeric gene construct will, for example, cover a transgenic plant containing this gene construct, even if the so characterized plant has not been specifically claimed.

dd) Overlapping DNA sequences

In its Recital 25, the EC Directive clarifies for the purpose of interpreting the scope of a patent that “when sequences overlap only in parts which are not essential to the invention, each sequence will be considered as an independent sequence in patent law terms.”1020

1018 The desirability of such a modification of the protection has been suggested in the legal literature for a long time. See e.g. STRAUS (1987), at 339.1019 Yet, Art. 9 expressly states that this rule may not lead to the coverage of subject matter which is excluded from patentabilty under Art. 5(1), namely the human body, at any stage of its development, or one of its element in their natural environment.1020 The French legislator has transposed this provision into national law as follows: “La portée d'une revendication couvrant une séquence génique est limitée à la partie de cette séquence directement liée à la fonction spécifique concrètement exposée dans la description.” [The scope of a claim covering a genetic sequence is limited to that part of this sequence which is directly linked to the specific function which has been concretely disclosed in the description.] Translation by the author.

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3. Limitations of and exceptions to the rights conferred by a patent

Just as the PBRs system, the patent regime provides for a number of limitations of and exceptions to the rights conferred by the patent. Exhaustion, rights based on prior use, exemption of private non-commercial acts, the exemption of acts done for experimental purposes and the provisions on compulsory licensing are of particular relevance in the present context. The existing rules have been partly modified, partly added to, by the EC Directive in order to adapt the patent regime to the particularities of the area of agriculture and plant breeding. Again the legislator takes into account the consequences of the natural ability of plants to be propagated and multiplied. At the same time, he considers that a specific balance has to be found between the interests of patentee, breeders using the invention and farmers as end-consumer, which leads to provisions on the farmers’ privilege and on compulsory cross-licensing.

a) Exhaustion

As a rule, when a protected product is put on the market by the patent holder or by a third person with his express consent, the former loses control over those uses of his product he has – explicitly or implicitly – agreed to. While the right to make a product is normally reserved to the right holder even after the placement on the market, the act of the patentee to market propagating material which by definition serves the making of the protected product is interpreted to imply an agreement to use the protected biological material for one reproduction cycle.1021 In Art. 10 EC Biotechnology Directive it is now expressly stated that the rights conferred by a product or process patent involving self-reproducing material do not extend to “biological material placed on the market in the territory of a Member State by the holder of the patent or with his consent, where the multiplication or propagation necessarily results from the application for which the biological material was marketed”. The Article also provides that exhaustion only extends to the propagation cycle following the placement on the market.1022 However, as will be seen below, Art. 11(1) of the Directive provides for a farmers’ privilege.

b) Prior use

National European patent laws further limit the effect of patent rights with respect to prior users whose activities have not made the invention available to the public. The French Patent Act, for instance, provides that:

“Any person who, within the territory in which this [Act] applies, at the filing date or priority date of a patent was, in good faith, in possession of the invention which is the subject matter of the patent shall enjoy a personal right to work that invention despite the existence of the patent.

1021 See MOUFANG (2002), at 161.1022 For an opinion in the literature having for a long time claimed this modification of the principle of exhaustion for biologically reproducible material, see STRAUS (1987), at 339.

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The right afforded by this Article may only be transferred together with the business, the enterprise or the part of the enterprise to which it belongs.”1023

It may be recalled that if a person uses an invention in a way that makes it public before the priority date of a patent application, this anticipation will prevent the grant of a patent, or, if the patent has been erroneously granted, permit attacking the validity of the patent. Only where using the invention has not made it available to the public in the sense outlined above,1024 does the aforementioned prior use exemption come into play.

The aim of this exemption is to protect the economic position of a third person who has possession of an invention acquired in good faith and started to commercially exploit this invention or at least made preparations for this exploitation. Yet the defence is limited:1025 the acts done or prepared for before the priority date may be continued or done afterwards by the person concerned, his partner being in the relevant business or an assignee of this business, not however by a licensee. Nor does the exemption entitle the user to perform variants of the prior acts, which might in particular arise from improvements of the invention.

Under patent law following the European model,1026 a situation is conceivable where a plant with certain characteristics is covered by a patent had been developed or used by a small circle of farmers or a breeding firm prior to the application or priority date, yet without being accessible to a public beyond the members of this circle. In such a case, nothing would hinder the persons in possession of the subject matter to continue to use it in the same way as they did before. They may, however, be deprived of further research opportunities to improve this subject matter.

c) Acts done privately for non-commercial purposes

National laws in Europe contain a provision stating that the rights conferred by a patent shall not extend to acts done privately and for non-commercial purposes.1027 It should be noted however, that only natural persons have a private sphere which falls under this exemption. Legal persons, public sector institutions, associations are unable to invoke this provision.1028

1023 Art. L613-6 Code de la propriété intellectuelle [French Intellectual Property Code], English translation available at www.legifrance.gouv.fr/html/codes_traduits/cpialtext.htm. Sec. 64(1) of the British Patent Act of 1977 and § 12 Patentgesetz [German Patent Act] contain provisions which are differently framed but similar in their content.1024 See above IV.2.a).1025 See CORNISH (1996), at 220/221, para. 6-21.1026 The situation assumed in this paragraph is unlikely to happen in Europe, but could occur in India if patent protection corresponding to the European model would be introduced.1027 See Sec. 60(5)(a) British Patent Act of 1977; Art. L 613-5(a) Code de la propriéte intelletuelle [French Intellectual Property Code]; § 11 Patentgesetz [German Patent Law]. 1028 See SCHULTE (2001), § 11, para. 9, point 2.1; CORNISH (1996), at 214.

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These provisions have importance for farmers and gardeners. While acts done for commercial purposes also include acts which serve to generate an income and the production of grains or seed for the market is therefore a commercial activity, subsistence farming is exempted from this. Consequently, it would not be an infringement to use seed falling under a patent claim to produce harvest for one’s own consumption.1029

d) Experimental use exemption

Virtually all1030 national laws in Europe further provide for an express exception from patent infringement for “experimental use relating to the subject matter of the invention”.1031 It is important to note that this phrase has two elements. Not any experimental use is exempted, but only those uses which relate to the subject matter of the invention. In principle the latter include only those activities which have the purpose of seeking information about the patented invention, i.e. to see whether one can actually carry out the invention or how it can be improved.1032 In contrast, the use of a process or a research tool which is just the means for performing the experiment does not fall under the exception from infringement. To give an example:1033 The PCR process, which is widely used both in commerce and in basic research to amplify minute traces of DNA to detectable levels, is patented. If the experimental use aims at detecting traces of DNA, this infringes the patent, because the experiment does not relate to the subject matter of the invention, i.e. the PCR process. If, on the other hand, the experimental use serves the improvement of the PCR process itself, it is covered by the experimental use exception. There is no implicit condition that purely scientific aims have to be pursued. The researcher may also test the possible applications of the invention for future commercialisation.1034

In the area of plant biotechnology this provision raises two issues in particular: As mentioned earlier, breeders consider it important to be able to use plant varieties embraced by a patent claim “plant containing a gene X” in their breeding programmes and to be free to commercialize the resulting new varieties without the authorisation of the right holder, provided this variety does not contain the protected DNA sequence. Few would deny that breeding is an activity done for experimental purposes. Yet CLAES raises doubts whether this experimentation relates to the subject matter of the

1029 See SCHULTE (2001), § 11, para. 10, point 2.1.1030 See COOK (1998/1999), at 167/168, pointing to the exception of Switzerland.1031 See, e.g. Art. L 613-5(b) of the French Intellectual Property Code; Sec. 60(5)(c) of the UK Patent Act of 1977; § 11 No. 2 German Patent Act.1032 A lot of national case law in Europe in the last decade has dealt with the question of how to deal with experimentation that has a double purpose. Clinical trials of new entrants into the market of patented drugs often serve the goal of discovering if and in what form the active substance is suitable for curing or alleviating illnesses as well as submitting such data to regulatory authorities. The dominant opinion which emerges from this jurisprudence considers that a collateral non-experimental purpose does not prevent true experimentation from being non-infringing experimentation. For details, see COOK (1998/1999), at 168 et seq.1033 See COOK (1998/1999), at 173/174.1034 For German law, see e.g. SCHULTE (2001), § 11, note 7 and 8.

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invention, where a breeder uses a parent plant that falls under the scope of a patent directed to plants containing ‘gene X’, but does experimental research breeding to improve another trait that is not controlled by ‘gene X’.1035 CLAES concludes that these breeding experiments would not be exempted from infringement, arguing that the researcher may only do research on the invention itself, in order to improve it. Other legal commentators argue in favour of the application of the research exemption to this kind of situations.1036 An argument against the view of CLAES could be that the protected subject matter would be construed differently for the purpose of determiningan infringing use and for defining the experimental use exemption. If for determining infringement the use of the plant containing gene X, as defined by the claims, is relevant, this plant, not only the gene X should also be regarded as “subject-matter ofthe invention” when it comes to determining the application of the experimental use exemption. A clarification of this issue by the legislator would be desirable.1037

The second issue relating to plant biotechnology which has engendered some debate in the legal literature is the application of the experimental use exemption to “basic research inventions”,1038 especially the degree to which patented sequence information should be useable without infringement.1039 It should be noted that the initially discussed problem concerning patents for short DNA sequences of unknown biological utility is settled. Under the EC Biotechnology Directive and current practice, the utility as a probe which may merely be useful in experimental research leading to a further invention which may then have real commercial utility, does not satisfy the requirement of industrial applicability.1040

e) Farmers’ privilege under the EC Biotechnology Directive

While Art. 10 of the Directive clearly limits exhaustion of the rights of a patentee selling propagating material to one propagation cycle, in its Recitals 46 to 49 and in Art. 11(1) the Directive provides for a derogation for farmers using plant propagating material incorporating the protected invention:

“[T]he sale or other form of commercialisation of plant propagating material to a farmer by the holder of the patent or with his consent for agricultural use implies authorisation for the farmer to use the product of his harvest for

1035 See CLAES (2001), at 17.1036 See e.g. LANGE (1996), at 589.1037 The German Patent Law now provides for a specific exemption for breeders, which however is framed in such broad terms that it would render patent protection for genetic components meaningless if interpreted in a literal sense. § 11No. 2a exempts: “die Nutzung biologischen Materials zum Zweck der Züchtung, Entdeckung und Entwicklung einer neuen Pflanzensorte” [the use of biological material for the purpose of breeding, discovering and developing a new plant variety] Translation by the author.1038 GILAT (1995), at 81, for instance, suggests a more liberal experimental use exemption than that provided by traditinal patent law in the area of biotechnological basic research arguing that “the effect of enforcing a patent right against research competitors might be detrimental to progress […].”1039 See e.g. COOK (1998/1999), at 173/174.1040 See above, point B.IV.1.

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propagation or multiplication by him on his own farm, the extent and conditions of this derogation corresponding to those under Article 14 of Regulation (EC) No 2100/94.”1041

Thus the European legislator provides for a farmers’ privilege even under patent law and aligns the patent rules in this respect with the plant variety rights regime. Seed saving by farmers is possible without the authorisation of the patent holder. The consent is implied in the commercialisation of a product for propagation and multiplication purposes. Yet, the use of the harvested product is restricted to the holding where it has been grown. Furthermore, the extent and the conditions of that derogation are limited in accordance with the extent and conditions set out in Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights.1042

The European directive is pointing in an interesting direction, as it blends features of the patent and the PBRs system in order to adapt patent law to the agricultural sector. This idea shall be explored more in depth later in this paper.

f) Compulsory cross-licensing

Building on the latest and most advanced breeding material being of fundamental importance for achieving rapid breeding progress,1043 Art. 12 of the EC Biotechnology Directive contains a special compulsory licensing provision dealing with the relationship between PBRs and patent rights.

The provision restates a principle which is already contained in national laws for patents concerning an improvement on an invention already patented and applies it to the intersection between PBRs and patent law.1044 Where a breeder has stably integrated protected genetic information into a new variety and as a result is unable to exploit a plant variety right without infringing a prior patent, Art. 12 provides for the grant of a non-exclusive compulsory license under the following conditions: The breeder has to demonstrate that he has applied unsuccessfully to the holder of the patent to obtain a contractual licence and moreover that the plant variety constitutes “significant technical progress of considerable economic interest compared with the

1041 Art. 11(1) EC Biotechnology Directive.1042 See id. Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights, OJ L 227, 1.9.1994, pp. 1-30, as amended by Council Regulation (EC) No 2506/95 of 25 October 1995, OJ L 258, 28.10.1995, pp. 3-4.1043 See also Recital 52 of the Directive. 1044 See e.g. Art. L613-15, paragraph 2, of the French Intellectual Property Code (English translation as available at www.legifrance.gouv.fr/html/codes_traduits/cpialtext.htm): “After hearing the Public Prosecutor, and in the public the First Instance Court may grant to the owner of the patent of improvement, at his request which may not be made before expiry of the period specified in Article L613-11 [three years from the grant of a patent or four years from the filing date of the application], a license to the extent necessary for working the invention to which that patent relates, in so far as the invention to which the improvement patent relates represents a substantial technical progress and economic interest in relation to the prior patent.”

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invention claimed in the patent.”1045 The grant of the licence will be “subject to the payment of an appropriate royalty.”1046 The same scheme applies to the holder of a patent concerning a biotechnological invention who cannot exploit it without infringing a prior plant variety right.1047 Additionally, to take account of the reciprocal dependence of breeders and genetic engineers for the development of genetically engineered varieties, Art. 12 of the Directive entitles the holder of the right which is subjected to compulsory licensing to a cross-licence on reasonable terms.1048

VI. Conclusions of part B

Some of the concerns expressed by patent critics can be invalidated. Others, if they are shared by the Indian legislature, would need to be addressed by specific provisions in patent law:

- Patent protection under European law does not cover unmodified plants in their existing form or DNA segments in their natural state in the source organism.1049

Genetic components indigenous to the claimed species are not considered as patentable inventions, unless they are claimed in their isolated form. However, European patent law, in its current interpretation, does in principle permit claiming the result of a conventional cross if it is defined only by few characteristics and thus not considered to be a variety.1050 In the absence of a statutory exclusion, such claims, which can cover virtually all interesting uses of the genetic component in breeding, can only be filtered out by a strict application of the inventive step requirement.

- While the EPO confers absolute product protection for DNA molecules, this approach is not inherent in the patent system.1051 Lawmakers have the choice to restrict patent claims to a purpose-bound format.

- Broadly formulated claims directed to products that have been produced for the first time but where the actual invention lies in the method for obtaining it rather than in the conception of its features have been granted by the EPO.1052

Products obtained later by methods owing nothing to the break-through invention would nevertheless fall under the patent claim. This seems problematic as the protection goes beyond the contribution to the art.

- The European patent law does not provide protection for DNA sequences isolated by routine sequencing means based merely on their sequence

1045 Art. 12(3)(a) and (b).1046 Art. 12(1), 1st sentence.1047 Art. 12(2).1048 Art. 12(1), last sentence, and 12(2), last sentence. 1049 See above B.II.3.b).1050 See id.1051 See B.II.3.c).1052 See B.I.4.b).

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characteristics or on speculative functions. New genes and partial sequences were considered inventive only if they were disclosed together with unexpected properties or if scientific research was needed to isolate a gene, i.e. where a probe was not yet available.1053

- Moreover, the inventive step requirement has proved in some cases to be an effective filter against claims directed to innovations which merely achieve breeding results that follow the normal rules of classical breeding.1054 It is further interesting to note that the basic techniques of plant genetic engineering are now state of the art.1055 The phase where the owner of a patent for a major break-through invention could have (at least theoretically) blocked scientific progress in an entire field of plant transformation seems to be over.

- The application of the enabling disclosure requirement by the EPO Boards of Appeal provides in many cases a satisfactory balance between breadth of the claims and contribution to the art. Especially the link to the standards applied when assessing inventive step permits balanced solutions, which may attenuate some of the concerns related to overly broad patent claims.1056 Plant traits defined independently of their underlying genetic structure should normally be prevented by the requirements of enabling disclosure and of support by the description, if the general principles developed by case law are applied.1057

However, in some cases the EPO seems to take a too generous approach towards claims which define the invention merely in terms of the achieved technical effect. There could be a need for clearer guidelines how to deal with such claims.

- A broad interpretation of the experimental use exemption could prevent that a plant comprising a patented chimeric gene may not be used in a breeding programme even if the patented gene is not contained in the breeding result.

- European patent law provides for an, albeit restricted, farmers’ privilege, which allows farmers to use part of their crop as seed for their own holding without the authorization of the breeder provided they pay a predetermined remuneration to the breeder. Yet, it is unclear how European law will deal with cases of innocent infringement by farmers.1058 This issue would need to be addressed by the Indian legislature.

1053 See B.IV.3.d).1054 See B.IV.3.a).1055 See id.1056 See B.IV.4.c).1057 See B.IV.4.d).1058 See B.V.1.b)aa).

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C. CHAPTER CONCLUSIONS

The following conclusions can be drawn from this chapter which could be of help for the Indian lawmakers to shape a suitable IP system for the Indian breeding and biotechnology sector:

There are no principle legal or technical obstacles which would prevent plant breeding innovations from being protected by patents. But there seems to be a large consensusin Europe among breeders that the PVP system is better adapted for the protection of plant varieties. Two major advantages are emphasized by European breeders which are in their majority small and medium enterprises: first, the PBRs system is relatively cheap and legally simple; second the breeders’ privilege allows them to build on the most advanced germplasm as source for their new varieties.

However, while PBRs are seen as a good solution for protecting plant varieties, the rigid definition of the protected subject matter leaves no margin to accommodate innovations where the contribution to the art lies in the provision of a new genetic component. Even prior to biotechnology this may have led to unsatisfactory situationsin some cases, but this was rather a marginal phenomenon. With the advent of plant genetic engineering techniques an entire field of technology has protection needs which are not answered by PVP. In Europe a majority of plant breeders approves patent protection for plant genetic components.

Nevertheless, if India which, of course, has to take its specific economic and technological situation into account, considers the introduction of plant related patents, it could take a more reserved approach towards patenting certain types of subject matter than the European patent regime does. First of all, it has to be kept in mind that patented genetic components are removed from the freely available germplasm for breeding. Depending on the interpretation by patent offices and court decisions, the protection provided by the European patent system could go far beyond the area ofplant genetic engineering inventions1059 and enter into conflict with the needs expressed by breeders to freely access plant genetic traits indigenous to the genome of the concerned species. In Europe this risk will probably be mitigated by a strict application of the inventive step requirement. Still, India may consider drawing a different borderline regarding the patentability of results of conventional breeding processes and exclude claims to plants merely defined by genetic components indigenous to that species. This would also mitigate the reproach that “life-form” patents support the practice of “biopiracy”. Breeders also oppose claims to traits as such, defined independently of their underlying genetic structure. While again in Europe this issue will be solved in most cases by a stringent interpretation of the requirements of enabling disclosure and support by the description, the Indian legislator may choose to specify these principles for plant biotechnological inventions in a more explicit provision.

1059 See B.II.3.b).

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Moreover, the Indian legislator may consider introducing an obligation for the inventor to refer in his product claim to the method for obtaining a product where the invention does not lie in the conception of the feature of the new product but only in the process for obtaining it. The legal argument would be based on the enabling disclosure requirement. This should not be confounded with a general exclusion of product protection in certain areas. Product protection would of course be provided where the inventiveness lies in the specific features of the claimed product.

Finally, India could draw the lesson from the European patent regime that restrictions on seed saving practices of farmers are not an intrinsic feature of patent protection. Taking all interests of the different stakeholder groups into account, India could frame the relationship of farmers and breeders/inventors according to the specific needs of the Indian seed sector.

In a nutshell, it seems possible to frame patent legislation in a way so as to balance the interests of the different stakeholders and ensure that the protection corresponds to the contribution of the inventor to the art. But as will be seen in the next chapter, while in a one country perspective a balanced protection for inventions is necessary to provide incentives for R&D, in a multi-country setting developing countries may have different economic interests and may prefer solutions that favour imitators.

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CHAPTER 4: ECONOMIC THEORY OF IPRS AND EMPIRICAL EVIDENCE

Economic motives have always played a significant role in justifying the introduction of IP protection for innovations and creations.1060 They have even become the most important source of legitimacy of IP protection since the two lines of argument based on moral considerations, namely the Natural-Law Theory1061 and the Reward-by-Monopoly Theory,1062 have been largely criticised in the specialised literature.1063

Justifications for IP protection have shifted to a utilitarian approach which regards IPRs as public policy instruments that should be designed to enhance public welfare by stimulating technological progress.1064 The Indian legislation invokes these economic aspects in its recitals,1065 and the potential negative or positive economic consequences of the introduction of IPRs are crucial topics in the Indian debate on the implementation of Art. 27(3)(b) TRIPS Agreement.1066

The following chapter will therefore briefly discuss whether the existing theoretical and empirical research by economists on the effects of IP protection provides any guidance for answering the questions whether IPR protection for plant genetic resources should be introduced in India and how such legislation should be shaped.1067

Part A of this chapter will focus on economic theories dealing with IPR. While most of the literature focuses on patents, the analysis is also valid for PBRs. In section I, the intended economic effects that make IPRs conducive to technological progress will be explained. Section II will deal with the economic tensions inherent in IP protection and shortly address the economics literature on optimal patent design and its limits. Theories on the economics of patents in a multi-country setting will be discussed in section III. Finally, part B will discuss the available empirical evidence with regard to patents in section I and to PBRs in section II.

1060 See HEINEMANN (2002), at 11.1061 According to the Natural-Law Theory, human beings have a natural property right in their own ideas and inventions. For a good résumé, see BOSTYN (2001), at 33. Interestingly, this line of thought reappears in the context of IP protection for indigenous or traditional knowledge. 1062 Pursuant to the Reward-by-Monopoly Theory, justice requires that whoever renders a service to society is rewarded for his services in proportion to their usefulness to society. See BOSTYN (2001), at 33/34. 1063 See BOSTYN (2001), at 33/34. Yet, the natural rights dimension is still present in the political discussion when imitators are spoken of in terms of “pirates”.1064 See, e.g. SRINIVASAN (2001), at 45/46 with reference to Deardorff, A.V. (1990) “Should Patent Protection be Extended to All Developing countries?”, World Economy 13, pp. 497-507.1065 See the 2nd and 3rd Recital of the PPV&FR Act. 1066 See below chapter 6.1067 For this analysis the author relies, to a large extent, on the results of two recent surveys of the economics literature carried out by KEELY (2000) and SRINIVASAN (2001) respectively. I would like to express my gratitude to both authors. I am particularly obliged to Dr. SRINIVASAN who kindly provided me with his unpublished thesis.

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A. ECONOMIC THEORY OF IPRS

I. Intended economic effects

Three important economic goals underlie patent protection: incentive for innovation, dissemination of technology and regulation of the research for new technology.1068

1. Incentive for innovation

The chief aim of IP protection is to create incentives for research and development (R&D). The choice of a company to undertake R&D is determined by different factors, including the size of demand for a new technology,1069 the opportunity of creation of new technology and the appropriability of at least part of the social benefit flowing from the new technology.1070 The last determinant is crucial from the perspective of IP policy.

a) The appropriability problem of public goods

The appropriability problem raised by knowledge/information is well documented in the literature.1071 Suppliers of these intangible assets, just as suppliers of public goods,1072 have difficulty recouping the full earning potential of their product because of two properties: non-exclusiveness (implying that once provided to some users or consumers, the goods are available to all users/consumers at minimal costs or even without additional costs)1073 and non-rivalry (meaning that their consumption or use by one individual does not limit the consumption/use by anyone else).1074 In this situation, competitors can introduce imitating products without or minimal R&D costs and are able to obtain profits even if prices approach the production and marketing costs. The

1068 See KEELY (2000), at 17 et seq.1069 This determinant will, for instance, be significant in the context of potential private sector investment in technologies for resource-poor farmers. See below, chapter 6, A.I.1.1070 See KEELY (2000), at 19, with references.1071 According to the “Property Rights” Approach, property rights, including IPRs, serve to induce private parties to take the full costs and benefits associated with their activities into account. Without property rights, so-called externalities or ‘spillover’ effects that arise when a party, in the course of his rendering/consuming some service for which payment is received/made, coincidentally also renders services or disservices to other persons/firms, are not considered when making production or consumption decisions. IP reacts to positive externalities created by the generation of knowledge and seeks to internalise these effects. Yet, the “Property Rights” Approach advocates the creation of property rights only where the benefits of internalising externalities exceeds the costs of property rights, which lie in the exclusion of third persons from the use of the protected knowledge. On the basic mechanism in the context of IP, see JAFFEE/SRIVASTAVA (1992), at 14; KAUFER (1989), at 19; and HEINEMANN (2002), at 21. For an introduction to the “Property Rights” Approach, see LEHMANN (1983a), at 356 et seq.; LEHMANN (1983b), at 31 et seq. ; COOTER/ULEN (2004), chapter 4 “An Economic Theory of Property”.1072 These difficulties of suppliers of public goods have been highlighted in particular by representatives of “Economic Analysis of Law” approach. For a brief explanation, see HEINEMANN (2002), at 15 et seq.; JAFFEE/SRIVASTAVA (1992), at 12 et seq.; KEELY (2000), at 19/20; and SRINIVASAN (2001), at 22. 1073 See JAFFEE/SRIVASTAVA (1992), at 13.1074 See id.

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initial supplier, on the other hand, has incurred costs for research and commercial development. In order to be interested in making these so-called front-end sunk investments, he must expect that product prices can be maintained above the post-invention production and marketing costs long enough to recoup his investments.1075

Consequently, if there is price competition from “free riders”, there will be a tendency towards under-production of such goods if production decisions are profit motivated, which is mostly the case in the private sector industry.

b) Public good features of plant related biotechnological innovations and plant varieties

Seed embodied technology has public good features not only when technical knowledge becomes available about it. Biological material has these features by its very nature given the fact that it can be propagated. Schematically speaking, once seed of a plant population has been provided to some users, the embodied technology can be reproduced at little cost, without further reference to the breeder (non-exclusivity), and can with every generation of multiplication be made available to an increasing number of farmers without depleting it (non-rivalry).1076 Yet, in reality, the public good character of seed embodied technology and the severity of the appropriability problem vary substantially in degree depending on the breeding system of the variety concerned.1077

F1 hybrids, which are the product of a crossing of two inbred lines, are biologically protected against the use of harvested crops as seeds. In fact, subsequent harvests from saved hybrid seeds register significant yield decreases. This renders traditional practices of on-farm seed saving and farmer-to-farmer seed supply economically unattractive. The consequent high replacement rates make it easy to forecast the demand and guarantees that the seed firm benefits to a large extent from its innovative efforts. It is also easier to protect parental lines against the “acquisition” by competitors than finished plant varieties which are distributed as seeds. Still, the protection of parental lines as trade secrets has turned out to be less efficient than breeders initially believed.1078 Hybrid breeders therefore have an interest in PBR to protect their parental lines. Notwithstanding, the problem of appropriability arises to a much smaller extent than for self- and open-pollinated crops.1079 Hybrid varieties exist mainly for outbreeding crops. In selfing crops, rice forms the exception to the rule that hybrid production is too complicated and expensive.

1075 See BOSTYN (2001), at 27.1076 See JAFFEE/SRIVASTAVA (1992), at 21.1077 On the following, see CROMWELL et al. (1992), at 25/26.1078 See JAFFÉ/VAN WIJK (1995), at 3.3.1. In-bred lines cannot be kept hidden in the company’s factory; they must be planted outdoors on a large scale for seed production and thus become accessible to competitors.1079 Open-pollinated crops are outcrossing species which are pollinated at random, not humanly controlled as in hybrid production.

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On the other end of the spectrum are self-pollinated crops.1080 Modern plant varieties of inbreeding species are composed of a few pure lines or even only a single line, which are/is genetically homozygous and thus naturally true-breeding. Their genetic integrity is easy to maintain for farmers, who can consequently carry out seed production themselves without quality loss. Without IP protection, the added value of the improved variety will be captured largely by farmers, consumers, processors, and competing seed companies.

Open-pollinated crops of outcrossing species1081 are in the middle of these two extremes. Due to their natural cross-pollination, they are prone to contamination by foreign pollen. Additionally, if contamination occurs, it is more difficult to detect because of the intrinsic variability that already exists within the variety. Production of quality seed is therefore more sophisticated and requires isolation of the variety from other populations of the same species. This may be difficult to manage for farmers.

Biotechnological inventions embodied by a plant with particular characteristics raise serious appropriability problems, as heritability of this characteristic will be one aspect of the successful invention. Users and competitors will therefore be able to reproduce the specific genetic information once the plant material becomes available.

The scope for breeders/inventors to appropriate the benefit of their research activities is therefore most limited in the area of self-pollinated crops and for genetically modified plant characteristics. In the case of open-pollinated crops, due to the technical difficulty of maintenance of the genetic composition, breeders are to some extent protected from competition by farmers. Yet, “free riding” by competitor firms is immediately possible once seed of the variety is marketed. In contrast, hybrid technology permits breeders to largely exclude others from producing and marketing of their product and thus appropriate the value attached to it by users.

Table 4.1: Classification of crop species on the basis of their pollination behaviour1082

Self-pollinated crops: Rice, wheat, barley, coarse millets (common millet, finger millet, Italian millet, little millet, barnyard millet), lentil, chick-pea, cowpea, French bean, Dolichos bean, groundnut, flax, sesame, soybean, tomato, egg plant, lettuce, apricot, citrus, peach, etc.

Cross-pollinated crops: Pearl millet, corn, sunflower, alfalfa, fenugreek, red clover, white clover, crimson clover, sweet clover, rye grass, sugar beet, sugar cane, cauliflower, cabbage, spinach beet, carrot, onion, etc.

Often cross-pollinated crops: Sorghum, Brassica juncea, castor, cotton, chilli, okra, etc.

1080 For an enumeration of important self-pollinated crops, see below, table 4.1.1081 For examples, see below, table 5.1.1082 Derived from AGRAWAL (1998), at 30, Table 4.1.

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c) Objections against the “innovation inducement” rationale

Critics of this “innovation inducement” rationale not only invoke the social costs of monopoly control over innovations,1083 but challenge also the basic assumption that without a reward by exclusive rights fewer inventions will be made. It is argued that granting such monopolies may be unnecessary for stimulating innovative activity.1084

As alternative mechanisms of appropriating rewards, the economics literature cites inter alia non-patent barriers to market entry (e.g. production facilities, managerial experience, distribution channels, trade secrets) and head start advantages.1085 Further incentives to innovate are competition with technological rivals, market growth and factor costs.1086 Yet, the reliability of such factors varies across different sectors of technology. Empirical evidence suggests that IP protection is crucial for decisions to develop and market new products and processes in those industries where fixed costs of R&D are high and imitation is fairly easy.1087 Typical examples are the pharmaceutical and chemical industries.

To what extent would the above arguments apply to the plant breeding industry? Significant technical and financial entry barriers indeed exist. They are particularly high for varietal development of hybrids. But similarly, though to a lesser degree, the development of open-pollinated crops is technically demanding, costly and a long-term venture.1088 Yet, these entry barriers concern only the plant breeding activity, not the seed multiplication activity. With the exception of hybrids, imitation is more or less easy.1089 Organisation of large-scale seed production of open-pollinated crops certainly requires technical skills. But once this knowledge has been acquired, and a network of contract growers and the distribution channels have been built up, a competing seed production company is able to multiply any new non-hybrid variety, irrespective of what new characteristics constitute its agronomic value. The lead-time of a breeder is therefore only one season in relation to farmers producing seed of self-and open-pollinated crops for their own needs or limited local supply. Competitor seed

1083 See below, point II. Equating a patent with a monopoly is a simplification that is often tolerated when developing economic models. HILPERT (1998), at 93, note 15, points out that using the term “monopoly” is only justified if the patent precludes substitutes and the patentee is thus able to obtain monopoly profits. The grant of a patent does not automatically lead to this market position. For details, see BERNHARDT (1974), at 25 et seq.1084 See BOSTYN (2001), at 36, who quotes MACHLUP, F., “An economic review of the patent system”, Subcomm. on Patents, Trademarks and Copyright in the Senate Comm. on the Judiciary, Study No 15, 85th Cong., 2nd Sess, Washington, Governmental Printing Office, 1958, at 24: “[T]he seeds of invention exist, as it were, in the air, ready to germinate whenever suitable conditions arise, and no legislative interference is needed to ensure their growth in proper season.”1085 See YUSING (1992), at 792; KAUFER (1989), at 20/21; BOSTYN (2001), at 36 and NELSON (1994), at 2675. 1086 See MASKUS/EBY-KONAN (1994), at 409. BOSTYN (2001), at 24, rightly notes that competitive markets are also one of the premises of the optimal functioning of the patent system. 1087 See below B.I.1.a).1088 It requires considerable levels of basic scientific research followed by extended varietal selections, crosses and trials, with the successful development of an improved variety taking 5 to 15 years and frequently entailing sunk costs of $ 2-3 million. See JAFFEE/SRIVASTAVA (1992), at 20.1089 On the modest barriers to entry into self- and open-pollinated seed markets, see also BUTLER/MARION (1985), at 49.

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firms will need several seasons to produce enough seed to capture a significant market share.1090 Yet, since varietal development is a long-term venture associated with high costs and risks, the head-start advantage may not be sufficient to recover the R&D investments. Therefore, in general, the “innovation inducement” rationale seems valid in the context of non-hybrid plant breeding and the above economic characteristics of the seed industry strongly suggest that the innovation activity remains at a sub-optimal level without public policy intervention.

It seems useful at this point to correct a misunderstanding that prompts activists like Vandana SHIVA to speak of the “myth of stimulating creativity”.1091 She states that

“[c]entral to the ideology of IPRs is [the] fallacy […], that people are creative only if they can make profits and such profits are guaranteed through IPR protection. This negates the scientific creativity of those not spurred by the search for profits, i.e., the majority of scientists in universities and public research systems. It negates the creativity of traditional societies and the modern scientific community in which free exchange of ideas is the very condition for creativity, not its anti-thesis.”1092

Yet, the economic theory of patent law in no way alleges that there is no innovation without patent protection. Rather it concludes that the inventive activity is at a sub-optimal level. Nor does it ignore that the provision of public funds for research is a possibility to promote R&D activity. The “innovation inducement” theory refers to the investment behaviour of private companies.1093

d) Alternative public policy interventions

To reach the socially optimal level of innovation, governments may indeed choose between participating directly in R&D and promoting private sector research by either of the following categories of publicly administered rewards for new technology: “patronage”, “procurement” and “property”.1094 “Property” designates the granting of exclusive rights for use of inventions to the inventors. “Procurement” includes government contracting for the production and use of new technological knowledge. And “patronage” includes prizes and subsidies to innovators in exchange for full disclosure of their inventions.

Several economic scholars come to the conclusion that property rights are not generally superior to the two other options, but that they are superior to contracts when informational asymmetries exist between government administrators and innovating

1090 The number of generations necessary depends on the multiplication factor of the species concerned. See CROMWELL et al. (1992), at 27/28.1091 See SHIVA (2001), at 21 et seq.1092 SHIVA (2001), at 25.1093 See also BEIER (1980), at 581, who stresses in connection with the importance of exclusive patent rights for technical progress that these rights are of significance not so much to the individual inventor but to the enterprise that exploits the invention.1094 See KEELY (2000), at 19.

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firms about costs and probability of success.1095 This assumption seems generally appropriate in the case of inventive activity.1096 The results of the framework of WRIGHT further suggest that patents are most likely to be preferable to prices when the overall success probability is low, and the elasticity of supply of research is moderately high to high, i.e. when researchers are responsive to incentives.1097

ROMANO concludes from his model that public R&D funding may be inferior to patents even when policy makers are perfectly informed if the costs of raising the revenue to provide public funding and of monitoring the effort of publicly funded researchers are high.1098 He refutes the presumption that patent protection is generally associated with greater excess social costs than is public funding, but also the converse.1099 KEELY counters his arguments noting that “incremental costs to raising the revenue are small, given that a mechanism or tax collection would be in place regardless, and that the community of publicly funded researchers have mechanisms of their own to ensure a sufficient standard of quality.”1100

However, the fact that both alternative reward mechanisms would require additional public funds can certainly not be ignored in the Indian context where – against the background of a huge budgetary deficit – many experts count on private investments in R&D.1101

e) Degrees of appropriability depending on the shape of seed IP laws

Evidently the introduction of some form of IP protection does not necessarily result in full appropriability of returns for breeders. As seen in the previous chapter, plant variety protection provides for two key exemptions. Both reduce the appropriability of benefits from new varieties by breeders. A model by SRINIVASAN allows quantifying these effects.1102 He considers four different assumptions about farmer seed replacement behaviour (possibly determined by biological and legal constraints), of which three are presented here: 100% replacement every year, no replacement, replacement by 20% of the farmers each year. He also considers a scenario where, due to the breeder’s exemption and the absence of dependency or a concept of essential

1095 See WRIGHT (1983), at 695 et seq., and the references in KEELY (2000), at 22/23. 1096 See WRIGHT (1983), at 695, stressing that information is costly to acquire.1097 See WRIGHT (1983), at 702/703.1098 See ROMANO (1991), at 703 et seq. The problem of “lack of incentives for cost control by researchers in situations where external monitoring is difficult” is also mentioned as a disadvantage of contracts by WRIGHT (1983), at 703. 1099 Id., at 711 and 717.1100 KEELY (2000), at 22/23.1101 See below, chapter 5, C.V.2. It is acknowledged that the establishment and maintenance of a well-functioning patent system also generates considerable costs. Yet, since patent applicants share in these costs, the costs do not reach levels comparable to the R&D expenses that would be necessary to make private R&D superfluous. In industrialized countries, patent offices are increasingly required to become financially self-sufficient. The European Patent Office is even entirely self-financing, its operating and capital expenditure being defrayed out of procedural fees and a proportion of the renewal fees for granted European patents. See EUROPEAN PATENT OFFICE (2003b), at 11. 1102 See SRINIVASAN (2001), at 111 et seq.

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derivation, imitators can introduce rival varieties with a time lag. Table 5.2 summarises the innovator’s discounted quasi-rents for three different scenarios:

Table 4.2: Innovator’s discounted quasi-rents for different scenarios1103

No imitation With imitationFull replacement by farmers

396 (100%) 240 (60%)

No replacement by farmers 39 (9%) 33 (8%)Replacement by 20% farmers

118 (30%) 75 (19%)

It is noteworthy that under the assumption that 20% of the farmers replace their seed, self-pollinated varieties yield only 30% of the return from hybrids (assuming that hybrids are fully replaced and that development costs are similar).1104

2. Dissemination of technology

A second purpose of IP laws is to promote the dissemination of technological knowledge. This is at first sight “paradoxical”, as the patent system “starts out by conferring upon the inventor the power to restrict to himself the use of that knowledge.”1105 But the rationale of this approach is that in the absence of IP protection, inventors need to keep their inventions secret in order to eliminate the danger of free riding by competitors. In terms of social costs, secrecy may be worse for diffusion of knowledge than patents. It may result in duplicative research efforts by competitors and the opportunity to make further developments based on the new technology may also be lost or delayed.1106 Moreover, protection by means of secrecy presents difficulties when the inventor is trying to sell or license an invention, as he is forced to disclose the invention to a potential licensee, making his own position more vulnerable.1107 Patent protection, by conferring on the patentee a temporary right to exclude others from using the invention, encourages disclosure and increases the efficiency of the use of new knowledge.

Two somewhat contradictory objections have been raised against the argument of the “incentive to disclose” theory. On the one hand, doubts have been voiced whether the disclosure required in patent law practice assures effective diffusion of new technology.1108 On the other hand, it has been argued that incentives remain for inventors to opt for durable secrecy over temporary protection by patent law, as patents are a far from perfect means of appropriating the benefits flowing from an

1103 Derived from SRINIVASAN (2001), at 114, table 4.2. 1104 See SRINIVASAN (2001), at 115.1105 See JEWKES et al. (1969), at 187/188.1106 See BOSTYN (2001), at 39.1107 See, e.g. BOSTYN (2001), at 23/24 and 37; ORDOVER (1991), at 50.1108 See EDWARDS, C.W., “Maintaining Competition: Requisites of a Governmental Policy”, Mc Graw-Hill, New York 1949, at 222/223, as cited in BOSTYN (2001), at 37. BOSTYN, id., at 38, counters that this argument actually does not call the rationale of the “Exchange for Secret” Theory into question, but only requires a more strict application of the disclosure requirement.

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investment in R&D.1109 KAUFER points out that “the disclosure of technical details required to obtain a patent often helps would-be imitators in their circumvention efforts”.1110 MANSFIELD et al. had indeed found in their empirical investigation that about 60% of the patented innovations in their sample were imitated legally within four years.1111

In the area of plant breeding, this rationale has to be examined in the light of the technical particularities of self-replicating biological material. Process innovations, be it conventional breeding strategies or biotechnological plant transformation techniques, can indeed be kept secret. In contrast, keeping the technology embodied in products, i.e. plant varieties or genetically modified plants, secrecy is often rendered impossible by the heritability of the specific genetic information. Notwithstanding, the reasoning of the “incentive to disclose” theory remains valid to some extent, as biological mechanisms exist that hinder the identical replication of the plant innovation by multiplication. As mentioned, keeping the parental lines secret prevents competitor seed companies from reproducing the hybrid genotypes. Further, plant genetic engineers have developed genetic use restriction technologies (GURTs), popularly known as “terminator technology”, which lead to the sterility of seed in the crop generation produced by farmers. Neither hybrid technology nor GURTs serve merely the purpose of appropriating the value of plant innovation. A hybrid has the benefit of extra vigour, which leads to higher yields.1112 The higher seed prices they fetch are also due to this vigour, not only to the fact that hybrids require annual replacement. GURTs are discussed as one possible measure against “gene flow” from GM crops to other populations of the same species or wild relatives. IP protection would therefore not lead to disuse of both mechanisms. Nevertheless, IP protection might play a role in the decision of a seed firm to invest in hybrid varieties rather than in self- and open-pollinated crops or to develop genetic use restriction technologies.1113

3. Regulation of research allocation

KITCH has identified the regulation of search for new technologies as a further function of the patent system.1114 According to this approach, exploitation of technological information can be compared to prospecting for natural resources.1115

1109 See KAUFER (1989), at 20; For a short outline of conditions under which trade secrets are more advantageous than patent protection, see FRIEDMAN/LANDES/POSNER (1991), at 62 et seq.1110 KAUFER (1989), at 20.1111 MANSFIELD et al. (1981), at 907 et seq. The authors had collected data from firms in the chemical, drug, electronics, and machinery industries concerning the cost and time required to imitate (legally) 48 product innovations.1112 See CROMWELL et al. (1992), at 26. 1113 This is also emphasized by SRINIVASAN (2001), at 123: “[…] terminator technology offers [no benefits to farmers]. The technology is simply aimed at the elimination of loss of revenue to seed companies owing to the use of farm-saved seed. Its emergence must be seen as a technological response to the inadequacies of existing IPR institutions. An important lesson for developing countries is that strong IPR institutions may obviate the need for development or application of such technologies that they find so unacceptable.”1114 KITCH (1977), at 265 et seq.1115 Id., at 271 et seq.

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Patents permit inventors to lay claim to a “prospect”, i.e. a particular opportunity to develop a known technological possibility, deterring others from doing research in this still partly unexplored field.1116 This approach implies that the patent breadth goes beyond what the reward rationale alone would require, which KITCH found to be the case in the US. According to KITCH this has two advantages:1117 First, it puts the patent owner in a position to coordinate the search for technological and market enhancement of the patent’s value. The benefit of this is seen in a more efficient resource allocation, especially the reduction of duplicated research efforts; second, the patent owner can invest in developing commercial applications and/or marketing his invention without fear that competitors will appropriate the fruits of these post-invention investments.

Yet, it has also been pointed out in the economics literature that providing such “prospecting rights” may have double-edged effects. The prospect of obtaining an exclusive right for an invention may induce many potential inventors to invest in the same research opportunity, in the hope of being the winner who takes all or substantially all in such a patent race.1118 The waste of duplicated R&D expenditures may thus be diverted from the post-invention stage to the pre-invention stage.1119

Another objection against the “prospecting” rationale is that many independent inventors will generate a wider and diverse set of improvements than would occur under the control of one organisation.1120 The high transaction costs of technology licensing may delay or prevent the use of the invention outside the sphere of the pioneer inventor and may impede efficient development of the patented technology.1121

These arguments closely relate to one type of tensions inherent in IP protection which will be addressed in the next section.

II. Economic tensions inherent in IP protection

Theoretical economic research highlights that the introduction of IP protection, in particular patent protection, necessarily implies trade offs. In order to achieve the positive effect of increased innovative activity the use of the protected innovations is restrained.1122 Two main tensions inherent in IP protection leading to social costs are identified: those between firms and consumers, and those between current innovators and future innovators.1123

1116 See also KEELY (2000), at 21.1117 See KITCH (1977), at 276. 1118 See BOSTYN (2001), at 31.1119 See GRADY/ALEXANDER (1992), at 317/318. On the problem of over-investment, see also BOSTYN (2001), at 31, with references to the economics literature, and HEINEMANN (2002), at 18.1120 See MERGES/NELSON (1990), at 873.1121 For references to the substantial literature on these transaction costs, see MERGES/NELSON (1990), at 874, note 146. 1122 On the mechanism of restricting competition at the production level to promote competition at the innovation level, see also LEHMANN (1983), at 360 et seq.1123 See KEELY (2000), at 29. Id., at 43, she briefly addresses as a third type of tension which results from allocating labour between innovation activities and other production activities, but observes that

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These inevitable tensions make clear that any IP regime is only a “second best” optimal solution.1124 In their theoretical analysis authors aim at maximising socialwelfare1125 by varying different elements of the system, such as patent length and breadth, patent height, first to file versus first to invent rules, patent licensing policies, patent enforcement, and patent disclosure timing.1126 Yet, as will be seen, the findings that can be achieved by these economic models are of limited use for lawmakers.1127

1. The tension between innovators and consumers

In the underlying economic model, it is assumed that under a legal regime which permits free dissemination of knowledge, firms operate under perfect competition and sell at a price that equals marginal costs.1128 Consequently consumers benefit from a surplus, i.e. they appropriate the difference between what they would have been willing to pay and what they actually paid at a given demand level. Under a patent regime which is assumed to create monopoly conditions1129 the price will rise to a higher level. Some of the consumer surplus will thus be transferred to firms, which creates a direct tension between firms and consumers. However, the consumer surplus enjoyed under perfect competition will not be completely redistributed to firms as the consumer demand goes down, thus generating so-called deadweight loss costs for society.1130

Granting patents indeed can only diminish the efficiency of use of a given knowledge base, but, in a dynamic perspective, some form of protection may be necessary to create and renew this knowledge base. For this purpose society may be willing to tolerate deadweight loss costs to a certain level.1131 It is important to note, that the economics literature does not see this tension as reason for calling IP protection as such into question.1132 Authors rather seek to find an optimal intellectual property design that allows minimising the deadweight loss costs and to balance consumer and producer surplus.

few authors have explicitly analysed this tension. She points out the potential for a more comprehensive analysis of IP systems using dynamic models of economy.1124 See also THUMM (2000), at 32 et seq.; PRIMO BRAGA et al. (2000), at 28.1125 Social welfare is defined as “the sum of producer surplus, firm profits, on the supply side and consumer surplus through the price, quantity, and quality of the goods consumed on the demand side.” See KEELY (2000), at 3, note 1.1126 For a review of the available literature, see KEELY (2000), at 30 et seq.1127 See also THUMM (2000), at 34.1128 It has been mentioned above that factors other than IP may prevent the perfect competition case.1129 On the relationship between patents and monopolies, see above note 1083. 1130 See KEELY (2000), at 29 et seq., and BOSTYN (2001), at 28/29.1131 See KEELY (2000), at 30.1132 See, e.g. THUMM (2000), at 42; KEELY (2000), at 1 on the results of her survey of existing research by economists; HEINEMANN (2002), at 13.

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2. The tension between first and second-generation inventors

The second tension is due to the effect that patent protection granted to the first innovation has on innovation decisions of future innovators.1133 Where innovation is cumulative, i.e. depends on the technology included in previous innovations, broader protection for a currently patented invention means that there are greater technical advance requirements for the next generation of inventions and added costs for licences or “inventing around” the first generation patents. Hence, there is a dilemma between, on the one hand, providing an incentive for the initial innovator to invest in R&D and disclose his results in the first place, and, on the other hand, providing incentives for second-generation inventors to engage in further research and disclose future innovations. Again, this dilemma rarely leads to the conclusion in economic literature, that the absence of IP protection would be optimal.1134 Economic scholars rather seek to define some optimal level of patent length and breadth that strikes the right balance between net rewards offered to inventors in the first and the second generation.

3. Models defining optimal levels of patent length and breadth

Little consensus on the desirable shape of patent laws emerges from the research on optimal patent design.1135 The principal policy implication that can, for instance, be deduced from the often cited model of NORDHAUS on optimal patent length is that fixed patent terms are not optimal.1136 Different industries, technologies and market demands would necessitate different optimal duration of protection, a requirement that contradicts the general-abstract nature of patent laws.1137

Likewise, concerning the optimal mix of patent life and breadth, authors indicate contrary directions, depending on the market structure they assume in their models and depending on the tension they focus on. Concentrating on the inventor-consumer relationship GILBERT/SHAPIRO suggest that long-lived or even infinitely-lived but narrow patents are generally optimal.1138 “Increasing the breadth of the patent typically is increasingly costly, in terms of deadweight loss, as the patentee’s market power

1133 The following paragraphs again draw on KEELY (2000), at 39 et seq. According to her review, the theoretical literature on how to resolve this tension between current and future innovators concentrates again on patent design.1134 MERGES/NELSON (1990), e.g., at 885, built a case against broad patents but “take it as axiomatic that some degree of patent protection is necessary and desirable”. See also GRADY/ALEXANDER (1992), at 317/318, arguing that without patent protection secrecy measures can dissipate the social benefit from innovation. 1135 On the issue of renewal systems, see KEELY (2000), at 35/36 with references; on the first to file versus first to invent rule, see id., at 36/37with references; on enforcement of patents, id., at 38/39. 1136 See NORDHAUS, W., Invention, Growth and Welfare: A Theoretical Treatment of Technological Change, The M.I.T. Press, Cambridge, Massachusetts 1969, as cited in SRINIVASAN, at 26/27. A résumé of the NORDHAUS model can also be found in KAUFER (1989), at 24 et seq.1137 NORDHAUS finds that the optimal patent life for small “non-drastic” inventions ranges from 15.8 years to 1.8 years depending on the cost reductions achieved and the demand elasticity. See KAUFER (1989), at 30. 1138 See GILBERT/SHAPIRO (1990), at 106 et seq.

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grows.”1139 KLEMPERER qualifies these results by defining a second kind of social costs besides the deadweight loss from consumers switching consumption out of the product class: the costs of consumers inefficiently substituting a less-preferred member of the product class.1140 He suggests that in the latter case a broad, but short-lived patent can be optimal.1141

Yet, GILBERT/SHAPIRO recognize the limitations of their approach, pointing out that they have only considered a stationary environment with a focus on a single invention, whereas in practice inventions built on each other.1142 Other scholars introduce in their model the possibility of rivals to imitate the patented product without infringing it. GALLINI shows that longer patent lifes increase the risk that a patent is “invented around” and submits that patents should be broad to deter imitation, with a patent life just long enough to generate the desired return from research.1143 MERGES and NELSON likewise focus on the post-invention environment for the development of improvements, but arrive at very different conclusions. They point out that broad patents would discourage not only pure imitation but also significantly better follow-on inventions.1144 They argue that where technological advance is cumulative or where a number of innovations together form a system, granting broad patents for pioneer inventions or on components may lead to blockages.1145 Challenging KITCH’s assumption that granting broad scope to an initial inventor renders subsequent invention and development more orderly and productive, they conclude for “cumulative technology industries” that multiple and competitive sources of invention are socially preferable to a structure where there is only one or a few sources.1146 An important point of disagreement among analysts is indeed the desirable level of competition in the post-invention market. Several authors point out that having more competition through more firms entering an area of R&D is not necessarily welfare maximising.1147 Others emphasize that trying to organise orderly access to innovations in line with the reasoning of KITCH is likely to be very costly, as broad patents could have an adverse impact on the pace of technological advance especially where

1139 GILBERT/SHAPIRO (1990), at 107.1140 See KLEMPERER (1990), at 126 et seq.1141 See also DENICOLO (1996), at 249 et seq., who explains the diverse results found by GILBERT/SHAPIRO and KLEMPERER by the nature of competition prevailing in the product market assumed by the authors. He concludes that “the less efficient is competition in the product market, the more likely it is that broad and short patents are socially optimal.” Id. at 249. 1142 See GILBERT/SHAPIRO (1990), at 112.1143 See GALLINI (1992), at 52 et seq.1144 See MERGES/NELSON (1990), at 870.1145 See MERGES/NELSON (1990), at 881 et seq. and 908. In this context, see also THUMM (2000), at 77, who observes that “[…] nowadays it is less and less the case that innovations are driven by breakthroughs than by the routine exploitation of existing technologies. This gives rise to the possibility of innovations consisting of the concentration of all known characteristics plus one new one. This kind of ‘recombination model’[ref. omitted] of invention clearly means that the availability and the access to information are gaining in relative importance.”1146 See MERGES/NELSON (1990), at 908.1147 See KEELY (2000), at 34, with references.

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innovations built on each other.1148 THUMM points out that competition is important as a guarantee for the continuation of the innovative process, as it discourages a patent holder from resting on past achievements.1149 A further argument against broad patents for pioneer inventions has been mentioned above. While the prospecting rationale of KITCH undoubtedly enables society to use the pioneer invention sooner rather than later, the waste of duplicative R&D expenditures may be diverted to the pre-invention stage.1150

In an attempt to determine the optimal middle course between too narrow IP rights that will not provide enough incentive to develop the asset and overly broad rights that will pre-empt too many competitive development efforts, several authors emphasize the need for a differential treatment of industries.1151 MERGES/NELSON, for instance, distinguish several types of technologies, which differ in their pattern of technical advance:1152 For the first type of technology “discrete inventions” are typical, i.e. well-defined inventions which do not point the way to wide ranging subsequent technical advances. For these inventions and the corresponding industries MERGES/NELSON envisage broad patents.1153 In contrast, as mentioned above, in industries where technical advances are cumulative, i.e. build on and interact with many features of existing technology, the authors guard against broad patents. In a third category, referred to as science-based technologies, R&D efforts attempt to exploit recent scientific research, often carried out in the public sector.1154 The specific characteristic of the relevant industries, of which biotechnology is a prominent example, is that scientific research tends to narrow and focus perceived technological opportunities in the industry. New technological developments are “in the air” and the contribution made by the firm which first makes them operational may be very small. In this area, MERGES/NELSON see a “real danger that allowing patent scope to be overbroad may enable the individual or firm who came first up with a particular practical application to control a broad array of improvements and applications.”1155

4. Conclusions

Research on economic tensions inherent in patent protection shows that optimal patent design is a search for “second-best” solutions. According to the existing one-country economic models, some positive level of IP protection is optimal.1156 The second “message” of the economics literature is that “if a country’s objective is to maximise social welfare, then stronger (along the dimensions listed above) intellectual property protection is not always optimal. Some limit to the level of protection will be.”1157 This

1148 See SRINIVASAN (2001), at 30 and 66, and THUMM (2000), at 102/103, as well as the cited references. 1149 THUMM (2000), at 42. In the same vein, MERGES/NELSON, at 872. 1150 See also SRINIVASAN (2001), at 31/32.1151 See, e.g. MERGES/NELSON (1990), at 880 et seq.; SRINIVASAN (2001), at 65.1152 See MERGES/NELSON (1990), at 880 et seq.1153 Id., at 880/881.1154 See id., at 883/884 and 904 et seq.1155 Id., at 884.1156 See also KEELY (2000), at 1. 1157 See KEELY (2000), at 32. See also NELSON (1994), at 2675.

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is especially true for industries where technical advance is cumulative. Moreover, an analysis of the economics literature reveals that the conclusions of the authors depend on whether they believe that the exploitation of technological opportunities generated by a pioneer invention should be rivalrous or dominated by a single firm. The findings of the economics literature further sensitise policy makers to the fact that different types of industries have different pattern of technological advance and may necessitate different patent policies.

Beyond this, little guidance for the concrete framing of IP legislation can be drawn from the theoretical models proposed by the economic literature. Modelling requires stylising complex relationships and implies making assumptions, for instance on the existing market structure. More importantly, models do not allow determining an optimal balance of interests for the general-abstract situation to be regulated by IP legislation.1158 Not only can the relevant variables often not be empirically determined, but also the available models rather deal with the optimal social welfare outcome in individual cases.1159 In spite of the abundant literature on the economics of patent law, no definite conclusions can therefore be drawn on specific questions of optimal intellectual property design.1160

III. Economic models assessing the effects of IPRs in developing countries

Even the cautious conclusions drawn above, especially the statement that the “second-best” optimal solution is some level of intellectual property protection, may not hold true in a multi-country setting. KEELY identifies two main avenues for IP to impact a developing country’s social welfare:

“First, developing countries are users of innovations, both as consumers of goods embodying the innovations and as firms imitating innovated goods and processes. Introduction of intellectual property law may impact the price and variety of goods available in a country. Second, they also must try to determine whether and how intellectual property protection will assist in obtaining the longer run objective of developing an innovative capacity.”1161

The first point adds a new dimension to the tensions between producers and consumers outlined above, as part of the benefits of IP protection may occur outside the country which introduces IP laws.1162 The second point refers to longer-run, or dynamic effects. The conclusion that emerges from the available theoretical research is that

1158 See HEINEMANN (2002), at 20.1159 See HEINEMANN (2002), note 37 with reference to COOTER/ULEN, Law and Economics, 2nd

ed. 1997, at 123 et seq.1160 See HEINEMANN (2002), at 20. On the lack of consensus in the economics literature, see also BESEN/RASKIND (1991), at 8/9. 1161 See KEELY (2000), at 44.1162 The transfer of a surplus from consumers to firms may, for example, imply a transfer of profits from domestic consumers to foreign firms.

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these dynamic effects, under certain conditions, have the potential to be positive for developing countries and outweigh the largely negative static effects.1163

1. Static welfare analysis

Some authors who oppose the introduction of strong IP systems in developing countries invoke the static negative supply-side effects.1164 The basic model used to study economic effects of international patent protection is a two-country model where a rich and innovative country is confronted with a poor technology-using developing country.1165 In the case of patent protection restricted to the innovative country, innovators face a reduction in their monopolistic prices down to the marginal cost level as a result of competitive supply with imitated products. Consumers in the developing country gain from these low prices. Conversely, in the case of patent protection extended to both countries, innovators achieve monopoly prices in both markets. Consequently, besides the deadweight loss costs, the developing country society will suffer the transfer of the monopoly profit to foreign patent holders.1166 The size of transfer depends on the displacement of domestic firms, on the change in price due to the introduction of exclusive rights, and on the price elasticity of demand.1167

Thus, in this static model where innovations are generated outside the developing country, the possibility to free-ride on foreign technology in the absence of IP protection is a clear advantage for the technology importing country. DEARDORFFtherefore concludes that “patent protection is almost certain to redistribute welfare away from developing countries”.1168 Yet, he also points out that the underlying assumption is that a competitive supply of the invented products arises in the unprotected market.

2. Dynamic welfare analysis

Critics of the static welfare approach emphasize that many of the possible benefits of IP protection are not captured by these models, particularly technology spillovers and a possible push towards a domestic innovative capacity.1169 The results of the available dynamic frameworks are less clear-cut than those of the static perspective. They suggest that not all developing countries necessarily benefit from low IP standards. But depending on the studied parameters and the assumptions underlying the respective models, the authors come to different conclusions.

1163 See KEELY (2000), at 46. Static effects consist of the effect on market structure at a given point of time, whereas dynamic effects consist of research and development effects operating over time. See SUBRAMANIAN (1991), at 946. 1164 See, e.g. DEARDORFF (1993), at 447; SUBRAMANIAN (1991), at 946 with respect to high levels of IPR protection for net technology importing countries; ODDI (1987), at 842 et seq., assuming that most inventions patented will not have been induced by the patent system.1165 On the following see the explanation of THUMM (2000), at 45, with references and of KEELY (2000), at 46 et seq.1166 See also NOGUÉS (1993), at 31.1167 See KEELY (2000), at 47.1168 DEARDORFF (1993), at 447. For a more detailed presentation of the economic model, see DEARDORFF (1992), at 36 et seq.1169 See KEELY (2000), at 50; THUMM (2000), at 47.

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Some authors focus on location-specific goods and conclude that stimulating precisely those innovations could be an important motive for a developing country to protect patent rights, even if the country has strong free-riding incentives otherwise.1170 This point needs particular consideration in the area of agriculture as technologies need to be suitable for the local agro-ecological conditions. Breeding for drought-resistant plants might attract more attention from developed country investors if their research results could be marketed under IP protection. However, IP will only be one factor impacting the investment decision. The relative size and purchasing power of the specific developing country markets are of crucial importance.1171

The dynamic general equilibrium framework of HELPMAN considers the impact of IP protection on terms of trade, interregional allocation of manufacturing, product availability and R&D investment pattern.1172 The author demonstrates that developing countries whose comparative advantages lie in low labour costs and industrial imitation lose welfare with the strengthening of IP protection.1173 He finds that neither the temporary acceleration of the rate of innovation in response to tighter IPR nor the effects of foreign direct investments (FDIs) are sufficient to compensate these losses.1174 Yet, in his conclusion HELPMAN points to issues for further research, namely the relationship between imitation, the development of absorptive capacity for advanced technologies, the enhancement of a country’s absorptive capacity by the operation of multinational corporations, and IP as incentive for multinationals to transfer knowledge.1175 LAI challenges part of the findings of HELPMAN in a slightly different model, which combines the possibility of FDIs from North to South as a channel of production transfer with endogenous rates of innovation.1176 He concludes that in this scenario stronger IP protection in the South increases the rate of innovation, technology transfer and Southern relative wage.1177

CURRIE et al. develop a North-South endogenous growth model to examine and integrate three phases of development: innovation in the North with imitation in the South; innovation in the North with both imitation and innovation in the South; and finally innovation in both blocs.1178 They argue that the two key features which determine the transition between the three phases are the relative cost of imitating relative to innovating in the South, on the one hand, and the speed with which the South absorbs scientific and technical knowledge, and management and commercial

1170 See DIWAN/RODRIK (1991), at 27 et seq. and FINK (2000), at 35 et seq. Similarly CHIN/GROSSMAN (1990), at 105, and NOGUÉS (1993), at 51, the latter with respect to pharmaceuticals.1171 See KEELY (2000), at 51; CHIN/GROSSMAN (1990), at 96 et seq.; THUMM (2000), at 46.1172 See HELPMAN (1993), at 1247 et seq.1173 See HELPMAN (1993), at 1249 et seq.1174 On the rate of innovation, see id., at 1261 et seq.; on foreign direct investment, see 1268 et seq.1175 See HELPMAN (1993), at 1276.1176 See LAI (1998), at 133 et seq. LAI points out that, in contrast, HELPMAN had assumed in the model that allowed for endogenous rates of innovation that imitation is the only channel by which production is transferred to the South. Id., at 134. 1177 See id., at 147.1178 See CURRIE et al. (1996).

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skills from the North on the other.1179 However, CURRIE et al. do not address the tension that may exist between the two key features determining transition. Where the knowledge assimilation capacity is still lacking, imitation may be an efficient way to build up the Southern knowledge capital stock.1180 The significance of the capacity to absorb scientific and technical knowledge is highlighted by many economics scholars.1181 Some call for a differentiation between those developing countries that have a domestic capacity for technological adaptation and innovation and thus can be producers of new technological knowledge and developing countries that are mere technology users.1182

CONNOLLY studies the catching up process of Southern countries in a quality ladder model of endogenous growth in which North-South trade leads to technological diffusion through reverse engineering of goods.1183 Southern firms can pass from imitation to innovation and eventually take over leadership positions. She concludes that welfare gains are even greater for the South when opening to imports is combined with the enforcement of intellectual property rights.1184 Yet, she assumes that IP protection only causes Southern imitators to pay a fee to the Northern innovator firms.1185 In her model, this raises the fixed costs of imitative research and lowers the fixed costs of innovative research, thus affecting the choice between the two different ways of inducing technological progress, but it does not bar the possibility of imitation. The framework therefore does not address one of the key concerns of IP opponents which is precisely that IP protection could severely restrict technology diffusion through imitation. KEELY rightly points out that more research is needed to understand how the development of innovative capacities occurs.1186

3. Conclusions

North-South models suggest that the static effects of strengthening IP protection in developing countries are negative, unless consumers in the unprotected market do not have access to the relevant goods due to the lack of protection. A similar reasoning in a dynamic perspective suggests that IP protection could be welfare enhancing for developing countries in sectors where product needs are different between North and South.

1179 See id., “Non-technical summary”, and at 2 and 10 et seq.1180 See also THUMM (2000), at 51, who raises doubts about the general efficiency of IP protection to speed up the development of domestic innovative capacity.1181 See, e.g. SRINIVASAN (2001), at 140; HILPERT (1998), at 92 et seq.; MASKUS/EBY-KONAN (1994), at 411 and 439/440; KEELY(2000), at 95, concludes in the same vein that “[i]nstitutions supporting innovation, including publicly-funded research, university-trained innovators, and a well-functioning market economy, seem necessary.” PRIMO BRAGA et al. (2000), at 27, point out that “[m]ost analysts conclude that the impact of IPRs protection in a given country depends on circumstances such as educational attainment, openness to trade and investment, and related business regulations.”1182 See, e.g., HILPERT (1998), at 92 et seq.; MASKUS/EBY-KONAN (1994), at 411 and 439/440.1183 See CONNOLLY (1999), at 1 et seq.1184 See id., at 21 et seq.1185 See id., at 21.1186 See KEELY (2000), at 53

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The three dynamic endogenous growth models of LAI, CURRIE et al. and CONNOLLY attribute a positive role to stronger IP protection. But their conclusions are based on different assumptions which would need empirical confirmation. LAI assumes that technology spillovers through imitation can be replaced by technology transfer through FDI. CURRIE et al. underline the importance of the ability of the South to assimilate Northern knowledge in the transition process to an innovating region, but seem to assume, when they stress the positive role of IPRs, that the upgrading of Southern skill levels does not necessitate spillovers through imitation. CONNOLLY, finally, assumes that IP holders are willing to license their knowledge to their Southern competitors. Thus a clear picture could emerge only from empirical work.

B. EMPIRICAL EVIDENCE1187

I. Impact studies on patent protection

Many questions emerge from the theoretical analysis outlined above. In a two-country framework with differences in technological capacity, the dynamic benefits of IP protection are less clear than in a one-country model, where the monopoly is widely seen by economics scholars as a necessary price to be paid for private sector R&D activity. The following sections will analyse whether empirical work provides any answers to the question of how IP protection affects the development of domestic innovative capacity and how strengthening of IP protection affects economic growth. It will be examined whether there are empirical findings on the impact of patent protection on trade, FDI,1188 and technology transfer. Further if there is evidence on the static effects on consumer welfare which, as mentioned, raise a lot of concerns. Finally it will be examined whether the influence of IPRs on firm consolidation is empirically established.

1. Innovative activity

a) Company views on appropriability of innovations

Empirical studies, mostly based on surveys, on the issue of how effective and important patent protection is as a means of appropriating the rewards from inventions confirm the theoretical findings outlined above. Yet, KEELY notes that the available data originates from “countries with a substantial domestic innovative capacity and a long history of intellectual property protection”, and is therefore indicative of the

1187 This part draws heavily from KEELY (2000), at 53 et seq. and SRINIVASAN (2001), at 55 et seq, who each undertake a detailed review of the available empirical evidence on the economic impacts of IPR, in particular, patents. SRINIVASAN devotes a chapter specifically to PVP. See id., at 168 et seq.1188 Foreign direct investment is generally understood as investment that is made to acquire lasting management interest and is the sum of equity capital, reinvestment of earnings, and intra-company loans. Yet, not all authors cited here may understand it precisely in this sense, which, however, should not have an impact on the general findings presented here.

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potential benefits of patent protection only under the assumption that a domestic innovative capacity is developed.1189

Not surprisingly, patent regimes are only one factor among others that determine the level of innovative activity.1190 The importance of patents as means of appropriation varies widely from industry to industry. KAUFER reports of three studies carried out by SCHERER, TAYLER/SILBERSTON and LEVIN et al. which found that patents were viewed as a critical incentive for R&D investment only in a few industries, in particular pharmaceuticals, agricultural chemicals, industrial organic chemicals.1191 On the average, for product inventions, superior sales and services were considered most important, closely followed by lead-time advantages and learning-by-doing advantages. For process inventions lead-time, learning-by doing advantages, secrecy, and sales and service efforts were ranked more important than patents.1192 In specific sectors just named, however, patents were perceived as an efficient means of protecting the returns from industrial innovation. In the survey by LEVIN et al., patents for organic chemicals and drugs received scores exceeding 6.0 on a 1 to 7 scale.1193 Interestingly, SCHERER and TAYLER/SIBERSTON further noted that small firms place more weight on the need for patent protection than large ones.1194

KAUFER explains the importance of patent protection in the pharmaceutical sector by “the large research, development, and clinical testing expenditures required to introduce a new drug; the ease of imitating a proven drug without repeating those outlays; and the strong protection a patent gives for chemical molecules that have been proven superior to different near-substitute molecules.”1195 This allows drawing the parallel to the plant breeding and the genetic engineering sector. As mentioned above, the development of a new variety may take up to 15 years and cost US$ 2-3 million.1196 The breeding result is relatively easy to copy. The ease of imitating a drugis due to the ease of copying chemical molecules. The latter play an important role in many plant biotechnological inventions.

1189 See KEELY (2000), at 62.1190 See KEELY (2000), at 67.1191 See KAUFER (1989), at 21/22 referring to SCHERER, F.M. (ed.), “Patents and the Corporation: A Report on Industrial Technology under Changing Public Policy”, J.J. Galvin, Boston 1958; TAYLOR, C.T., SILBERSTON, Z.A., “The Economic Impact of the Patent System: A Study of the British Experience”, Cambridge University Press, Cambridge 1973; and LEVIN, R.C., KLEVORICK, A.K., NELSON R.R., WINTER, S.G., “Appropriating the Returns from Industrial R&D”, Brookings Papers on Economic Activity 1988. SCHERER and TAYLOR/SILBERSTON further identified some mechanical engineering lines as sectors where patents were perceived as critical inducement. According to LEVIN et al. importance was further given to patents in the sectors synthetic rubber, glass, compressors, and power-driven hand tools. 1192 See KAUFER (1989), at 21/22 referring to LEVIN et al.1193 See NOGUÉS (1993), at 26, Table I, which reproduces a table from LEVIN et al. (1988), at 797.1194 See KAUFER (1989), at 21.1195 KAUFER (1989), at 21; see also NOGUÉS (1993), at 25.1196 See JAFFEE/SRIVASTAVA (1992), at 20.

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b) Domestic research & development (R&D)

Various authors have attempted to determine the extent to which IPRs foster domestic R&D.1197 Various empirical studies confirm a positive relationship between patent protection and technological progress in research intensive industries in industrial countries.1198 ALFRANCA/HUFMANN study the role of incentives and institutions in private agricultural R&D expenditures in Europe.1199 Using data for seven European Union countries for the period 1984-1995, they reject the hypothesis that the quality of IPRs does not influence private agricultural R&D expenditures. They find that stronger contract enforcement, more efficient public bureaucracy and stronger patent rights lead to larger private agricultural R&D investment, other parameters being equal. SRINIVASAN examines the relationship between IPRs and private agricultural expenditures in an econometric study using OECD data on private R&D for the sector “Agriculture, Hunting and Forestry”.1200 To measure the strength of IP protection for agricultural innovations, he uses the index of patent rights developed by GINARTE/PARK, considering coverage of protection, membership in international agreements, provisions on loss of protection, enforcement of rights and duration of protection.1201 He finds that strengthening the patent regime does have a positive impact on private R&D expenditures and that this effect increases with the level of private R&D stocks. The latter finding “provides considerable support to the view that the impact of IPRs on private R&D depends on the pre-existing levels of research capability in the private sector.”1202

In contrast, scant empirical evidence is available on the impact of different levels of IPR protection on domestic R&D in developing countries.1203 There is some evidence from Taiwan and South Korea, which are often cited as examples of newly industrialising countries that used weak forms of IP protection tailored to their stage in the process of establishing indigenous innovative capacity.1204 If R&D expenditures as a proportion of GDP are taken as proxy for innovative activities, it is indeed noteworthy that these two countries significantly increased their technological efforts

1197 Most studies take inputs into the inventive process, such as R&D expenditures or R&D scientists and engineers as indicators, as there is no direct measure of inventive output. Patents may be an indirect evidence of research output.1198 See HILPERT (1998), at 92, with references to GREIF, Patente und Entwicklungsländer, in: Menck/Greif (eds.), Technologietransfer in Entwicklungsländer, München 1979, 115; and to OPPENLÄNDER, Die Wirkung des Patentwesens im Innovationsprozeß, ifo Schnelldienst 27 (1974), Nr. 10, 5. See further the two examples from the pharmaceutical sector given by NOGUÉS (1993), at 43, with references. 1199 See ALFRANCA, O., HUFFMANN, E. W., “Private R&D Investments in Agriculture: The Role of Incentives and Institutions”, Staff Paper No. 332, Iowa State University, Iowa 1999, as cited inSRINIVASAN (2001), at 63/64.1200 SRINIVASAN (2001), at 126 et seq. The countries under study were Australia, Belgium, Canada, Finland, France, Germany, Ireland, the Netherlands, Norway, Spain, Sweden and UK.1201 A limitation of this approach in the present context is that not all aspects which are taken into account (such as the patentability of pharmaceuticals) are of interest for the protection of agricultural inventions. Notwithstanding, it provides a reasonable approximation.1202 See SRINIVASAN (2001) at 140.1203 See SRINIVASAN (2001), at 641204 See KUMAR (2002), at 23 et seq.; CIPR (undated), chapter 1, at 8 of 17.

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before taking first measures to reinforce their weak IP protection regimes in 1987/88.1205 Analysts point out that, while patent protection especially at the enforcement level was weak, both countries encouraged small technological improvements by utility models and industrial designs, which were mainly used by domestic firms.1206 It was only in the mid-1990s that South Korea and Taiwan took comprehensive action to strengthen IPR protection and enforcement.1207 The continuing rise of innovative activity in Taiwan and South Korea is reflected in the increasing numbers of US patents.1208 Of the patents granted during the period 1991-95, the two countries accounted for 1.41% and 0.75% respectively, whereas India accounted for only 0.03%. In the period 1996-2000 Taiwan, South Korea and India accounted for 2.54%, 1.86% and 0.06% respectively.1209 One certainly has to be cautious about drawing conclusions from this type of case study, as it is unclear what would have happened if the tightening of patent protection had intervened earlier in the development process. The evidence therefore at best suggests two conclusions: First, imitation facilitated through weak IP protection is a possible way to achieve technological and innovative capacity. Second, some form of IP protection for small technological improvements seems to encourage the development of domestic innovative activity.

Since there is no cross-country evidence on the impact of IP protection on domestic R&D in developing countries, one type of evidence used to draw lessons for the present discussion is the experience of industrialized countries in the 19th century. Two cases, namely the Netherlands and Switzerland, are invoked by analysts, yet lead to ambivalent results.1210 Both countries had an extended period with no patent protection.1211 Both had economic links to other European countries that had a system of patent protection. SCHIFF compared the developments in these countries with simultaneous developments in two economically and institutionally similar patent-granting countries by looking at their residents’ patent activity in certain foreign countries.1212 For the Netherlands, SCHIFF reports that while their citizens’ patent applications over the studied period 1900-1912, i.e. prior to the introduction of patent protection in 1912, was low relative to those of the two other countries, they caught up and arrived at a similar level from 1920 onwards. He concludes that industrial development during the country’s patentless era was based less on domestic inventive activity than afterwards. In contrast, the evidence on Switzerland reveals that Swiss citizens did not increase their patent activity abroad after the introduction of an effective patent law in 1907. Switzerland even outraced the countries of comparison during the entire studied period. This suggests that Swiss innovative activity has been

1205 See FRISCHTAK (1989), at 13/14.1206 See, e.g. KUMAR (2002), at 24.1207 See id., at 24 et seq.1208 See KUMAR (2002), at 12/13.1209 See id., at 12/13.1210 See KEELY (2000), at 56 and CIPR (undated), chapter 1, at 8 of 17.1211 The Netherlands had no patents from 1869 to 1912. Switzerland introduced a first albeit quite ineffective patent law in 1888. Only in 1907 was a more substantial law implemented. 1212 See SCHIFF (1971), esp. at 25 et seq. and 96 et seq.

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vigorous despite their ineffective patent law and was not impacted by the introduction of a substantial patent law.1213

2. Economic growth

A few studies have addressed the link between IPR and growth directly, but the resulting evidence is limited. A close correlation between the effectiveness of patent protection and the level of economic development has been established by RAPP/ROZEK.1214 Yet, their conclusion that patents foster economic growth has been challenged. KUMAR and SRINIVASAN point to the difficulty to infer causality from this association.1215 GOULD/GRUBEN using cross-country data on patent protection, trade regime and country-specific characteristics confirm that stronger patent protection corresponds to higher economic growth rates.1216 However, countries with the second lowest level of patent protection grew faster on average than countries in the middle levels. The authors qualify the overall relationship between patent protection and economic growth as “weak”.1217 SRINIVASAN reports of a study by GINARTE/PARK showing that the underlying factors which influence patent levels are the country’s level of R&D activity, market environment and international integration which are in turn correlated with its level of economic development.1218 He notes that their findings lend indirect support to the hypothesis that stronger IPRs in developing countries will encourage R&D only if there is a certain critical pre-existing research capability.1219

KEELY links economic growth to IP protection through other economic factors, namely innovative activity, FDI flows and trade.1220 According to COE/HELPMAN, the beneficial effects of domestic R&D on total factor productivity growth have been established in the empirical literature.1221 Likewise, there is empirical evidence for the relationship between trade and FDI, on the one hand, and trade and technology dissemination via technology transfer and spillovers on the other, as well as for the association between dissemination and productivity growth.1222 KEELY holds that if additionally the relationship between IPR, on the one hand, and domestic innovative

1213 See KEELY (2000), at 57.1214 See RAPP, R.T./ROZEK, R.P. (1990), “Benefits and Costs of Intellectual Property Rights Protection in Developing Countries”, Journal of World Trade 24, pp. 75-102, as cited in SRINIVASAN (2001), at 62.1215 See KUMAR (2002), at 13; SRINIVASAN (2001), at 62.1216 See GOULD/GRUBEN (1996), at 331 et seq. To measure the level of patent protection GOULD/GRUBEN use an index developed by RAPP/ROZEK, as above note 1214, which is based on the conformity of each nation’s patent laws to the minimum standards proposed in the Guidelines for Standard Protection and Enforcement of Patents of the U.S. Chamber of Commerce. 1217 See id., at 333.1218 See GINARTE, Juan C., PARK, Walter G., Determinants of Patent Rights: A Cross-national Study, Research Policy, 283-300, as cited in SRINIVASAN (2001), at 62/63 and KUMAR (undated), at 14.1219 See SRINIVASAN (2001), at 63.1220 See KEELY (2000), at 76/77.1221 See COE/HELPMAN (1995), at 875.1222 See KEELY (2000), at 77.

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activity, trade, FDI and technology transfer on the other, can be established, a case is made for the argument that strengthening IP protection has positive dynamic effects via productivity growth.1223 Yet, the question arises whether the dissemination effects associated with trade, FDI and technology transfer are the same in scenarios with and without patent protection. The results of the econometric models examining the associations between trade and technology spillovers are based on the existing, i.e. in developing countries quite weak, IP regimes.1224 The causal line IPR – trade –dissemination therefore has to be considered with caution.

3. Trade

Most empirical studies suggest a positive link between IPRs and trade flows.1225 The paper by FERRANTINO is a counter-example. He looks at US arm’s length exports and overseas affiliate sales in 1982 using the membership in a series of international conventions as the measure for the IP protection level and concludes that “[a] country’s decision to adhere or not to adhere to IPR agreements has no clearly discernible impact on [these types of exports] by US firms.”1226 In contrast to FERRANTINO, other authors use an IP strength index based largely on the IP laws in place and their enforcement.1227 MASKUS/EBY-KONAN, in their econometric study using data on bilateral exports of the mid-1980s, find a positive effect of IP protection on trade levels, albeit a modest one.1228 A study by MASKUS/PENUBARTI based on data from the same period and which correlates bilateral manufacturing imports with income, trade barriers and patent laws clearly indicates a positive association between increasing patent protection and bilateral manufacturing imports into both small and large developing economies.1229

A study by FINK/PRIMO BRAGA generally confirms these findings.1230 Yet, surprisingly, FINK/PRIMO BRAGA find that IPRs are not significant for high-technology trade.1231 One of the possible explanations is that the measure used does

1223 See KEELY (2000), at 76.1224 See, e.g. BAYOUMI et al. (1999). 1225 Trade in IP assets, i.e. technology transfer, is dealt with in the next sub-section.1226 See FERRANTINO (1993), at 327. Another example is part of the results of FINK (2000), as below note 1230.1227 MASKUS/EBY-KONAN (1994) and MASKUS/PERNUBARTI (1995) use the index of RAPP/ROZEK based on the strength and enforcement of patent laws in the mid-1980s. Based on surveys of business and government officials and an examination of patent laws themselves, the index measures conformity of each nation’s patent regulations and enforcement to the minimum standards put forward by the US Chamber of Commerce Intellectual Property Task Force. See RAPP, R., ROZEK, R. (1990), “Benefits and costs of intellectual property protection in developing countries”, Working Paper No. 3, National Economic Research Associates, Inc., Washington D.C., as cited in MASKUS/PERNUBARTI (1995), at 235. 1228 See MASKUS/EBY-KONAN (1994), at 426 et seq.1229 See MASKUS/PENUBARTI (1995), at 230 et seq.1230 See FINK/PRIMO BRAGA (1999), based on data of 1989; See also FINK (2000), at 96, who confirms this result for German exports in 1992. Yet, his study also finds that US arm’s length exports in the same period were consistently found to be unaffected by the degree of IPR protection in the partner countries.1231 See id., at 10.

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not correctly capture the level of protection.1232 FINK observes that it only captures the strength of IPRs as written “on the books”.1233 Another explanation is that stronger IPR regimes may cause high technology firms to serve foreign markets by FDI or licensing of their technology to an overseas competitor, in part substituting for trade flows.1234

4. Foreign direct investment (FDI) and technology transfer

Stronger IPR protection could possibly have two contrary effects on FDI and technology transfer.1235 Countries with greater protection could attract more technology transfer and FDI, as foreign firms are more likely to share technological information with local affiliates and licensees when they are confident their technology cannot be legally imitated by domestic competitors. Conversely, at least for FDI, it could be argued that multinational firms have an incentive to engage in greater FDI in markets with limited protection in order to keep tighter control over their technological information.1236 Strong protection would then leave the firm the choice to service the market with exports. This is the argument of SHIVA for instance.1237

The available evidence on the impact of IPR protection on FDI is mixed. KEELY explains the ambiguity in results on IP protection and FDI by the use of different measurements of IP strength and different sets of countries and time periods.1238

Several studies dealing this issue find little evidence for a link between IP laws and FDI choices.1239 This conclusion is challenged by other research results. MASKUS

1232 The study uses a patent strength index developed by PARK/GINARTE (1996). This index grades IPRs regimes of 110 countries on a scale from zero to five, taking five categories of criteria into account (extent of coverage, membership in international patent agreements, provisions for loss of protection, enforcement mechanisms, duration of protection). For each category they use several benchmark criteria and compute the share of fulfilled criteria. See PARK, W.G., GINARTE, J.C. (1996), “Determinants of Intellectual Property Rights: a Cross-National Study”, manuscript, The American University, as cited in FINK/PRIMO BRAGA (1999), at 7. This may also be the reason for the mixed evidence found by FINK (2000), as above note 1230.1233 See FINK (2000), at 83.1234 See id. 1235 See MASKUS/EBY-KONAN (1994), at 414/415. Foreign direct investment is the act of establishing or acquiring a foreign subsidiary over which the investing firm has substantial management control. See MASKUS (1998), at 119.1236 See also MASKUS (1998), at 126/127.1237 With respect to the “myth of technology transfer, innovation and R&D”, she argues that “[w]hen companies can import products under import monopolies granted by patents, they have no incentive to set up domestic manufacture, or set up local R&D, or transfer of technology for local production.” See SHIVA (2001), at 26.1238 See KEELY (2000), at 79.1239 See MASKUS/EBY-KONAN (1994), at 415. The authors report on an econometric investigation of the link between IPR protection and FDI using data for 1982 on US FDI in 44 countries. They use the index of RAPP/ROZEK based on the strength and enforcement of patent laws in the mid-1980s. They even suggest that lower levels of patent protection could actually attract foreign investment at the margin. But the authors stress that data limitations render their results preliminary. See id., at 426 and 439. KONDO (1995), at 98 et seq. uses a measure of protection based merely on the patent law of each country and examines US FDI in 33 developed and developing countries over 15 years. He finds

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reports of survey evidence of the mid-1990s which points to national enterprises placing more importance on IPRs in deciding on FDI programs.1240 The same evidence reveals differences across industry sectors. Firms with easily copyable products and technologies are more concerned with the local IPR system’s ability to deter imitation.1241 The level of concern also depended on the stage of production. All sectors expressed strong concerns about local IPRs in locating R&D operations.1242

LEE/MANSFIELD find in their econometric analysis that the strength of a country’s IP protection has a substantial impact on the volume and composition of US foreign direct investment.1243 They develop a new IP strength index by using the firm’s perceptions as established by a survey of 94 major US firms in six manufacturing industries in 1991.1244 According to their results, the IP strength is particularly relevant for investments in facilities to manufacture intermediate or final products or R&D facilities.1245 The results of another study covering 27 less developed countries for the period 1975-1990 carried out by SEYOUM suggest that IPRs strength is significant in explaining variation in inward FDI and that this effect is particularly strong for emerging countries.1246 However, while KUMAR confirms for industrialized countries that the overall strength of IP regimes affects the level of R&D investments, he does not confirm this result for R&D based in developing countries.1247

Little empirical verification exists of the hypothesis that foreign firms, especially investors, would license their technology more readily – to foreign affiliates or unaffiliated foreign partners – if IP protection were provided. The available evidence rather confirms this proposition. FERRANTINO shows that Paris Convention membership is associated with an increase in flows of royalty and licence fees into and out of a country, but only if the country’s domestic IPR regime is sufficiently strong as measured by patent duration.1248 Two other studies find that foreign patent rights increase arm’s length licences,1249 yet according to one of them only once the GINARTE/PARK patent index exceeded a critical value of 2.07 on a five-point

no evidence of a relationship between patent-law strength and US manufacturing FDI as a whole. Using German data of 1992, FINK (2000), at 93/94, finds that IPRs have no influence on the direct investment stock of German firms in foreign countries.1240 See MASKUS (1998), note 88, with a references.1241 See id., at 132 with reference to MANSFIED, Edwin, “Intellectual Property Protection, Foreign Direct Investment, and Technology Transfer 19-21 (International Fin. Corp. Discussion Paper 19, 1994). 1242 See id.1243 See LEE/MANSFIELD (1996). 1244 See id., at 181 et seq.1245 See id., at 185.1246 SEYOUM, Belay (1996) “The Impact of Intellectual Property Rights on Foreign Direct Investment”, Columbia Journal of World Business 31(1), pp. 50-59, as cited in KUMAR (2002), at 18.1247 See also KUMAR (1995). 1248 See FERRANTINO (1993), at 326 et seq.1249 See SMITH, Pamela J. (2001) “How Do Foreign Patent Rights Affect U.S. Exports, Affiliate Sales, and Licences?”, Journal of International Economics, Vol. 55(2), pp. 411-439, as cited in KUMAR (2002), at 19; YANG, Guifang/MASKUS, Keith E., “Intellectual Property Rights and Licensing: An Econometric Investigation”, 136 Weltwirtschaftliches Archiv 2000, as cited in MASKUS (2000), at 2234.

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scale.1250 This evidence lends support to economic theory arguing that while for complex but easily copied technologies FDI is likely to increase as IPRs are strengthened, licensing should displace FDI as IPRs are further strengthened.1251

5. Consumer welfare

One avenue for effects of IP protection on consumer welfare, i.e. effects on productivity growth and thus the average standard of living, has already been discussed above. The two other types of effects which are studied in the economics literature are the variety of available goods in the longer run and the shorter term effects on the price of goods. KEELY concludes from her survey that “overall […] the size of the effect on consumer welfare of strengthening intellectual property is not well-understood, in developing or developed countries [reference omitted].”1252

A case study on the pharmaceutical sector in Turkey concludes that patent protection was not a decisive factor to determine the extent of drug technology available.1253 Yet, the newly introduced drugs may have been imitations of already existing drugs. A look at the evidence on the dynamic effects of patents on the variety of goods available due to changes in the size and direction of research activity is necessary to complete the picture.1254 LANJOUW refers to the example of the Orphan Drug Act in the United States, giving exclusive marketing rights for a seven-year period to drugs treating diseases affecting less than 200,000 persons.1255 The number of approved drugs for these diseases increased from 10 in the decade before the introduction of the Act to 99 in the first decade after its passage.1256

The available literature on price effects again focuses on the pharmaceutical sector. MASKUS/EBY-KONAN calculate the static welfare effects of changing IP protection levels in four developing countries and find that the initial market structure matters significantly for price changes and expected welfare impacts.1257 They also emphasize that “alternative forms of competition policy, such as price ceilings, profit taxes, and antitrust provisions, could be used to counter perceived foreign abuses of monopoly privileges.”1258 ROZEK/BERKOWITZ study price movements in nine low or middle income countries that had either changed their IP laws since 1986 or had been the

1250 See YANG/MASKUS, as above.1251 See MASKUS (1998), at 133.1252 See KEELY (2000), at 86.1253 See NOGUÉS (1993), at 42, referring to a study by KIRIM, A.S., Reconsidering Patents and Economic Development: A Case Study of the Turkish Pharmaceutical Industry”, 13(2) World Development 1985. KIRIM argues that the rate of new drug introductions into the Turkish market did not decline after 1961, i.e. the abolishment of the patent law, and that investments continued to flow into the Turkish pharmaceutical industry. See id. at 227/228.1254 See the literature survey by KEELY (2000), at 86.1255 See KEELY (2000), at 86, referring to LANJOUW, J.O., “The introduction of pharmaceutical product patents in India: ‘heartless exploitation of the poor and suffering’?” Working Paper 6366, NBER, January 1998.1256 See id.1257 See MASKUS/EBY-KONAN (1994), at 416 et seq.1258 See id., at 411.

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target of efforts by the pharmaceutical industry or the US government to improve their IP regimes.1259 Their analysis suggests that improving IP protection does not have a measurable impact on real or nominal prices of existing drugs. Surprisingly, IP protection had little impact on price changes of all drugs, including those introduced after the change of patent protection. “Therapeutic competition, regulation of pharmaceutical prices, monopsony buyers, and most importantly, the actual provisions of the IP laws are four factors that keep prices for pharmaceutical products from increasing as a result of IPP.”1260 But the authors observe that the situation may be different for true medical advances without therapeutic substitutes.1261 It should also be noted that weak enforcement is a characteristic mentioned in most of the country profiles presented by the authors. Their main findings are confirmed by FINK, who simulates the effects of the introduction of patent protection in the Indian pharmacy market.1262 His model clearly demonstrates the relevance of therapeutic competition. Only if newly discovered drugs are medical breakthroughs, however, may prices be significantly above competitive levels and static welfare losses relatively large.1263

6. Firm concentration

The agricultural supply industry has experienced a fundamental restructuring in the last decades, which seriously reduced the number of players.1264 In particular in the 1990s, the agro-chemistry industry has taken control of major seed companies. Multi-activity life-science groups were formed within which pesticides, seeds and drugs coexist and which have massively invested in biotechnology.

Evidently such a process is determined by multiple factors. ASSOULINE et al. explain the mergers and buy-outs in the agro-chemistry industry by pointing to stricter environmental regulations increasing the costs for new active materials, increased market competition at a time when a number of patents for key products were falling into the public domain, the costs of mastering the new research tools, and a marked decrease in sales on the pesticide market.1265 The vertical integration in the field of seeds is further explained by growing interconnections on the market, with the development of GMOs, between pesticides and seeds, research synergies and the access of seed producers to the market.

The issue of interest here is how significant protected IP assets have been in the consolidation of the life-science industry. Many authors argue that in the agricultural biotechnology industry any research programme requires access to a large number of

1259 See ROZEK/BERKOWITZ (1998), at 180 et seq. The countries studied are South Korea, Mexico, Taiwan, Hungary, Brazil, Argentina, Egypt, Jordan and Turkey.1260 See id., at 215. With “actual provisions of the IP laws” the authors seem to mean, e.g. low penalties for patent violations and compulsory licensing provisions. Many of the country profiles presented by the authors mention enforcement problems. 1261 See id., at 216.1262 See FINK (2000), at 123 et seq.1263 See id., at 150.1264 For details, see MARCO/RAUSSER (2002), at 119 et seq.; ASSOULINE et al. (2002), at 194 et seq.; FUGLIE et al. (1996), at 41/42; BUTLER/MARION (1985), at 50/51.1265 See ASSOULINE et al. (2002), at 196 et seq.

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component technologies that may be protected by patents. Acquisition of the company holding the relevant intellectual assets may be a better option for accessing patented technologies and preserving the freedom to operate than licensing, which still involves litigation risks.1266 Other authors suggest that it rather is uncertainty in patent rights that may lead firms to develop alternative organisational forms with which to manage their intellectual property.1267 Anecdotal evidence leaves no doubt that IP assets have played an important role in some cases.1268 But the actual question is whether the need to control IPRs has been a major driving force behind the overall process. MARCO/RAUSSER present a first empirical study that seems to support this hypothesis.1269 Studying the consolidation and restructuring of the US agricultural biotechnology industry in the last decade, they find evidence suggesting that the average enforceability of a firm’s patent portfolio is positively related to the probability of acquiring and being acquired.1270 Enforceability is defined as the probability that courts find the patent both valid and infringed. According to the authors, this result is consistent with industry anecdotal evidence which suggests that many of the mergers were rooted in conflicts over mutually blocking patents.1271

7. Dissemination of scientific information and follow-on R&D

A widely expressed concern is that a “web of proprietary claims”1272 could envelop the transfer and use of patented biotechnologies, thereby limiting the freedom to operate of public and private agencies and curtailing scientific development.1273 It is feared that in a constellation where there are numerous property claims over the building blocks necessary for R&D and where these property rights are diffusely held by multiple owners, the negotiations necessary to bring these building blocks together could fail, thus stifling follow-on inventions. The resulting situation of paralysis is often referred to as the “tragedy of the anti-commons”.1274

The empirical evidence set forth to confirm this argument in the area of plant biotechnology relies on a number of individual cases and does not permit evaluating whether these examples are isolated cases or represent a pattern, indeed slowing down

1266 See, e.g. SRINIVASAN (2001), at 265 et seq.; NOTTENBURG/PARDEY/WRIGHT (2003), at 5.1267 See MARCO/RAUSSER (2002), at 121.1268 See MARCO/RAUSSER (2002), at 119, referring to the purchase price of $730 million for Plant Genetic Systems (PGS), the market capitalisation of which was only $30 million at that time. According to the acquirer AgrEvo, $700 million of the purchase price was assigned to the valuation of the patent-protected trait technologies owned by PGS.1269 See MARCO/RAUSSER (2002), at 119 et seq.1270 See id., at 129, 131 and 134.1271 See id., at 134. 1272 See NOTTENBURG/PARDEY/WRIGHT (2003), at 2.1273 See e.g. BINENBAUM et al. (2000), at 14; see also DUTFIELD (2000b), at 35. On the parallel discussion concerning health related genetic patents, see OECD (2002), at 10 et seq.1274 See OECD (2002), at 49, referring to HELLER, M., EISENBERG, R. (1998), “Can Patents Deter Innovation? The Anticommons in Biomedical Research”, Science, Vol. 280, No. 5364, pp. 698-701, who coined the term.

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the pace of research progress.1275 Surveys regarding the sector of plant development are from the end of the 1980s, beginning of the 1990s and only concern the expectations of stakeholders not their experience.1276

First attempts of a more systematic research on the impact of patenting and licensing of genetic inventions on access to technology by researchers and companies have been conducted in the area of medical research tools. These studies rather indicate that the players find “working solutions” to access technology and by and large do not confirm the scenario of the “tragedy of anti-commons”.1277 A large study funded by the US National Academy of Science uses interviews and archival data to examine the changes in patenting and licensing in recent years and how these have affected innovation in pharmaceuticals and related biotech industries.1278 The authors find that there has in fact been an increase in patents on research tools. However, they conclude that drug discovery has not been substantially impeded by these changes. They also find little evidence that university research has been impeded by concerns about patents on research tools. Yet they acknowledge that there were exceptions where access to foundational discoveries was restricted or exclusive rights on targets with specific therapeutic and diagnostic functions were licensed exclusively thus excluding other institutions from research on these targets. They also found some evidence of delays associated with negotiating access to patented research tools and cases in which research was redirected to areas with more IP freedom. Still, the vast majority of respondents said that there were no cases in which valuable research projects were stopped because of IP problems relating to research inputs. The authors emphasize that they did not observe as much breakdown or even restricted access to research tools as

1275 BINENBAUM et al. (2000), at 16, refer to two examples where companies used their power to block commercial applications of their technology. The Centre for Legumes in Mediterranean Agriculture (CLIMA) in Australia developed a transgenic lupin cultivar with tolerance to the herbicide Basta, but has been unable to reach agreement with AgrEvo (now Aventis) to commercially release the plant. Likewise, researchers at Michigan State University (MSU) developed a new turfgrass containing a proprietary gene from one company and a promoter from another. Neither company would give permission for its material to be used in conjunction with that from another company, and so the turfgrass has been destroyed. ERBISCH (2000), at 134, further reports that MSU was denied the right to take a new variety forward because the company who leased the transformation equipment refused the University’s request for a licence.1276 FUGLIE et al. (1998), at 45, report that in a 1989 survey, 84 % of the surveyed directors of State agricultural experiment stations thought that using patents in public research programmes would adversely affect free exchange of germplasm between public and private breeders. 73 % predicted a negative effect of this policy on free availability of undeveloped germplasm from international sources. Another survey among agricultural research firms in 1991 found that only 35 % of the respondents said that the exchange of germplasm would be curtailed, and only 25 % thought that the flow of scientific information from public researcher and private companies would be reduced. See FUGLIE et al. (1998), at 45, with references.1277 An example for this is the agreement between the Max Planck Society, Bayer Crop Science, Garching Innovation and Monsanto, resolving the dispute relating to the use of Agrobacterium-mediated transformation technologies. See MONSANTO (2005).1278 See WALSH et al. (2003). The authors conducted 70 interviews with IP attorneys, business managers, and scientists from 10 pharmaceutical firms, 15 biotech firms, as well as university researchers and technology transfer officers from 6 universities, patent lawyers, and government and trade association personnel.

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one might expect because firms and universities have been able to develop “working solutions” that allow their research to proceed. These working solutions combine taking licences, inventing around patents, developing and using public tools, and challenging patents in court and also tolerated infringement.

The results of a survey conducted in Germany by STRAUS et al. on “Genetic Inventions and Patent Law” among a sample group of pharmaceutical companies, biotechnological companies, biotechnological research institutions and clinical institutions point in a similar direction.1279 Respondents indicated that generally research co-operations between companies or between companies and research institutions were handled in a flexible manner depending on individual circumstances and no specific problems arose with respect to patents. Yet, some biotechnological companies admitted that co-operations with other companies had failed or were complicated because of unresolved IP questions. An important conclusion of the survey is that due to the interest of patent holders to commercialize their inventions, licences on genetic inventions were generally available, except between direct business competitors.1280 Another exception to the rule was the licensing of certain research tools where exclusive licences were more typically granted so that the licensee could benefit from a period of exclusivity to recoup his investments. While some licensors were too demanding and overestimated the value of their inventions, often competition among potential licensors, e.g. when various equally suitable gene expression systems existed, enabled the future licensee to negotiate a reasonable royalty. However, a problem which emerges from the survey answers is “royalty stacking” resulting from the need to take licences under numerous patents to market a single product. Some firms include royalty-stacking clauses in licence contracts, with the effect of reducing the royalty rate of each individual licence if the cumulative royalty payments exceed 10% of the turnover of the final product. Lawsuits dealing with genetic inventions had not accumulated. Possible reasons are the doubtful validity and scope of certain patent claims and the fact that many presumptive patent infringers have not yet commercialized any products.

The fact that the scenario of a stifling of R&D due to restricted access to the necessary blocks of technology apparently has not occurred in the health sector in the US and Europe does not mean that future problems due to restricted access can be ruled out. WALSH et al. point to the fragility of the current balance. They hold that “[…] the danger remains that progress in a broad research area could be significantly impeded by a patentholder trying to reserve the area exclusively for itself.”1281 An expert group of eleven biologists set up to inform the European Commissioner responsible for Research on the prospects of life science research has identified overly broad patents which may lead to potential dependency problems as an important research policy issue that needs to be monitored.1282 Yet, the same experts also highlighted the

1279 See STRAUS et al. (2002), at 1 and 24. Detailed interviews conducted with 4 large pharmaceutical companies, 9 small and medium-sized biotechnological companies, 7 biotechnological research institutions and 5 clinical institutions point in a similar direction.1280 See STRAUS et al. (2002), at I and 6 et seq.1281 See WALSH et al. (2003), at 335.1282 See EUROPEAN COMMISSION (2002), at 43.

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important role of patenting of biotechnological inventions to support research and innovation. Concerning the area of plant biotechnology, commentators highlight the particular situation of public research organisations. They warn that those public institutions that lack proprietary technologies to cross-license and those public and private research programmes that target minor crops or minor agronomic traits might get priced out of the market for new proprietary technology.1283

8. Conclusions

There is little conclusive empirical evidence on the economic effects of IP protection in general and even less on the impact on developing country economies.1284 While the positive effect of patent protection on innovative activity in industrialized countries is confirmed, the evidence on effects of IPRs on innovative activity in developing countries is quite weak. The successful evolution of the high tech industry in Taiwan and South Korea suggests that utility model protection may have facilitated the development of domestic capacity. At the same time, it seems to confirm the intuitive assumption that “stronger IPRs may actually affect the innovative activity adversely by choking the absorption of knowledge spillovers […].”1285 Yet, this evidence should not be overestimated, since it does not provide a comparison with a policy approach where the upgrading of domestic competence is fostered by technology licensing and FDI.

The above review of empirical literature also illustrates how difficult it is to say anything about links between IPRs, growth, trade, FDI and technology transfer. There is a correlation between strength of patent protection and economic growth, but this does not imply causality. The evidence on IPRs and trade is mixed, but those authors using an IP strength index taking enforcement into account generally find a modest positive effect of IP protection on trade levels. High technology trade seems to form an exception which could lend support to the hypothesis that high-technology firms prefer serving markets by FDI or licensing if IP protection is strong. The evidence on FDI is mixed. The few empirical studies on technology licensing suggest that patent strength positively impacts the transfer of technology. Concerning price effects, not surprisingly, empirical investigations find that the initial market structure and product competition matter significantly. This explains the significance attached to firm concentrations. The scant systematic evidence rather supports the hypothesis that the control of IP assets was a significant factor leading to the concentration process in the agricultural supply industry in the last decade. Finally, concerning the impact of biotechnology patents on dissemination of technology and scientific progress, first evidence from the biomedical sector suggests that patents do not have the chilling effect on innovation in biotechnology that is often apprehended. Yet, the more complex patent environment does lead to higher transaction costs which have to be weighed against the social benefits of providing an incentive for up-stream inventions.

1283 See, e.g. PHILLIP/STOVIN (2000), at 273; NOTTENBURG et al. (2001), at 30.1284 See also PRIMO BRAGA et al. (2000), at 27, who conclude that “[a]vailable economic models and empirical evidence are inconclusive about the role of IPRs in the development process.”1285 See KUMAR (2002), at 17.

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II. Empirical studies on the impact of plant variety protection

As for the issue of economic effects of patents, the fundamental difficulty of using the evidence on post-PVP trends in the breeding sector for the PVP impact discussion “lies in disentangling the impact of PVP from the impact of other […] government policy and industry-structure variables.”1286 Mostly it is only possible to examine the association of PVP with certain economic parameters and draw cautious conclusions on causality based on informed qualitative judgements, e.g. statements by the surveyed firms.1287

1. Impact on R&D

The chief economic argument advanced for PVP is the encouragement of private investment in breeding R&D. Most of the available empirical impact studies originate from the US where plant variety protection was introduced in 1970. The evidence has to be seen against the background of a quite weak protection regime in the period between 1970 and 1994, prior to the amendment of the Plant Variety Protection Act (PVPA) restricting the farmers’ privilege and including a provision on essential derivation.1288

a) US studies carried out in the early 1980s

Concerning research input, two early empirical studies in the US found a substantially increased level of private investment in breeding and an increased number of active research programmes around the period of the introduction of PVP, i.e. in the period between 1960 and 1979.1289 The data presented by PERRIN et al. show a dramatic increase in research expenditures for the whole period, with a particularly marked upwards trend after 1970 for hybrid corn, soybeans and cereals.1290

BUTLER/MARION report that of the 60 sample firms, 20 had breeding programmes prior to 1960, 13 companies initiated breeding programmes between 1960-69, and 27 companies started breeding programmes after the 1970 Act.1291 They found that “[w]hile total R&D expenditures (deflated) increased over the period 1960 to 1980, the period of most rapid increase occurred in 1967-70 and was due mainly to those firms with older plant breeding programs, possibly in anticipation of the PVPA. After 1970, the growth in R&D expenditures was due mainly to the larger number of firms that

1286 See SRINIVASAN (2001), at 68. See also BUTLER/MARION (1985), at 1. 1287 See SRINIVASAN (2001), at 69.1288 On the impact on appropriability, see above A.I.1.e). 1289 See PERRIN et al. (1983), at 25 et seq., and BUTLER/MARION (1985), at 25 et seq. Both studies provide survey data on the breeding activity of roughly 60 private companies between 1960 and 1979/1980. BULTER/MARION (1985), at 1, point to the limitations of findings based on this period. In an industry in which new varieties often require 10 years or more to develop, the effects of the PVPA are not fully apparent after only 12 years.1290 See PERRIN et al. (1983), at 25, table 3, and 26, figure 1. The total expenditures on crop breeding of the 59 surveyed firms which were able to provide data for the entire 1960-1979 period increased from US$ 3,572,000 to US$ 42,630,000.1291 See BUTLER/MARION (1985), at 25.

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initiated plant breeding programs after 1960.”1292 The sum of all R&D expenditures by the surveyed firms increased faster over the period 1960-1980 than the quantity of seed sold.1293

Both studies also presented data on the effects of the PVPA on breeding in terms of research outputs. According to PERRIN et al., the examination of university-sponsored soybean variety trials in three states demonstrated that the number of varieties being tested grew from about 30 during the early 1960s to 140 during the late 1970s.1294 Based on data from test plots in these states, they further observed positive trends in the yield of soybean varieties released after 1970, whereas prior to this there was essentially no trend of improvement.1295 BUTLER/MARION found that the number of new soybean varieties released increased sharply, particularly during the late 1970s. Wheat varietal releases also increased but less dramatically, whereas alfalfa and cotton releases showed no detectable trend and the number of corn varieties released declined from an average of 48 per year from 1970-76, to an average of 30 per year from 1977-80.1296

The authors of both studies inferred from this evidence causalities between the introduction of PVP legislation and the positive trend in R&D efforts in specific crops. PERRIN et al. concluded that there is little doubt that private research on soybeans,cereals and vegetables was affected positively by the PVPA, while the steady upward trend in forage breeding research appeared to have been unaffected by the Act.1297

They base their conclusion on the fact that the number of breeding programs in soybeans and cereals grew from only half a dozen in the early 1960s to about 30 in the late 1970s and that research expenditure for breeding these crops grew from essentially none in 1960 to about $8.5 million by 1979, as well as on the comments offered by responding firms.1298 BUTLER/MARION, though emphasising the difficulty of establishing causality between the enactment of PVPA and the economic consequences of interest, found “considerable evidence that PVPA has stimulated the development of new varieties of soybeans and wheat.”1299 Yet, they found little evidence that the PVP Act had affected the R&D input or output for other non-hybrid crops.1300

Their conclusions on causality are called into question by other authors, who invoke discrepancies between the effect expected from PVP protection and the areas of investment and point to other factors which would explain the observed

1292 See BUTLER/MARION (1985), at 29.1293 See BUTLER/MARION (1985), at 1.1294 See PERRIN et al. (1983), at 32 and 38.1295 See PERRIN et al. (1983), at 34 et seq.1296 See BUTLER/MARION (1985), at 31/32.1297 See PERRIN et al. (1983), at 27, 31 et seq., and 38.1298 See PERRIN et al. (1983), at 27 and 38.1299 See BUTLER/MARION (1985), at 1, executive summary.1300 See id.

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developments.1301 According to the above findings on different degrees of appropriability of returns from R&D investment in hybrids and self- and open-pollinated crops, one would expect PVP to lead to increases in R&D levels mainly for non-hybrids.1302 Yet, the survey of PERRIN et al. demonstrated that the most dramatic trend was the increase in research expenditures on hybrid corn. The research effort on corn was approximately equal to that of all the other crops combined.1303 KNUDSON explains the wheat research increase in the 1960s by the fact that at this time companies were still expecting hybrid wheat to be successful.1304

The first alternative explanation for the increase in R&D expenditures in soybeans loses its strength when the trend is expressed as research expenditures per million dollar of annual crop value. In order to confirm the hypothesis that private research in self- and open-pollinated crops was positively affected by the PVPA, PERRIN et al.had examined the possibility that some of the increase in private research expenditures might be attributable to the increased commercial importance of crops.1305 When presented in terms of research expenditures per crop value, the increase in hybrid corn research expenditures was less dramatic since 1970, whereas the upward trend for soybean since 1970 was still very evident.1306 For cereals, however, the crop breeding research expenditures per million dollar of annual crop value had stagnated since 1970.1307 Wheat was not singled out in this analysis. The fact that the breeding industry has focused on specific crops among self-pollinated crops is not inconsistent with a positive incentive-impact of PBR, but has to be kept in mind when predicting potential effects of PVP protection in India. BUTLER/MARION identify “potential profitability” as an important factor for the concentration on specific crops.1308 It is also not surprising against the background of the above observations on appropriability

1301 See, e.g. RANGNEKAR (2000a), at 34; KLOPPENBURG, Jack R. jr., First the Seed: The Political Economy of Plant Biotechnology, 1492-2000, Cambridge University Press, Cambridge 1988, as cited in RANGNEKAR (2000a), at 34.1302 The practice of US breeders of protecting parental lines as trade secrets changed only in the 1990, when a leading company discovered that competitor firms had used their parental lines without authorisation. The protection of the hybrids themselves became possible only in 1994, when the PVPA was amended. See JAFFÉ/VAN WIJK (1995), point 3.3.1.1303 See PERRIN et al. (1983), at 27. BUTLER/MARION (1985), at 30, even report of a share of R&D expenditures for hybrid corn of 70% during 1977-80.1304 KNUDSON, M.K. (1990), “The Role of the Public Sector in Applied Breeding R&D: The Case of Wheat in the USA”, 15(3) Food Policy 1990, pp. 209-217, as cited in PRAY/KNUDSON (1994), at 104.1305 See PERRIN et al. (1983), at 27/28.1306 See PERRIN et al. (1983), at 28 and 30, figure 2.1307 See id., figure 2.1308 See BUTLER/MARION (1985), at 38. This “potential profitability” is broken down into four major factors: “(a) Total quantity of seed sold by the seed industry which is determined by: [(i)] the acres planted to a crop, and the expected future growth or decline in acreage; [(ii)] the seeding rate, and [(iii)] the proportion of seed that is purchased from the industry. (b) Potential for genetic improvement, including hybrid potential. (c) The pricing discretion of companies developing new varieties – likely to be influenced by the level of competition, the importance and availability of public varieties and the ability of farmers to use bin-run seeds.(d) Difficulty and expense of developing new varieties.”

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that the level of research in non-hybrid crops had not approached that in hybrid crops.1309 In contrast, the argument of KNUDSON is an interpretation that certainly cannot be ignored.

b) Later US studies

According to later evidence, the positive trend in private breeding investments in the US continued in the 1980s. A survey by KALTON et al. found that the total projected private plant breeding expenditures for 160 companies rose from $115 million in 1982 to $272 million in 1989.1310 Yet, the attention was still devoted to specific crops including corn, soybean, turf grasses, sugar beets and canola, whereas investment in vegetables, grain sorghum, wheat, sunflower and other small grains declined.1311

Evidence for a limitation of the positive effect of PVP on breeding R&D to a few specific crops is also offered by BUTLER.1312 He found that PVP is used extensively only in some crops. The top six crops protected by PVP accounted for 37% of all PVP certificates issued until the end of 1994, and the top 24 crops for 65%.1313 An econometric study by FOSTER/PERRIN on incentives for breeding R&D likewise confirmed the findings of the early PVP impact studies. The authors came to the conclusion that private incentives for R&D on crops increase with the value of the crop and the appropriability of returns and that the number of PVP certificates increases (i) with the value of the crop; (ii) as the cost of enforcement decreases; (iii) for crops with greater concentration of producers.1314

The continuing importance of hybrid cultivars in private sector commercial production was demonstrated in a survey by FREY of human and financial resources allocated to plant breeding in the US in 1994.1315 Of the 16 crops to which the private sector devoted 20 or more plant breeding Scientist Years (SY), the six entirely hybrid crops (field corn, sorghum, sunflower, sweet corn, sugar beet, and muskmelon) accounted for 43% of the total SYs. Another 8% were devoted to crops with both hybrid and pure-line cultivars. Still, when compared with public sector investment, private industry played an important role in specific pure-line cultivars. The private sector had

1309 See also PERRIN et al. (1983), at 28.1310 See KALTON, R.R., RICHARDSON, R.A., FREY, N.M., “Inputs in Private Sector Plant Breeding and Biotechnology Research Programs in the United States”, 5 (4) Diversity 1989, 22-25, as cited by SRINIVASAN (2001), at 74/75.1311 See id.1312 See BUTLER (1996), at 26 et seq.1313 See id. The earlier study had found that in 1984, 21 crop species accounted for 89% of the total certificates of protection issued; Five species (soybeans, 23%; wheat, 11%; garden peas, 10%; cotton, 9%; and garden beans, 10%) accounted for 63% of all PVP certificates issued. See BUTLER/MARION (1985), at 33.1314 See FOSTER, W.E., PERRIN, R.K., “Economic Incentives and Plant Breeding Research”, Faculty Discussion Paper 91-05, Department of Agriculture and Resource Economics, North Carolina State University, Raleigh 1991, as cited in SRINIVASAN (2001), at 73/74. 1315 See FREY, K.J., “National Plant Breeding Study-I: Human and Financial Resources Devoted to Plant Breeding Research and Development in the United States in 1994”, Special Report 98, Iowa Agriculture and Home Economics Experiment Station, Iowa State University, Iowa 1996, as cited in SRINIVASAN (2001), at 76.

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65% of the SYs in soybean and 77% in cotton, and still 41% in wheat.1316 In others the role of the public sector remained very important.1317

Later developments in the US are difficult to correlate with the strengthening of the PVPA in 1994, as the patentability of plants which was recognized in 1985 by the Patent and Trademark Office’s Board of Appeals is likely to have impacted the behaviour of the private industry.1318 Nevertheless, it is interesting to note that the seed market share of private companies in soybean was estimated at 90% in 1997.1319 This seems to confirm the overall picture that that stronger IP protection, at least in this profitable self-pollinated crop, may contribute to establishing the private industry as the principal developer and producer of varieties in this area.

c) Evidence from other industrialized countries

There is surprisingly little research on the impact of PVP on private R&D expenditure in plant breeding in European countries.1320 One of the few studies uses time-series data for the development of new varieties and applications/grants of PVP certificates for selected horticultural crops in the UK in order to examine causality between PVP and innovation.1321 The results of PENNA DA ROCHA again support the conclusion that the effectiveness of PVP is crop specific. He finds that factors such as the ease of propagation, cost and time involved in breeding, and the prospects of turnover affect the relevance of PVP in varying degrees according to the structure of the market and the link between innovators and consumers.1322 PBRs had some positive impact on the rate of releases of new varieties of French bean for instance.1323

d) Evidence from developing countries

Few systematic studies have been carried out so far on the impact of PVP in developing countries. A case study by JAFFÉ/VAN WIJK presents evidence from Argentina, Uruguay and Chile, where PVP protection was introduced in the 1970s and

1316 See id. 1317 JAFFEE/SRIVASTAVA report in 1994 that more than 50% of the wheat and soybean seed, 90% of the barley and dry bean seed, and 95% of the rice seed planted consisted of publicly bred varieties. JAFFEE/SRIVASTAVA (1994), at 105.1318 The extension of utility patents to plants, seeds, plant parts, plant genes, and tissue cultures was stated in the case “Ex parte Hibberd”, (1985) 227 USPQ 443.1319 See HAYENGA (1998), at 45. This figure includes genetically modified varieties which are mostly protected by patents.1320 SRINIVASAN (2001), at 68 et seq. and RANGNEKAR (2000a), at 32 et seq. have found only PENNA DA ROCHA, A.L., “An Analysis of the Impact of Plant Breeders’ Rights Legislation on the Introduction of New Varieties in UK Horticulture”, Ph.D. Dissertation, Wye College, University of London 1994. NEUMEIER (1990), at 225 et seq., refers to data on the number of certificates issued in UK and Germany. However, this does not allow for a comparison with the developments prior to the introduction of PVP. He stresses himself the limitations of the existing evidence. 1321 See PENNA DA ROCHA (1994), as above note 1320, as cited in SRINIVASAN (2001), at 79.1322 See id.1323 See id., as cited in RANGNEKAR (2000a), at 39.

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1980s and steps were taken to enforce these laws in the 1990s.1324 Evidence on private sector R&D expenditure is only reported from Argentina.1325 The authors themselves point out that the relatively small number of companies involved and the fact that figures are estimates and that companies were surveyed only at two points in time, namely 1986 and 1992, call for care in drawing conclusions.1326 The study found that research expenditures increased for all types of seed firms during this period. The increase was largest for companies having hybrids and self-pollinated varieties in their port-folio (130%), second largest for companies dealing exclusively with hybrids (47.7%) and smallest for companies focusing on self-pollinated crops (3.3%).1327

JAFFÉ/VAN WIJK further found that the R&D/sales ratio increased for companies working in hybrids and self-pollinated varieties (6.4%) as well as for companies dealing solely with hybrids (2.7%), but decreased for those dealing exclusively in self-pollinated crops (-25.0%).1328 Nevertheless, the ratio was still highest for this latter category of companies.1329 The authors explain this high R&D/sales ratio by the need of a minimum level of R&D even when sales are low and suggest that the decrease of this ratio may have been caused by the increase in sales and royalty income. The views expressed by seed industry representatives suggested that PVP might have prevented the domestic companies dealing in wheat from reducing or even terminating their breeding programmes and facilitated the reactivation of soybean research rather than encouraged additional R&D investment.1330

The evidence on the impact of PBRs in Kenya collected for a study launched by UPOV is very limited.1331 Among the institutions covered by a survey only, four private breeding firms were included and little information is given on their profile, especially their research and production portfolios. The number of new varieties released since the introduction of PVP is indicated for all institutions – public and private – covered by the survey, which makes it impossible to establish the impact of PVP on private sector breeding. The statement that “financial investment had increased in all private institutions” is not further substantiated.1332

1324 JAFFÉ/VAN WIJK (1995). The two other Latin American countries studied by JAFFÉ/VAN WIJK, Columbia and Mexico, were only about to introduce PBRs legislation.1325 Id. at point 3.2.1326 JAFFÉ/VAN WIJK collected data from 5 companies that focus almost exclusively on hybrids, from 2 companies that focus on hybrids and self-pollinated varieties and from 4 companies that focus almost exclusively on self-pollinated varieties. See id., at 31. 1327 See id., table 3.3.1328 See id., table 3.4.1329 18.6% as compared to 8.3% for companies that focus on hybrids and 7.6% for companies that focus on both hybrids and self-pollinated crops. See id.1330 See JAFFÉ/VAN WIJK (1995), at 33.1331 See UPOV (2003). The Consultative Committee of UPOV decided to establish an Ad hoc Working Group with the participation of selected new members from developing countries and countries in transition to a market economy to conduct a study on the impact of PBRs on the basis of empirical data collected in selected member States: Argentina, China, Kenya, Poland and the Republic of Korea. A preliminary report is only available on Kenya.1332 Id. at 3.

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Five recent case studies by LOUWAARS et al. dealing with the impacts of strengthened IP regimes on the plant breeding industry in China, Columbia, India, Kenya and Uganda yield little evidence that the introduction of PVP in these countries has to date provided an incentive for investment in a wider range of non-hybrid varieties.1333 In the interviews conducted by LOUWAARS et al., stakeholders of the private sector showed little interest in including more open-pollinated varieties in their breeding port-folios. However, as the authors rightly observe the length of time that companies in these countries have had to gain experience with PVP legislation is limited and the evidence must be interpreted with caution. Widespread sale of farm-saved seed among farmers and lack of trust in enforcement possibilities seemed to play a role in this strategic choice of private seed firms.

2. Impact on public sector R&D

Opponents to PVP have further argued that PVP may crowd out public sector breeding. This argument refers to developments which have indeed been observed in many countries parallely to the introduction of PVP and the increasing engagement of the private sector in plant breeding: Having already slowed down in the 1970s, public funding for public agricultural R&D appears to have suffered a significant further setback in the 1980s.1334

Moreover, evidence from the US suggests that there has been a shift in public research priorities.1335 BUTLER and FREY both report that many public breeding institutions have focused their efforts on basic research at the expense of applied breeding programmes.1336 Nevertheless, according to FREY, the State Agricultural Experiment Stations still remain very active in cultivar development.1337 SRINIVASAN points out that a division of labour is emerging in which the public sector concentrates on basic research and pure line cultivars, while the private sector focuses on cultivar development, especially in hybrid crops.1338

This association in time should not be equated with a causal link between PVP and reduction of public support for agricultural R&D. What does appear to be a consequence of PVP protection is the increased competition from the private sector in

1333 See LOUWAARS et al. (2005), at 91/92. The statements of stakeholders of the Indian private seed sector which confirm this trend will be mentioned below, note 1775.1334 See SRINIVASAN (2001), at 90 et seq. with references. See also KNUDSON/PRAY (1991), at 882.1335 Id., at 93 et seq.1336 See BUTLER (1996), at 29; FREY (1996), as above note 1315, as cited in SRINIVASAN (2001), at 96. FREY studies the proportion of Scientist Years (SY) devoted in the public and the private sector to basic plant breeding research (BR), germplasm enhancement (GE) and cultivar development (CD) respectively. In State Agriculture Experiment Stations the SYs allocated to BR, GE and CD were 30, 29 and 41 respectively. In the Agricultural Research Service of the US Department of Agriculture they were 40, 48 and 12. In the private industry they were 9, 11 and 80.1337 See SRINIVASAN (2001), at 96.1338 See id. See also KNUDSON/PRAY (1991), at 882, who mention that corn and sorghum have experienced a decline in public sector scientists years (SYs), whereas public SYs have increased in soybeans and wheats.

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economically attractive markets, which may have indeed impacted the direction of public research. But one should be careful about assuming an automatism for such a development. The research focus of the public sector in the post-PVP period is the result of public policy decisions not of legal barriers to R&D opportunities. SRINIVASAN rightly points out that the public sector can respond to PVP in a different ways. Alternatively to a “retreat” to basic research,

“PVP could be used by the public sector as an avenue for resource generation i.e. as budgetary support for public research declines, the public sector may attempt to generate additional resources by protecting its varieties. This could imply a change in the response of the public sector to commercial incentives and a consequent shift in research priorities.”1339

This has partly happened in industrialized countries. BUTLER reports that many State Agriculture Experiment Stations facing tighter budgets rely on grants and contracts from private sources and that many universities rely on royalties from PVP as a source of revenue.1340 Interestingly, KNUDSON/PRAY, in a model examining the impact of PVP on public sector breeding priorities, find that expected social benefits still guide public sector research directors in their resource allocation.1341 They show that two decades after the enactment of the U.S. PVPA the allocation of public resources remains substantially different from an allocation based on the value of the seed market.

The preliminary evidence on the response of public sector research institutions to the introduction of PVP in Argentina, Uruguay and Chile suggests that PBR protection may support the public breeding sector.1342 Budgetary pressures are forcing the institutes to take advantage of PVP as a means of developing new sources of revenue.1343 In Argentina and Chile, PBRs have permitted the institutes to establish more formal and commercial relationships with the private sector and to increase their income. In Argentina, up to 1994 the national public breeding agency held an average of 28 % of all PBRs titles granted. The number of PBR titles indicates that the institute focused on wheat (28), tomato (16), soybean (13), linseed (12), sorghum (12), potato (11), alfalfa (9), sunflower (8), maize (7), bean (5), in self- and open-pollinated crops, and on maize (11) and sunflower (5) in hybrids. Yet, the new orientation towards fund raising had at the time of the study not yet affected the research agenda.1344

1339 See SRINIVASAN (2001), at 89.1340 SeeBUTLER (1996), at 29/30.1341 See KNUDSON/PRAY (1991), at 885.1342 On the following see JAFFÉ/VAN WIJK (1995), executive summary and point 4.1343 See JAFFÉ/VAN WIJK (1995), executive summary.1344 See JAFFÉ/VAN WIJK (1995), at point 4.1, 4.2 and 4.4. Involvement in hybrid breeding had already been reduced in the 1970s for a number of reasons. The introduction of PVP did not contribute to this development.

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3. Firm and market concentration

The issues of market concentration and structural change in the seed industry have received considerable attention in the literature on the economic impact of PVP. Concerns have been voiced that PVP could lead to a monopolistic market structure, where firms could charge higher seed prices, suppress inventions or produce goods with uneconomically short lives.1345

a) Firm concentration

In the US, a large number of seed firm mergers and acquisitions (M&A) took place during the 1970s and early 1980s.1346 A second wave of M&A occurred in the 1980s and 1990s.1347 But again one has to be cautious about establishing causalities between the introduction of PVP protection and these developments. Concerning the first wave, at an US Congress hearing in 1980, the American Trade Association explained this phenomenon by the financial and tax environments that caused similar takeovers in other industries.1348 It also highlighted that there has been a net increase in the number of private firms engaged in seed R&D despite these mergers. Due to the financial and technical entry barriers to the plant breeding activity a certain firm size is certainly necessary to survive in a competitive seed market. Yet, the European experience suggests that the introduction of PVP rather leads to the emergence of an industry structure marked by small and medium enterprises.1349

Was PVP a factor that impacted the second wave of M&A which led to a dominance of huge life science companies in the seed industry? There are good arguments which suggest that PVP has played only a minor role, if any, in the consolidation of the seed industry in the last 20 years. Because of the breeders’ exemption, PVP a priori does not create an incentive for M&A for the purpose of accessing protected material for further research.1350 Nevertheless, the recent developments in the Indian seed industry may be related to the imminent introduction of PBRs in the sense that these rights may be a factor inducing FDI.

1345 On planned obsolescence, see RANGNEKAR (2000b). 1346 US Congress (1980), Hearings on H.R. 999, Serial No. 96-CCC, US Government Printing Office, Washington D.C., at 20, as cited in PERRIN et al. (1983), at 16.1347 See the references in note 1264.1348 US Congress (1980), id., at 77, as cited in PERRIN et al., at 17.1349 Personal correspondence from Dr. M. Llewelyn, dated 8 Oct. 2002, who reports that one of the major findings of a research project assessing the attitudes and concerns of the European plant breeding community towards IP was that most plant breeders fall into the SME category. The report which was commissioned by the European Union will be published soon: LLEWELYN/ADCOCK, “European Plant Intellectual Property”, Hart Publishing (forthcoming).1350 The introduction of the concept of essential derivation has not fundamentally changed this situation, as it is principally directed against cosmetic breeding. The moment a company engages in full-fledged breeding program comprising several parents, the issue of essential derivation should not arise. SRINIVASAN (2001), at 268 et seq., comes to a contrary conclusion, obviously assuming a very broad interpretation of the concept.

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b) Seed market shares

Analysing data on varietal market shares for wheat in the UK for 1960-95, RANGNEKAR reports that the very high concentration ratios of the 1960s have decreased in the post-PVP period.1351 In the 1960s only two varieties accounted for more than 80% of the total market, while from the mid-1970s on, the market share accounted for by the top two and top five varieties has fluctuated within a range of 30-50% and 70-80% respectively. The total number of marketed varieties almost doubled, reaching 15 varieties. Yet, the analysis of corporate market shares show that the concentration at the corporate level has not diminished, though the market leaders have changed. “The market shares accounted for by the market leader has consistently been above 35-40% throughout the period of study. In addition there have been periods where the market leader has accounted for between 60 and 80% of the market […].”1352

There is little evidence on the development of market shares of varieties or companies after the introduction of the US PVPA. The data of BUTLER/MARION show generally a rather moderate variety concentration for the period 1979-80 for self- and open-pollinated crops.1353 They report that in soybeans, cotton and wheat the top four varieties failed to register a collective market share greater than 34%, whereas the top ten varieties did not exceed the level of 56%. Rice and barley were an exception, but private varieties and protected public varieties accounted only for a small share of acreage planted with these crops. More generally, except in corn and cotton, private varieties and particularly privately protected varieties held a modest market position.1354 Against this background BUTLER/MARION conclude in 1985 that “there is little evidence to suggest that current market shares of privately protected varieties or of leading companies seriously hamper competitive market forces in the open-pollinated seed species.”1355 Some 15 years later market concentration has increased. HAYENGA, who has estimated the US market share of major companies for soybean and cotton in 1997, finds that the top five companies together account for a share of 51% in soybean and that the top company accounted for 84% in cotton.1356 Yet, this evidence does not permit establishing a causal relationship between this trend and the introduction of PVP in the 1970 or its strengthening in 1994.

1351 See RANGNEKAR (2000b), at 9 et seq. The Plant Varieties and Seeds Act entered into force only in 1964. 1352 See RANGNEKAR (2000b), at 11.1353 See BUTLER/MARION (1985), at 47 et seq., esp. table 3.9.1354 See BUTLER/MARION (1985), at 48, esp. table 3.9. In soybeans 6.6% acreage were planted to privately protected varieties, in wheat 7.9%, in rice 0.4%, and in barley 3.0%. In contrast in corn and cotton, 76.7% and 37.0% acreage were planted to private protected varieties respectively.1355 BUTLER/MARION (1985), at 51.1356 See HAYENGA (1998), at 44 et seq.

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4. Implications for farmers

a) Evidence from the US

Against the aforementioned mechanism of increased appropriability, an increase in seed prices would be an expected result of PVP. As BUTLER/MARION rightly observe, the actual issue is whether or not PVP has triggered structural changes which create sustained unjustifiably high prices.1357

From 1970 to 1980 seed prices increased by 176%, a ratio which was neither high nor low compared to those of other inputs.1358 FUGLIE et al. show that during the period 1975-1992, the real price of seed (measured as the ratio of nominal seed price to crop price to account for inflation) grew by 4.75% for corn, 5.08% for sorghum, 1.92% for soybeans and 4.46% for cotton.1359 ALSTON/VENNER note for wheat that the nominal price of seed has remained roughly constant since the mid-1970s.1360 A catching up of non-hybrid seed prices to the level of hybrid seed prices did not occur.1361 Additionally, LESSER notes in a study on pricing of soybean varieties in New York State in 1992 that the prices of protected varieties on average were only 2.3% higher.1362

The justifiability of these price increases, should be seen in the context of the distribution of economic benefits from new varieties among seed firms, farmers and consumers.1363 For hybrid crops in the US, FUGLIE et al. have estimated that seed companies captured only 35-48% of the value of improved seed, with the remainder going to farmers.1364 For non-hybrid crops, where farmers can replant farm-saved seed, companies obtained a share of yield gains of only 12-24%. This confirms the above conclusion that even in the presence of IP protection the share of benefits that can be

1357 See BUTLER/MARION (1985), at 52.1358 See BUTLER/MARION (1985), at 55.1359 See FUGLIE et al. (1996), at 45.1360 See ALSTON/VENNER (2000), at 16.1361 See also PERRIN et al. (1983), at 17.1362 See LESSER, W., “Valuation of Plant Variety Protection Certificates”, 16 Review of Agricultural Economics 1994, pp. 59-68, as cited in SRINIVASAN (2001), at 86.1363 On the following, see also BUTLER/MARION (1985), at 61, confirming the pattern observed by FUGLIE et al. by anecdotal evidence. See also the reference in LOUWAARS et al. (2005), at 40, to three studies on the welfare impact of GM crops in China. Estimating the proportion of benefits accruing to breeding companies, farmers and consumers respectively, they find that the largest share of benefits is typically enjoyed by the adopting farmers. 1364 See FUGLIE et al. (1996), at 43 and 45. The authors made the assumption based on available estimates (references id., at 44) that half of the growth in farmer yields can be attributed to genetic improvements. They adjusted the change in yields for changes in seeding rates to get the increase in bushels of crop yield required to purchase one bushel of seed. The ratio of yield growth to seed price growth gives the share of genetic improvement going to seed companies. See also PRAY, C.E., RIBEIRO, S., MUELLER, Rolf A.E. et al. (1991) “Private Research and Public Benefit – The Private Seed Industry for Sorghum and Pearl Millet in India”, 20(4) Research Policy, pp. 315-324, on distribution of benefits from private sorghum and pearl millet hybrid breeding in India, as cited in SRINIVASAN (2001), at 84. They conclude that seed companies capture little more than one-sixth of the total economic gains obtained by a 10% yield increase, 1-24% were captured by dealers/distributors and farmers between 61-86%.

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appropriated in non-hybrid crops does not reach the level in hybrid crops, which has, of course, repercussions on the incentive effect. FUGLIE et al. conclude that “[s]o far, there is little evidence that the changes in the structure of the seed industry have been detrimental to market efficiency or performance.”1365 FUGLIE et al. as well as BUTLER/MARION emphasize the impact of competition, especially by farmer-saved seed or public varieties on the seed price development.1366

b) Evidence from developing countries

The predominant effect of the Argentinean PBR legislation has been a considerable reduction in the unauthorised marketing of seed of protected wheat and soybean varieties.1367 The traditional practice of seed swap, i.e. the provision of grain for seeding purposes by grain elevators and cooperatives in exchange for a double quantity of grain from the farmer’s harvest which is resold to other farmers, was not considered to fall under the UPOV 1978 type farmers’ privilege. The private association ARPOV1368 which represents public and private sector breeders organised a system to control unauthorised seed production. The strength of this system is based on the mutual cooperation of its members in imposing commercial sanctions in case of unauthorised seed marketing. Since 1993, this system is backed up by a public control system imposing administrative sanctions. Most seed dealers changed over to an official system including the registration of the seed transactions, licensing contracts and royalty payment. The share of seed supply controlled by the breeders thus increased to a total of 55% for wheat and 40% for soybean.1369 Notwithstanding, no direct negative effects of the PBR legislation on seed diffusion were observed. At the time of study, the extra costs had not been passed on to farmers. The credit in kind system of gain/seed swap still exists.

5. Impact on information flows and germplasm exchange

Another issue of concern which has been dealt with in PVP impact studies is the effect of PVP on the free exchange of genetic materials among breeders. PERRIN et al.report that in the 1980 Congressional hearings, public plant breeders were divided as to the legitimacy of the concern that breeders may be more reluctant to share potentially useful germplasm in a competitive environment.1370 BUTLER/MARION underline the difficulty of measuring these effects.1371 According to their survey question asking industry and public plant breeders to evaluate the changes that occurred in the amount of information and plant breeding materials sent to and received from public institutions and private companies since 1970, the PVPA appears to have had a neutral or positive effect.1372 57% of industry breeders felt that the

1365 See FUGLIE et al. (1996), at 43.1366 See FUGLIE et al. (1996), at 43; BUTLER/MARION (1985), at 52 et seq., esp. 60.1367 On the following see JAFFÉ/VAN WIJK (1995), at 2.4.1., 2.4.2, 2.5.2., 6.1, 6.2 and 6.3. 1368 Asociación Argentina de Protección a las Obtenciones Vegetales.1369 See JAFFÉ/VAN WIJK (1995), executive summary. 1370 See PERRIN et al. (1983), at 18.1371 See BUTLER/MARION (1985), at 67.1372 See BUTLER/MARION (1985), at 68/69.

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amount of materials sent to universities had increased, 51% stated that the amount of materials received from universities had increased. The share of those respondents who estimated that plant material or information sent to or received from universities had decreased stayed below the level of 17%. Concerning exchange of material and information between private companies, some 40% detected an increase; roughly a third found the situation unchanged. The view of the public breeders on their relationship with the private sector was slightly different. But still a large majority saw either a positive or a neutral impact. Only about one fourth of the respondents felt that the amount of material or information received from companies had decreased, and only 16% and 10% respectively felt that they sent less material or information to private companies. A large majority of public breeders felt that the situation had remained unchanged for breeding material sent to companies (54%) or received from companies (56%) and for information sent to companies (55%) or received from companies (57%). An even larger majority of public breeders considered that their exchange with other public institutions had remained the same.

Concerning the international transfer of varieties and germplasm, SRINIVASAN notes in his literature survey that there appear to be no empirical studies of how PVP affects this exchange.1373

The evidence from Argentina and Chile suggests that it was the budgetary pressures that changed the terms on which public sector material is made available to the private sector rather than the introduction of PVP.1374 Obliged to market their new plant varieties in a more profitable way, the institutes saw the strategic importance of their germplasm enhanced and have reduced their public availability.1375 On the other hand, several companies favoured formal rules for access because these would replace the often arbitrary decisions concerning availability of germplasm taken by individual employees of the institutes.

6. Impact on genetic diversity

Critics of plant variety protection often express the concern that its introduction reduces crop genetic diversity and increases the vulnerability of crops. Two issues have to be distinguished: First, the introduction of – protected or unprotected – modern cultivars may arguably lead to erosion of genetic diversity.1376 And second, the effects of PVP might accelerate this trend by its requirements for protection.1377 It has been

1373 See SRINIVASAN (2001), at 103.1374 See JAFFÉ/VAN WIJK (1995), executive summary and point 4.3, 4.4.1375 See id.1376 On this issue see, e.g., TRIPP (1996), urging a more reasoned debate on the effects of modern varieties on intra- and intercrop diversity, and SMALE (1997) on the case of wheat. The dilemma of replacing traditional varieties that are genetically diverse, but less adapted to input-intensive agriculture, by modern high yielding varieties will also be addressed in the next chapter.1377 SRINIVASASN (2001), at 99, refers to two further lines of argument predicting that PVP will accelerate genetic erosion: Stronger IPR protection may encourage private sector breeding but crowd out public sector breeding. Private sector breeding tends to rely on a narrow range of elite lines rather than explore the full range of available germplasm (as screening and evaluation costs tend to be high). Again these arguments deduce causality from association. There is no evidence that the reduction of

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argued that the genetic homogeneity required in order to meet the DUS criteria results in less genetic diversity than the breeding of modern varieties would imply. However, according to the literature survey of SRINIVASAN, there is no empirical evidence that shows that PVP leads to reduced genetic diversity in the varieties made available to farmers.1378 It seems reasonable to assume that a more restrictive and formalised system of germplasm exchange might reduce the availability of breeding materials to individual breeders.1379 But as seen above, the example of the US provides no evidence for a reduction of information flows and germplasm exchange. From his time-series analysis of wheat diversity in the UK, SRINIVASAN concludes that “the empirical evidence clearly does not lend any support to the view that PVP has led to a decline in genetic diversity”.1380 On the other hand, he observes that genetic diversity has been maintained mainly through more intensive use of a relatively unchanging germplasm pool.1381 He notes that the evaluation of exotic germplasm is a costly and time-consuming exercise. While he appears to deduce an argument against PVP which, by increasing competitive pressure, may strengthen the tendency to rely on a narrow range of previously evaluated, elite germplasm,1382 this point could also speak in favour of IPR protection for the results of this research effort.

7. Conclusions

There is relatively scant empirical evidence on the effects of PVP. While PVP appears to have some incentive effect in non-hybrid crops, this effect is crop-specific since highly dependent on other economic factors. The relatively small incentive effect which can be attributed to PVP in the US in the 15 years following the introduction of the PVPA has to be seen in the context of the limited appropriability provided by this Act. It is perfectly consistent with the theoretical model of SRINIVASAN on appropriability for plant varieties in the presence of the farmers’ privilege and breeders’ exemption. Still, in profitable self-pollinated crops private participation in R&D may reach a significant level. In the US a division of labour between public sector concentrating on basic research and pure line cultivars and private sector focusing on cultivar development, especially in hybrid crops has emerged. While many public institutes now rely on PVP as a source of revenue, it seems that resource allocation remains still different from an allocation based on the seed market. There is no evidence that PVP has not been a driving force in the massive industry consolidations which have taken place in the seed sector in the last decade. But PVP in India may indirectly contribute to this trend if it encourages further FDI by MNCs. Early evidence from the US suggests that market shares of leading companies did not hamper competitive market forces. More recent trends raise more concerns but cannot be attributed to PVP protection. In the decade after the introduction of the US PVPA

public sector investment or research output is a consequence of PVP. It is, as in India, rather the starting point for reflexions on mechanisms to encourage private investment. 1378 See SRINIVASAN (2001), at 99 et seq. See also PRAY/KNUDSON (1994), for evidence from the US. 1379 See SRINIVASAN (2001), at 101.1380 See SRINIVASAN (2001), at 307.1381 See id., at 308.1382 See id., at 101.

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seed prices have increased for hybrids, as well as the most profitable self-pollinated crops, i.e. soybean and cotton, but apparently breeders did not appropriate the entire increase in genetic crop value. In Argentina seed dealers who had to change over to a legal licence system did not pass on their costs to farmers. Further it is noteworthy that the concerns on reduced germplasm and information flows has not been confirmed by a survey carried out in the US 15 years after the introduction of the PVPA. Evidence from Argentina and Chile suggests that access to public sector germplasm was rather reduced out of budgetary constraints. Finally empirical evidence does not lend any support to the view that PVP has led to a decline in crop genetic diversity.

C. CHAPTER CONCLUSIONS

An overarching theme emerges from the analysis in this chapter: We know little about the theoretical and actual effects of IP protection, especially in developing countries, which is perhaps not surprising as “lines of causation can be notoriously difficult to establish unambiguously in a basically non-experimental field like economics”.1383

Nevertheless, based on a few rather consensual theoretical findings and by weighing the available empirical evidence, a number of cautious conclusions may be drawn:

Economic theory and empirical evidence suggest that IP protection is crucial for the decisions of firms to develop new products in those industries where fixed costs of R&D are high and imitation fairly easy. The incentive is dependent on the degree of appropriability of benefits from innovations which in turn is dependent on the features of seed IP laws. Due to the inevitable tensions between firms and consumers and current innovators and future innovators, any IP regime implies social costs. Notwithstanding it would seem that in industrialized countries, in a dynamic perspective, some positive level of IP protection is welfare maximising.

The situation in developing countries is more complex as these countries are primary users of innovations. When it comes to building up domestic innovative capacity, IP protection has contradictory effects. On the one hand, it provides incentives to firms that have already innovative technological capacity. It also fosters FDI in R&D facilities and voluntary technology transfer of technologies which are costly to develop and easy to imitate. On the other hand, it cuts down technology spillovers via imitation which may be crucial for upgrading domestic technological capacity. Ultimately there is no clear evidence on the question how the development of innovative capacity occurs. Some scholars suggest a differentiation between developing countries that do have a domestic capacity for technological innovation and those that are mere technology users. Others stress the need for further research on the relationship between imitation, the imitation the enhancement of a country’s absorptive capacity by operation of MNCs and the incentive for MNCs to transfer knowledge. If lessons may be drawn from the experience in Taiwan and South Korea, it suggests that, in an intermediary phase, IPR protection encouraging small technological improvements and a weak patent system facilitating the imitation of more important technological advances is one possible way of achieving technological capacity.

1383 LEE/MANSFIELD (1996), at 186.

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First evidence on the impact of biotechnology patents on the dissemination of technology and follow-on R&D suggests that the industry has found working solutions which permit technological progress to continue. But increased costs and restricted access to break-through or up-stream inventions might pose a problem to public research.

Concerning the effects of PVP, it may be highlighted again that even with a weak system, private participation in R&D may reach a significant level in profitable self-pollinated crops.

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CHAPTER 5: PRESENT STATUS OF THE INDIAN SEED SECTOR AND FUTURE CHALLENGES

IP policies that have been successful in building up private seed sector industry in industrialized countries may not necessarily be successful when applied to India. The special situation of the Indian seed sector has to be taken into account when framing seed-related IP legislation capable of contributing to sustained agricultural growth. Particular attention will have to be paid to the following questions: What are the needs of and constraints for small and marginal farmers who will be particularly vulnerable to changes in the seed sector environment? To what extent is there a need for modern agricultural technology, especially biotechnology, in order to secure food security? What is the significance of traditional agriculture and conservation of agricultural biodiversity in the solution of the problems the Indian agricultural sector faces? And finally, what is the current role of the private seed sector and what should this role be?

In order to provide the necessary background knowledge about the Indian seed sector, part A contains an overview of important developments in the Indian agricultural sector in the last decades. This will provide the context for a study of the current structure of the Indian seed market in part B. Part C addresses future challenges faced by Indian agricultural policy and outlines the strategies envisaged by the Indian Government and scholars. Identifying these strategies is crucial as they have a bearing on the role that public seed sector, private seed industry and farmers who enhance and conserve traditional germplasm should play in the future. This analysis in turn provides a basis for the assessment of the impact that the implementation of different types of IPR could have.

A. AGRICULTURAL POLICY IN THE LAST DECADES

I. Introduction of yield-raising new seed and fertiliser technology

Since the late 1950s Indian agricultural policy has aimed at increasing production through the introduction of modern agricultural technology.1384 In 1957, the Indian Council of Agricultural Research (ICAR) started the All India Coordinated Maize Improvement Project in close collaboration with the Rockefeller Foundation. This marked the beginning of an intensive, integrated and multidisciplinary public sector R&D activity in food crops. The first four maize hybrids were released in 1961, the first sorghum and pearl millet hybrids in 1964 and 1965 respectively. Encouraged by this success, the ICAR organized further research projects on other crops.

A major breakthrough in agricultural productivity was achieved in the late 1960s to the early 1970s, when high-yielding varieties (HYV) of wheat and rice combined with fertiliser technology were introduced on a large scale and infrastructure for irrigation was improved significantly.1385 The diffusion of this new technology and the subsequent transformation of agricultural production are known as “Green Revolution”. The key to the Green Revolution were semi-dwarf varieties which had

1384 On the following, see SINGH et al. (1990), at 7; GROSSMAN et al. (1991), at 68.1385 See BHALLA (2001), at 209.

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several agronomic advantages: a higher index of grain relative to the plant, shorter and stiffer stalks adapted to the weight of the increased grain head, and most importantly the ability to better utilize high amounts of inputs such as fertilisers, agrochemicals and irrigation water.1386 This gave these dwarf cultivars superiority in grain yield over indigenous tall cultivars, at least under increased application of irrigation and fertilisers.1387 International research institutions of the CGIAR network played a major role in achieving this revolution, the new varieties of wheat being derived from CIMMYT breeding programmes and the new rice varieties developed by the IRRI.1388

The rapid growth of irrigated area under wheat and the rapid spread of HYV resulted in an extraordinarily high output growth in wheat production, mainly in the favourable agro-climatic regions, namely the Punjab, Haryana and the western parts of Uttar Pradesh.1389 The technology of high yielding fertiliser responsive varieties has been subsequently extended to other major crops, such as oilseeds.1390

Until the early 1980s, the spread of the Green Revolution technology was rather slow and the increase in levels of output was largely confined to districts in the irrigated northwestern states and the coastal parts of southern and western states, as well as to Gujarat and a few irrigated parts of central and eastern India.1391 In contrast, the rainfed districts in the central and eastern regions, i.e. Rajasthan, Madhya Pradesh, and northern parts of Maharashtra, Karnataka and Tamil Nadu, were, left out of this development.1392 This pattern significantly changed during the studied period from the triennium 1980-83 to the triennium 1992-1995. The seed-fertiliser technology was extended towards the eastern and central regions where many areas recorded a high growth.1393 Moreover there was a revival of growth in the southern region. Another important development during this period was the change in cropping patterns. In the central region, and to a lesser extent in the southern region there was a shift from coarse cereals to oilseeds. In the northwestern and eastern regions the shift took place from coarse cereals to wheat and rice. The acceleration of agricultural output led to a growth rate of 3.47% per annum as compared with only 2.21% during the earlier period 1962-65 to 1980-83. The data on yield levels show that the number of districts with low yield levels (yield below Rs. 5000 per hectare) has significantly decreased during the period 1980-83 to 1990-93 from 82.2% share in total gross cropped area to 36.9%. Most of the remaining low yield districts are concentrated in Madhya Pradesh, Maharashtra, Rajasthan and Gujarat in the central region and in Bihar and Orissa in the eastern region.

1386 See BRUSH (2001), at 146.1387 See GROSSMAN et al. (1991), at 70.1388 See BRUSH (2001), at 143. CIMMYT stands for Centro Internacional de Mejoramiento de Maiz y Triogo, IRRI for International Rice Research Institute. On the CGIAR network, see above note 312.1389 See KUMAR/MATHUR (1996), at A-135; GROSSMAN et al. (1991), at 62.1390 See CHOPRA (2001), at 4; See SINGH/ASOKAN (1997), at 6.1391 See BHALLA/SINGH (2001), at 206. The study analyses the growth performance of Indian agriculture between the trienniums 1962-65, 1970-73, 1980-83 and 1990-93.1392 See id., at 206.1393 See id., at 206. On the following id., at 205 et seq.

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The Green Revolution and its extension to the eastern and southern states, and many areas in the central region, allowed India to become a self-sufficient and even food-exporting country.1394 To achieve this aim successive Five-Year Plans had aimed at improving the irrigation infrastructure, increasing the use of fertilisers, improved varieties of seeds, implements and machinery and the supply of credit.1395 The technological transformation was facilitated by large-scale investment in public research and extension.1396

II. Development of the Indian seed industry

“Use of high quality seeds of improved varieties and hybrids in all major crops of importance have played a key role in steady increase in food grain production.”1397 Not only varietal development but also quality seed production is a sophisticated and time-consuming activity. Especially the complexity of the seed production process needed for the new HYVs and hybrids necessitated the set-up of an effective specialized seed production system. In the following, the post-independence development of the seed industry is broadly grouped into three (overlapping) phases showing the changing attitude of the government towards the participation of private seed companies.

1. Development of the public sector seed industry

In the first phase, the Indian Government stressed public sector seed development and production. During this period between Independence and the late 1960s, a network of public sector research and production organisations was established in order to promote modern agricultural technology.1398 The first major landmark in the development of the Indian seed production industry was achieved with the establishment of the National Seed Corporation (NSC) in 1963.1399 This central government agency was responsible for the production, processing and marketing of high quality seed, and especially hybrids. After the establishment of a system of quality control through a certification procedure, it took responsibility for production and distribution of certified seed of various crops and functioned as a certification agency in different states until the State Certification Agencies were established.1400

2. Decentralization of seed production

During a second phase, the government started paying attention to decentralised seed production and the complementary development of public and private seed industries. The latter had only played a marginal role. In 1975, the National Seed Project was launched with a loan from the World Bank. This programme and its successor, the National Seed Project II, also supported by the World Bank, attempted to decentralize

1394 The fact that the Green Revolution has “warded-off the threat of famines” is also emphasized by CHOPRA (2001), at 4. 1395 See GOVERNMENT OF INDIA (1997-2002), at 434, para. 4.1.2.1396 See BHALLA/SINGH (2001), at 203.1397 See CHOPRA (2001), at 7, para. 25. See also SHARMA (1980), at 754. 1398 The research projects of the ICAR have been mentioned above, at point A.I.1399 See SRINIVASAN (2001), at 347.1400 See GROSSMAN et al.(1991), at 71; SINGH et al. (1990), at 7 et seq.

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seed production and aimed at creating a network of State Seed Corporations with an interrelated network of cooperative and private seed producing agencies.1401

SRINIVASAN describes the shortcomings that led to a restructuration:

“Being owned and controlled by the state governments, [the State Seed Corporations] become closely involved in executing their policies. This in turn left little scope for flexibility in the marketplace. They inevitably became suppliers of seeds of less-profitable self-pollinating cereal crops. Further, these corporations could multiply and market only varieties bred by public sector institutions and, consequently, had no control over products they were given to market.”1402

According to CHOPRA, this failure of the SSCs to meet the expectations of the Indian Government prompted it to encourage the private sector.1403 The 1980s marked a significant increase in the contribution to production of cereal and hybrid vegetable crop seeds by private sector firms, which initially had only been involved in the production of vegetable and flower seed.1404 An important step initiated by the government to promote private sector seed production was the 1983 decision to supply breeder seed of public bred varieties to private seed agencies to ensure timely availability of quality foundation seed.1405 Towards the end of the 1980s, private sector seed production accounted for an important share of commercial seed supply in hybrid crops. However, only a few seed companies had their own research programmes. Most of the companies concentrated on production and marketing of HYV, and hybrids developed by the public sector.1406

3. Liberalisation policy

In the third phase, the government took further steps to supplement public sector efforts by encouraging private sector participation in seed R&D and production. Since the previous protectionist policy had not resulted in any significant private sector interest in seed research, the government changed its attitude towards foreign involvement in the domestic seed industry, and paved the way for foreign investment in the seed sector and liberalized imports of high quality seeds.1407 The New Seed Policy introduced in the late 1980s as well as later reforms brought the following significant changes: The government included the production of seeds of HYVs and hybrids among those activities that are open to investment by foreign companies.1408

1401 See SINGH et al. (1990), at 10 et seq.; GROSSMAN et al. (1991), at 72. 1402 See SRINIVASAN (2001), at 348/349. See also CHOPRA (2001), at 8, para. 28 et seq.1403 See CHOPRA (2001), at 8, para. 30.1404 See GROSSMAN et al. (1991), at 77.1405 See SINGH/ASOKAN (1994), at 5 et seq.; CHOPRA (2001), at 8, para. 30. In the formal seed sector, the transfer of seed from the breeder to the farmers involves the production of at least three seed generations. These consecutive generations are called breeder, foundation and certified or labelled seed.1406 See SRINIVASAN (2001), at 369 et seq.; GROSSMAN et al. (1991), at 78.1407 See SINGH et al. (1990), at 42.1408 See BASANT (1995), at 25; SINGH et al. (1990), at 12; for details, see SRINIVASAN (2001), at 351.

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Since the mid-1990s, even acquisition of 100% equity in seed companies has been allowed.1409 In order to secure for Indian farmers the availability of the best quality seeds and planting material from anywhere in the world, the import of seeds of coarse cereals, oilseeds, pulses and fodder by Indian companies having technical/financial collaboration agreements for production of seed with foreign companies was facilitated.1410 Finally, various other incentives have been given to the private seed industry for its growth, such as reducing import duties on seeds, on certain equipment needed for seed production and processing,1411 eliminating domestic agricultural controls which restrict the movement of produce within the country and of export controls on rice and wheat,1412 allowing seed prices to rise, and reducing seed subsidies in order to provide for free competition between public and private sector companies.1413

Both private and public sector seed agencies have expanded considerably since the initial steps towards liberalisation. The turnover of the seed industry for the year 1991-92 was estimated at over Rs.6.500-7.000 million,1414 which meant a growth of 100% in just two years.1415 This growth continued, yet at a slower pace. Around 1999 the estimated value of the seed traded in the Indian seed industry amounted to Rs. 15.000 million, with a private sector contribution of around 60%.1416 According to estimations of the Seed Association of India, private companies have increased their share in the organised industry to 67% in 2003.1417 India has about 10 large seed companies, about 25 medium-size companies and over 200 small seed enterprises.1418 Many national and foreign private seed companies have entered the Indian seed market and are now conducting research on various crops, mainly on hybrids. In 1999, of the approximately 150 private seed companies, more than a third had collaborative links with international partners.1419 Nine of the top ten seed firms in India even offered a majority or minority equity stake to foreign companies accompanied by a change in management control.1420

1409 See SRINIVASAN (2001), at 351.1410 See SINGH et al. (1990), at 42 et seq.; BASANT (1995), at 25 et seq; for details see SRINIVASAN (2001), at 351/352; THE ECONOMIC TIMES (1989); PRAY (1990), at 193 et seq.1411 See GOVERNMENT OF INDIA (1993), “National Conference on Seeds”, at 5.1412 See PRAKASH (1998). 1413 See CHOPRA (2001), at 8, para. 30.1414 See GOVERNMENT OF INDIA (1993), at 5.1415 See SINGH/ASOKAN (1994), at 6.1416 See SELVARAJAN et al. (1999), at vii and 13.1417 See CHATURVEDI (2005), at 17.1418 See CHOPRA (2001), at 17, para. 50.1419 See SELVARAJAN et al. (1999), at 13.1420 See SRINIVASAN (2001), at 380.

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Table 5.1: Acquisition of major Indian seed companies by foreign companies1421

Company Sales turnover (Rs. in million)

Equity holding after acquisition

Maharashtra Hybrid Seed Company Ltd.

2000 Monsanto 26%; original (family) owners 74%

Pro-Agro-PGS India Ltd. 1300 Agro-Evo (Aventis) 100%Advanta India Ltd. 400 Advanta 50%; ITC Agrotech 50%Indo-American Hybrid Company Ltd. 350 Private limited company, widely reported to

be looking for a buyerNovartis India Ltd. 350 Novartis 100%Nath Seeds Ltd. 300 Seminis 100%Mahendra Hybrid Seeds Pvt. Ltd. 300 Emergent Genetics, U.S.A 74%; original

(family) owner 26%SPIC-Pioneer Hybrid International Ltd.

250 Pioneer 100%

Cargill India Ltd. 200 Monsanto 100%Parry Monsanto Ltd. 200 Monsanto 51%; EID Parry 49%

Private seed companies, scientists and NGOs, welcomed the New Seed Policy with mixed reactions.1422 While most private companies approved the new policy, in the NGO sector as well as the scientific community it was feared that the New Seed Policy, contrary to its aims, would lead to a high dependency on foreign technology and imported seeds and would undermine the development of domestic R&D.1423 A concern that has proven valid is the strong position of foreign companies in the Indian seed industry.1424 SRINIVASAN points out that the total turnover of the top ten companies which figure in table 5.1 above amounts to nearly 55% of the total turnover of the organised seed industry.1425

B. CURRENT STRUCTURE OF THE SEED SECTOR

This part identifies the participants involved in development, production and distribution of seeds. In contrast to industrialized countries, in India the formal sector which covers public agencies and private seed companies produces only a small proportion of the seed used by farmers.1426 An overwhelming majority of seed in circulation emanates from informal sources which are characterised by the absence of

1421 The table is derived from table 12.18 in SRINIVASAN (2001), at 380, which is based on his own survey.1422 See SINGH et al. (1990), at 47 et seq., TURTON/BAUMANN (1996), at 13; THE ECONOMIC TIMES (1989); MENON/SADANADA (1989).1423 See MENON/SADANADA (1989), at 29 et seq.1424 By contrast, the liberalisation did not lead to a surge in imports. See SRINIVASAN (2001), at 378.1425 See SRINIVASAN (2001), at 380.1426 The formal seed supply system “is characterized by planned production, some form of mechanized processing, named varieties (registered, released or notified), seed marketed in identified packages, a system of quality assurance to buyers” and also by a clear distinction between seed and grain. CHOPRA (2001), at 9.

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control by official monitoring bodies at different points of the seed production chain.1427 The low seed replacement rate reveals that the farmers themselves are the most important seed producers and distributors, and probably, though arguably, still the most important seed developers. The first section is dedicated to this informal seed production and marketing system, the second section provides an overview of the respective involvement of public and private sector agencies and other operators in different stages of the formal sector seed development, production and distribution process.

I. Informal sector1428

Seed production as an activity of an industry of specialized seed producers only emerged in the early twentieth century when new plant breeding methods allowed the development of improved crop varieties. Traditionally, farmers retained part of their crop for seed purposes or purchased seed from other farmers. By selection of locally adapted materials using visual characteristics such as yield, grain size and colour, farmers genetically improved and still improve their crops and thus evolved the genetic stock modern plant breeding is built on.1429

1. Importance of the informal seed supply system

The significance of this informal sector can be inferred from the low seed replacement rate in non-hybrid crops. According to CHOPRA, just 12% of the total seed requirements of farmers for all crops were derived from formal sources in 1996-1997.1430 This means that 88% of the seed used was produced by the informal sector, i.e. mainly by farmers. This situation has only slightly changed in the last years. According to a statement by the Department of Agriculture and Co-operation in 2005, “despite implementation of the organized seed programme since the mid 1960s, the seed replacement rate has only reached the level of 15%”.1431 Other sources speak of a supply of 20% by the formal sector.1432

Up-to-date crop-wise statistics of seed replacement rates are not available in the annual report of the Department of Agriculture and Co-operation “Agricultural Statistics at a Glance”. Different indicators read together suggest that the situation described by CHOPRA for the year 1996-971433 has not fundamentally changed.1434

1427 See TURTON/BAUMANN (1996), at 16 et seq.1428 On the general traits of this sector, see in particular TURTON/BAUMANN (1996), at 16 et seq.1429 The active role of farmers in the enhancement of landraces is now widely recognized, whereas at the beginning of the last century their role was downplayed saying that the qualities of a particular landrace are the result of unselected adaptation to its growing conditions. See HALEWOOD et al.(DISCUSSION DRAFT).1430 See CHOPRA (2001), at 9, referring to agricultural statistics of 1996-1997.1431 See GOVERNMENT OF INDIA (2005), at 1.1432 See SHARMA (2005), who quotes Krishan Bir Choudhary, executive chairman of the Bharat Krishak Samaj (which is the Congress party’s farmers’ outfit) with the statement that 20% of the seeds for cultivation are supplied by the public and private sector.1433 See table 5.2.

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Table 5.2: Formal sector seed supply for field crops in 1996-971435

Crop Area sown (million ha) Certified/Quality Seed Supply in ‘000 t

Seed supply % of Requirement

Wheat 25.89 232 8.96Rice 43.43 166 12.74Sorghum 11.43 27 19.71Pearl millet 9.98 17 42.50Maize 6.26 19 15.20Chickpea 6.85 14 2.72Pigeonpea 3.51 6 8.57Other pulses 12.09 22 9.09Groundnut 7.60 73 6.40Rape/mustard 6.55 10 30.30Soybean 5.45 31 8.75Sunflower 1.93 6 31.57Cotton 9.12 29 15.93

There has been a slow but steady trend in the last decade towards an increase in the supply of certified/quality seeds for major crops, whereas, with a few exceptions, the respective size of sown area has remained relatively stable.1436

The quantity of formal sector cereal seeds has grown from 0.35 million tons (mt) in 1991-1992 to 0.66 mt in 2001-02.1437 This development has been particularly significant for barley seed distribution, which, while starting from a low base, has increased ten-fold,1438 for wheat seed distribution, which has more than doubled,1439

and for maize and rice seed distribution, which have increased by factor 1.84 and 1.86respectively.1440 In contrast, “[a]lthough pulses constitute an integral part of vegetarian diet of majority of the population still they form a minor part of formal seed supply system. The increase in their supply has been minimal from 0.035 million tons [in

1434 See below, table 5.4.1435 The table draws on CHOPRA (2001), at 10, table 6, referring to GOVERNMENT OF INDIA, Agricultural Statistics at a Glance, 1999. 1436 As table 4.3 of the Agricultural statistics 2004 shows, the average area sown (in million ha) in the periods 1998-99 – 2002-03 was 26.4 for wheat (as compared to 25.89 in table 5.2), 43.9 for rice (43.43), 9.8 for sorghum (11.43), 9.0 for pearl millet (9.98), 6.5 for maize (6.26), 3.4 for tur/pigeonpea (3.51), 6.4 for gram, 21.4 for the total of pulses (22.45), 6.6 for groundnut (7.6), 5.3 for rapeseed & mustard (6.55), 6.3 for soybean (5.45), 1.4 for sunflower (1.93). See GOVERNMENT OF INDIA (2004).1437 Below table 5.3.1438 Certified/quality seed distribution increased from 0.0005 mt in 1990-1991 to 0.005 mt in 2001-2002. See below table 5.3.1439 Certified/quality seed distribution increased from 0.14 mt in 1990-1991 to 0.33 mt in 2001-2002. See below table 5.3.1440 Certified/quality seed distribution for maize increased from 0.0149 mt in 1990-1991 to 0.0275 mt in 2001-2002, for rice from 0.137 mt to 0.256 mt. See below table 5.3.

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1990-1991] to 0.049 million tons [in 1999-2000][…].”1441 Stagnation can be observed with respect to certain oilseed crops.

Table 5.3: Crop-wise supply of certified/quality seeds of major crops from 1990-1991 to 2002-2003 in thousand tons1442

Crops 1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03 (Antici-

pated)

Grand Total 571.0 575.0 603.3 622.0 658.6 699.2 732.7 787.9 849.7 879.8 862.7 918.0 930.0CerealsSub-Total 347.0 353.5 367.2 387.4 413.5 440.3 464.3 517.8 572.7 611.4 594.7 655.6 660.0Rice 136.6 144.7 142.8 135.8 146.3 153.7 165.7 202.2 240.5 237.1 244.1 255.8 257.0Wheat 142.0 140.4 151.5 182.3 202.1 224.1 232.2 244.2 261.4 295.2 270.4 325.9 327.0Sorghum 34.6 34.6 39.1 36.9 32.5 27.3 27.3 28.3 25.7 26.7 23.9 22.0 22.5Pearl Millet

16.8 16.8 16.9 16.8 16.1 16.6 17.1 16.3 18.7 20.0 19.4 18.0 19.0

Maize 14.9 15.0 15.0 13.5 13.5 15.5 18.8 23.6 22.6 27.2 31.1 27.5 28.0Ragi 1.6 1.5 1.4 1.5 2.4 2.3 1.9 1.9 1.9 2.0 1.9 1.4 1.5Barley 0.5 0.5 0.5 0.6 0.6 0.8 1.3 1.3 1.9 3.2 3.9 5.0 5.0PulsesSub-Total 34.1 32.9 34.0 36.2 36.0 35.8 41.9 38.9 40.6 38.7 38.5 46.9 48.0Gram 11.4 10.3 10.2 11.1 11.4 12.2 14.4 10.6 11.0 11.9 10.9 15.3 15.5Peas 3.2 3.1 2.7 2.3 2.7 2.7 2.5 3.0 2.5 2.9 2.6 3.1 3.2Urad 6.5 6.5 7.9 7.9 7.5 6.9 10.7 9.6 10.2 8.6 8.8 9.7 10.0Moong 6.0 6.2 6.3 7.7 6.8 6.3 6.5 6.9 8.6 8.0 7.8 8.3 8.5Arhar 4.9 4.9 4.8 4.9 5.6 5.7 5.8 5.9 6.4 5.6 5.8 6.4 6.5Others 2.1 1.9 2.1 2.3 2.0 2.0 2.0 2.9 1.9 1.7 2.6 4.1 4.3OilseedsSub-Total 85.9 96.6 107.5 113.8 120.1 126.4 125.3 128.7 138.3 129.8 125.4 121.0 125.0Groundnut 60.0 67.2 70.0 67.3 70.1 68.5 72.7 68.1 62.0 64.6 54.0 52.5 55.0Rape & Mustard

7.4 7.7 7.5 7.9 7.5 8.6 10.2 10.5 11.3 9.4 6.9 8.6 9.0

Sunflower 4.1 5.5 6.3 7.3 6.8 8.2 5.8 7.5 6.2 5.1 4.2 4.8 5.0Soybean 10.1 12.3 19.1 25.7 29.8 35.7 30.8 36.8 54.1 44.5 54.6 49.9 50.0Others 4.2 3.9 4.6 - 5.9 5.4 - 5.9 - 6.2 5.7 5.2 -

1441 See CHOPRA (2001), at 9, para. 34.1442 This table is derived from GOVERNMENT OF INDIA (2003), table 15.10: “Crop-wise Distribution of Certified/Quality Seeds from 1990-1991 to 2001-2002” and the corresponding table 15.10 “Crop-wise Distribution of Certified/Quality Seeds from 1991-1992 to 2003-2004” in GOVERNMENT OF INDIA (2004). The figures for 2003-04 have not been taken into account as they concern only targets.

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Under the assumption that the sowing rate has remained the same, the following seed replacement rates can be deduced from the available figures on sown area and crop-wise distribution of certified/quality seed in 2001-2002 as compared to 1996-97:

Table 5.4: Evolution of formal sector seed supply1443

Crop Area sown (million ha) Certified/Quality Seed Supply in ‘000 t

Seed supply (% of Requirement)

1996-07 2001-02 1996-97 2001-02 1996-97 2001-02Wheat 25.89 26.34 232.2 325.9 8.96 12.36

Rice 43.43 44.90 165.7 255.8 12.74 19.12Sorghum 11.43 9.80 27.3 22.0 19.71 18.51

Pearl millet 9.98 9.53 17.1 18.0 42.50 46.00Maize 6.26 6.58 18.8 27.5 15.20 21.15

Total Pulses 22.45 22.01 41.9 46.9 6.79 7.75Pigeonpea 3.51 3.33 5.8 6.4 8.57 9.97Groundnut 7.60 6.24 72.7 52.5 6.40 5.63

Rape/mustard 6.55 5.07 10.2 8.6 30.30 33.00Soybean 5.45 6.34 30.8 49.9 8.75 12.19

Sunflower 1.93 1.18 5.8 4.8 31.57 42.73

The reasons for the different seed replacement rates across crop species are to be found partly in the biological features of crop species which have already been addressed in chapter 5 in the context of appropriability of R&D benefits.1444 The breeding system determines the ease of maintaining the genetic integrity of a variety and thus its favourable characters. In a nutshell, it is most convenient for farmers to save their seeds in self-pollinated crops, but they can save seed also from synthetic and open-pollinated varieties, provided they are grown in isolation. In contrast, seed saving from hybrids is likely to result in significant reductions of yield, in the case of maize, some 25-30%.1445

1443 The figures are derived from CHOPRA (2001), at 10, table 6, and GOVERMENT OF INDIA (2004), table 15.10 “Crop-wise Distribution of Certified/Quality Seeds from 1991-1992 to 2003-2004”. The seed replacement rate 2001-02 has been calculated using the rule of three, assuming that the sowing rate per hectar remains stable.1444 See above chapter 4, A.I.1.b).1445 See SHARMA (1980), at 796.

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Table 5.5: Important biological features of major crop species and need for seed replacement1446

Crops Breeding system

Hybrid produc-tion

Sowing rate per ha

Multiplica-tion factor

Rate of deterio-ration

Frequency of purchase (except hybrids)

Justifica-tion for purchase(of non-hybrids)

Seed replace-mentrate1996-971447

Rice Self-pollinated

Yes Medium (50kg)

Medium (50)

Slow 4 years Poor 12.74

Wheat Self-pollinated

No High (100kg)

Low (25) Slow 4 years Poor 8.96

Maize Cross-pollinated

Yes Low (20kg) High (100) Rapid 2 years Good 15.20

Sorghum Inter-mediate

Yes Low (10kg) High (100) Medium 3 years Variable 19.71

Pearl Millet

Inter-mediate

Yes Low (10kg) High (100) Medium 3 years Variable 42.50

Barley Self-pollinated

- - - Slow - Poor -

Beans Self-pollinated

No High (100kg)

Medium (50)

Very slow Variable Poor (Soybean) 8.75

Ground-nuts

Self-pollinated

- High (125kg)

Very low(< 10)

Very slow Variable Very poor 6.40

Sun-flower

Cross-pollinated

Yes - - Rapid - - 31.57

Vege-tables

Varied Yes Varied Very low (<10)

Rapid 1 year Good -

The available figures do not distinguish between the seed replacement rate for hybrids and non-hybrids, which explains the divergence between the category “justification for purchase of non-hybrids” and “seed replacement rate”. According to CHOPRA,

“[t]here is considerable government pressure to increase seed replacement rates and thus reduce informal seed supply, but it is felt that in the crops where the seed rate [per ha] is high, such as, groundnut, soybean and many pulses, farm saved seed or seed purchased from informal sector will be a cost effective solution.”1448

1446 This table is derived from CROMWELL et al. (1992), at 24, Table 3.1, which contains the information on maize, sorghum, millet, wheat, rice, beans and groundnuts, and from JAFFEE/SRIVASTAVA (1992), at 19, which contains additional information on vegetables. Supplementing information was found in EASTHAM/SWEET (2002), at 46, and CROMWELL et al.(1992), at 25.1447 Source as above note 1435.1448 See CHOPRA (2001), at 9.

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2. Sources of informal seed supply

There is little information available about the structure of the informal seed market. Therefore, while it is possible to describe its general characteristics many questions linked to the problem of how PBR would impact these activities have to be left unanswered. In particular it is not possible to establish the share of on-farm saved seed and the share of seed from off-farm channels. Off-farm channels include “NGO supported seed multiplication and supply programs; community groups; farmer’s cooperatives; seed grower’s associations; farmer to farmer exchange”1449 and organisations or non registered traders in local markets and bazaars.1450 The importance of replacement of homegrown seed by “fresh” seed from off-farm sources even in traditional agricultural systems should be emphasized.1451 Among off-farm sources farmer-to-farmer seed supply seems to play a significant role. TRIPP states that “even in the relatively advanced rice system of Andhra Pradesh, between 30% and 60% of off-farm seed is acquired from other farmers.”1452 Generally the informal seed system operates at the community level, although lines of supply may extend to a relatively wide geographic area.1453

3. Types of transactions involved

As regards the exchange mechanism farmers rely on a wide range of possibilities including cash, barter and transfer based on social obligations.1454 In this context the question arises what share of these transactions has to be qualified as commercial and thus would infringe breeders’ rights. Members of the seed industry have argued that seed sales among farmers are a marginal phenomenon.1455 However, since this observation is based on personal contacts with clients, it is doubtful whether any general conclusions can be drawn as to the behaviour of farmers who do not rely on private seed companies for seed supply. The government clearly started out from the assumption that seed sales “in a limited manner” among farmers are current practice.1456

1449 See CHOPRA (2001), at 9.1450 See also TURTON/BAUMAN (1996), at 16/17 and 34 et seq.1451 See ZEVEN (1999).1452 See TRIPP (2002), at 242.1453 See TURTON/BAUMAN (1996), at 17.1454 See TURTON/BAUMAN (1996), at 16/17.1455 Personal conversation with Mr. Deepak MULLICK, Managing Director, Advanta India Ltd., Director (International Affairs) of the Association of Seed Industry, on 9 Sept. 2001. Mr. Mullick gave this interview in his personal capacity and expressed merely his own views, not the official opinions of Advanta or the ASI. He explained that from his experience it was below the dignity of a farmer to take seed from another farmer.1456 Personal conversation with Dr. Dolly CHAKRABARTY, Director (Seeds), Department of Agriculture and Cooperation, Ministry of Agriculture, Government of India, on 7 September 2001.

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4. Types of varieties covered

Often the seed is not labelled and the variety not specified.1457 The varieties circulating in the informal sector include local varieties as well as new varieties. During the Green Revolution the informal sector therefore acted as a very important seed diffusion mechanism. The fast extension of HYVs was due to the lateral spread of seeds among farmers.1458 FAN/HAZELL estimate that by 1995 HYVs were grown on some 60% of the total cropped area in irrigated areas, and on respectively 50% and 40% in high potential and low potential rainfed areas.1459 If one compares these figures with the seed replacement rate, it becomes clear that even in the informal market, a majority of traded varieties are likely to be formal sector varieties. Similar conclusions can be drawn for rice, where according to some estimates, adoption levels of modern varieties were increased to 85% of the total rice area in India.1460 Likewise, since the Wheat Revolution in irrigated areas most of the tall conventional type wheats have been replaced by the semi-dwarf wheats.1461

In a future scenario where PBRs would be introduced for private sector varieties, only newly marketed varieties would be covered by UPOV-type rights. Furthermore some of the improved varieties after a few generations would probably lose their uniformity and stability to a degree that makes their identities with the protected varieties questionable. But it can nevertheless be assumed that, if farmers continue their current practices and remain open to new technologies, a considerable share of seed circulated in the informal sector would be from proprietary varieties. The uncertainty about the exact quantities of HYV or landraces used in the informal sector does not hinder the following conclusion: The Green Revolution shows the significance of the informal sector even for the success of agricultural policies that concentrate on the introduction of modern agricultural technology.1462 And in spite of the emphasis of scientists and politicians on improving the performance of the formal seed sector, any legislation on seed related IPR in India has to carefully consider the impact on the informal seed sector.

1457 Personal conversation with Dr. Suman SAHAI, President of the NGO Gene Campaign, on 29 August 2001.1458 See SINGH et al. (1990), at 128.1459 See FAN/HAZELL (2000), at 1455 and 1457. The authors classify districts as “rainfed” if the irrigated share is les than 25%. See id. at 1456. “Low potential rainfed areas” are characterised by poor soils, short growing seasons, low and uncertain rainfall, limited infrastructure and poor market access. The authors define 8 of the 20 Agroclimatic Zones identified by the ICAR as low potential areas. These include inter alia the Western plain, the Deccan plateau, the Eastern ghats, Tamil Nadu uplands, the central highlands, Gujarat plains and the Kathiawar peninsula. For details, see FAN/HAZELL (2000), table 1.1460 See EVENSON (2002), at 9.1461 Yet, in low-fertility soils or in rainfed areas the tall varieties are still grown. See SHARMA (1980), at 754.1462 See BRUSH (2001), at 157, with references, observing that “[t]he openness of traditional seed systems accounts for the wide diffusion of crops and crop varieties away from their places of origin [footnote omitted]. Indeed, the rapid diffusion of semi-dwarf varieties of wheat and rice occurred because of the prominence of the public domain in traditional seed systems.”

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II. Formal sector1463

The formal sector includes government agencies, private seed companies, cooperative societies and other participants such as registered dealers and contract growers that operate in a regulated environment and are, at least to some extent, subject to the control of monitoring bodies at different stages of the seed production chain. Varietal development, seed production and distribution/marketing are the core activities of this sector. Each component of this process involves a different amount of risks and of technical, capital and human resource inputs, which explains the various degrees of participation of private seed enterprises. These factors also have to be taken into account when assessing the impact of the introduction of IPRs.

1. Varietal development

Seed R&D involves the systematic improvement of the genetic quality of seed and of its physical and physiological attributes such as purity, germination capacity, vigour and health.1464

a) Public sector

The Indian agricultural research system is one of the largest in the world.1465 The ICAR, which is “the nodal agency” at the national level for the promotion of technology in the areas of agricultural R&D and education, has developed a network comprising 46 research institutes, 158 regional stations and 81 All India Coordinated Research Projects in different parts of the country to meet the needs of different agro-climatic zones and regions.1466 Thirty-one State Agricultural Universities and one Central Agricultural University and a National Bureau of Plant Genetic Resources supplement this grid.1467 The public sector still plays a predominant role in seed research and development.1468 Most of the R&D work on self/open-pollinated crops is carried out by public sector institutions.1469 Public sector institutions have also been very active in developing hybrid varieties of major cereals, forage crops and cotton. Over the last three decades an estimated 3,000 varieties have been released by public sector institutions.1470

1463 The difficulty of describing the current status of the seed industry has been well expressed by Dr. Kuldip R. CHOPRA, President of the Seed Association if India, who observed in 1998 that the seed industry “was perhaps in its greatest state of change since its inception” and that “benchmarking” the seed industry thus amounted to describing a “moving target”. See CHOPRA (1999), at iv.1464 See BASANT (1995), at 24; TURTON/BAUMANN (1996), at 10.1465 See SRINIVASAN (2001), at 354.1466 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.66.1467 See id.1468 See SRINIVASAN (2001), at 403.1469 Even if hybrids are included, the public sector involvement remains dominant. “The central government provides about 60% of all funds for agricultural research, state governments 20%, private companies 12% and foreign donors, the rest.” SRINIVASAN (2001), at 355. 1470 See SRINIVASAN (2001), at 360.

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b) Private sector

On the other hand, until the late 1980s, despite a protectionist policy designed to promote domestic research, private sector involvement was minimal.1471 Only a few private enterprises were engaged in R&D activities and developed their own lines of hybrid vegetables and hybrids of pearl millet, cotton and oilseeds which, according to SINGH et al., were overwhelmingly accepted by the farming community.1472 After the introduction of the reform policy described above, India’s private seed industry expanded significantly and many national and multinational private seed companies have taken up research.1473

In their study on “Agro-Biotechnology Capacity and Demand in the Indian Private Seed Sector Industry”, SELVARAJAN et al. analyse inter alia resource budgeting and seed development profile of different broad categories of private seed firms.1474 This differentiation between different types of firms is interesting in the context of IPR insofar as many fears of IPR opponents are linked to the dominance of multinational corporations and many hopes of proponents are set in technology transfer and foreign investments. SELVARAJAN et al. distinguish:

- Big seed companies with extensive market coverage,1475 i.e. companies that are exclusively in the seed business and the experience of which exceeds three decades.1476 They have diverse types of collaborations and linkages with foreign companies. The foreign equity share in some of these companies has considerably increased in recent years.1477

- Medium seed companies with foreign joint ventures, i.e. companies that are exclusively in the seed business, yet for a shorter time, and that are particularly characterised by multiple joint ventures on both national and global levels.1478

Some have become 100% subsidiaries of, or offered majority equity stakes to, their foreign partners in recent years.1479

1471 See GOVERNMENT OF INDIA (1993), at 5.1472 See SINGH et al. (1990), at 20.1473 See BASANT (1995), at 25; for details see SRINIVASAN (2001), at 367 et seq.1474 On the following, see SELVARAJAN et al. (1999), at 15 et seq.1475 Around 20 branch offices/marketing/production/research centres.1476 At the time of the study in 1999, these companies had turnovers, ranging from Rs. 350 million to Rs. 1,000 million (US$ 9 million to US$ 26 million).1477 According to information kindly provided by Dr. SELVARAJAN in a personal conversation on 24. Aug. 2001, Maharashtra Hybrid Seed Company Ltd. and Mahendra Hybrid Seeds Pvt. Ltd. are typical examples for this category. Pursuant to the table in SRINIVASAN (2001), at 380, as reproduced in table 5.1, most of the seed companies with a turnover in the range from Rs. 350 to 2000 million have transferred a majority stake to a foreign company.1478 Their medium turnover ranged from Rs. 20 million to Rs. 30 million (US$ 0.5 million to US$ 0.8 million).1479 According to information kindly provided by Dr. SELVARAJAN in a personal conversation on 24. August 2001, ProAgro-PGS(I) Ltd was a typical example for this category. ProAgro-PGS India Ltd. is now a 100% foreign owned. See above table 5.1.

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- Large multi-product companies with expanding seed business,1480 i.e. business houses, some more than century old, having the longest experience in agro-inputs and/or highly diversified business interests. These companies consequently have the best marketing network, but require reorientation to be able to handle seed marketing, a relatively new area for them.

- Small to medium self-reliant seed companies, i.e. companies with a limited and expanding seed business with less than ten years of experience, involved mostly in exclusive seed business and regional market coverage, with limited exports. They are extending the current linkages with foreign companies to source and hire agro-biotech services in the future.

- Small seed companies with limited market, i.e. companies with exclusive seed business with about a decade of experience, mostly localised market coverage and limited exports. These firms are largely dependent on public-bred material and focus on multiplication and marketing.

Concerning R&D allocation as percentage of the total budget, it can be observed that the category of medium seed companies with foreign joint ventures have the highest percentage of their total budget allocated to R&D, namely some 65%. These companies started actively pursuing sustained R&D efforts during the 1990s and developed in-house expertise in agro-biotech and varietal improvement activities.1481

Since they have a long experience in the seed business, big seed companies have developed an adequate in-house R&D infrastructure over time by continuous investment. Their current allocation of resources and manpower is therefore only around 10%. These companies now aim at “complete and diversified in-house agro-biotech R&D capacity” and have “no constraints to strengthening and funding their in-house R&D and technical expertise.”1482 Large multiproduct seed companies allocate some 35% of the total budget to R&D.1483 Like big and medium seed companies they endeavour to acquire in-house agro-biotech R&D capacity. But according to SELVARAJAN et al., the “pace is slow in most because of the lack of adequate budgetary and technical support for projects that have longer gestation periods.”1484

The category of small to medium self-reliant seed companies kept around 30% of their budget for R&D. “[These] companies are still trying to develop a matching conventional breeding-based R&D support system for their expanding activities. They […] are willing to and capable of acquiring agro-biotech services through national and/or international sourcing for supplementing conventional breeding programs currently under way.”1485 Small seed companies do have R&D units, which account for some 15% of the total budget, but they are maintained mainly for seed-

1480 At the time ofthe study, these companies had turnovers ranging from Rs. 450 million to Rs. 7.400 million (US$ 11.5 million to US$ 190 Million) annually, the seed component accounting for 7-23 %.1481 See SELVARAJAN et al. (1999), at 19.1482 See id., at 15.1483 SELVARAJAN et al. (1999) do not specify whether this figure refers to the budget for commercial seed business only or to the total budget of the company. 1484 See SELVARAJAN et al. (1999), at 19.1485 See id., at 19.

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multiplication related activities. They essentially depend on the collection of germplasm materials from the public sector.

Not all companies which were aiming at in-house agri-biotech capacity at the time of the survey of SELVARAJAN have succeeded. In a paper of 2005, CHATURVEDY mentions some difficulties of Indo-American Hybrid Seeds.1486

"This was one of the premier companies, which entered the scene way back in 1992-93, but is still struggling with the identification of relevant gene sequences, high capital cost of R&D leading to resource crunch for research and, on the top of that, shortage of skilled manpower."

CHATURVEDI further states that "some of the larger companies, which have readily gone for alliances with TNCs, are engaged in low-end technology research only". The author mentions Mahyco Seeds and Rallis in this context.1487

On the other hand, CHATURVEDI identifies a new category of companies active in plant biotechnology. This group covers highly specialised technology companies that undertake contract research.1488

The considerable risks and costs of plant breeding also have an impact on the seed development portfolios, which reflect the endeavour of seed firms to recoup their investments.1489 SELVARAJAN et al. took the period of 1993-1997 as a reference. The trend is clear: “Across crops and seed companies, except for small seed companies, hybrid varieties accounted for […] more than 90 percent of varieties developed.” The domination of hybrid varieties was total for big and medium seed companies. In the case of large multi-product seed companies, small to medium seed companies and small companies, improved varieties, i.e. self- and open-pollinating varieties accounted only for 8,5 and 34 % respectively of the varieties produced in 1996/97. According to BASANT, for crops that provide a scope for successful hybridisation, such as sorghum, pearl millet, maize, cotton, sunflower and selected oilseed crops and vegetable, the applied research expenditures of the private sector have even reached similar levels as those of the public sector in the mid-1990s.1490 In this area, the number of privately developed varieties as compared to publicly bred varieties is significant:

1486 See CHATURVEDI (2005), at 34.1487 See id., at 35. This means that they have developed transgenic plant varieties through back-crossing with genes obtained from their foreign partner.1488 The two firms which are alsways cited in this context are Avesthagen and Meta-Helix. The agri-biotech capacity of Indian firms will also be discussed in chapter 6, A.III.1.a) and C. 1489 On the following see SELVARAJAN et al. (1999), at 24 et seq.1490 See BASANT (1995), at 26.

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Table 5.6: Number of private and public bred hybrids marketed during 19981491

Crops Private PublicPearl millet 60 6Sorghum 41 5Maize 67 3Sunflower 35 6Cotton 150 15Rice 12 4

The concentration on hybrids confirms the appropriation constraints explained chapter 4.1492 While varietal development of hybrids is technically very demanding, extremely costly and a long-term venture, which generates particularly high technical and financial entry barriers, in the absence of IPR, they provide the largest scope for breeders to appropriate the benefit of their R&D.

Table 5.7: Varieties developed during 1993-1997 as percent of total1493

Big seed companies

Medium seed companies with joint ventures

Large multiproduct seed companies

Small to medium seed companies

Small seed companies

Improved varieties 0 0 8 5 34Hybrids 100 100 92 95 66

This principal concentration on hybrid development has apparently not changed. Based on a survey carried out in 2004, LOUWAARS et al. report that there are only few private companies that have their own non-hybrid varieties.1494 They also observe that "there is relatively little evidence at this early stage that the new PVP will elicit much additional breeding activity outside of hybrids."1495

It is also interesting to note, that, broadly speaking, the focus of private sector seed development is on cereals and vegetables, and for small to medium seed companies also on fibres, whereas oilseeds play a minor role and pulses received no attention from private seed firms at all:

1491 See DHAR (undated), at 31, table 11, referring to information provided by the Seed Association of India (SAI).1492 See chapter 4, A.I.1.1493 This table is derived from table 3 “Seed development and production of private seed companies” in SELVARAJAN et al. (1999), at 25.1494 Interestingly, the situation is different as concerns seed production. LOUWAARS et al. (2005), at 55, report that private companies in Andhra Pradesh now provide more than half the state's rice seed. However, the varieties produced are virtually all public varieties.1495 See LOUWAARS et al. (2005), at 92.

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Table 5.8: Varieties developed by crop group during 1993-1997 as percent of total1496

Big seed companies

Medium seed companies with joint ventures

Large multiproduct seed companies

Small to medium seed companies

Small seed companies

Cereals 23 0 56 45 50Pulses 0 0 0 0 0Oilseeds 13 3 17 5 6Vegetables 47 97 4 13 33Fibres 17 0 23 37 11

Low interest in pulses and oilseeds is confirmed by the priorities in agro-biotech strategies of private companies. The prioritised crops were tomato followed by maize, cotton, rice, pearl millet, wheat cabbage, cauliflower, and sugarcane.1497

SRINIVASAN details the R&D focus within cereal crops. “The appropriate crop-wise break up of research effort was as follows: maize (17%); sorghum (14%); sunflower (14%), cotton (17%), mustard (6%), hybrid rice (8%) and others (10%).”1498

The interest of the private sector in seed research in specific crops is impacted by different factors in addition to the existence of hybridisation systems. SELVARAJAN et al. explain that the relatively large number of cereal crop varieties among developed and produced varieties “is in conformity with the stated goal of most of the companies to capture and sustain the market standing of their respective products. Targeting a cereal crop varietal mix appropriate for diverse production environments gives greater mileage to the companies by deepening and widening their market as well as their future product coverage.”1499 Further, private seed firms tend to focus on breeding and marketing of crop varieties which are relatively low volume and fetch high prices.1500

Crops, such as maize, sorghum and millet with a high multiplication factor, so-called low volume crops, are easier to manage for the formal seed sector because fewer multiplications are required and, at each stage, there are smaller quantities to process, store and distribute.1501 Additionally, due to the low sowing rates, the purchase cost for farmers as a percentage of total production costs per hectare is normally lower and thus higher prices can be charged for the seed. In contrast, grain legumes, such as beans, are characterised by low multiplication factors, and these are consequently less attractive for private seed companies. Other criteria are the easy availability of germplasm, segregating or even finished lines, the scope for value addition through chemical treatment and the regional adaptability.1502 These factors will play a role in

1496 This table is derived from table 3 “Seed development and production of private seed companies” in SELVARAJAN et al. (1999), at 25. 1497 See SELVARAJAN et al. (1999), at xiii. The companies were asked to rank agro-biotech strategies on a scale for each of the crops they considered. The above 9 crops accounted for more than two thirds of the total scores. See id., at xiii and 33. 1498 See SRINIVASAN (2001), at 374.1499 See SELVARAJAN et al. (1999), at 26.1500 See CHOPRA (2001), at 12, para. 36.1501 See CROMWELL et al. (1992), at 25.1502 See CHOPRA (2001), at 14, para. 41.

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answering the question in which areas the private seed sector might be willing to do research if PBRs were introduced and the farmers’ right to sell seeds was restricted.

2. Seed production

Control of the origin of the seed and monitoring of the multiplication process is vital for the production of quality seed. The 1966 Seeds Act, which is in the process of being revised, provides for two control mechanisms: A variety found to be superior to existing ones after being tested in coordinated trials is recommended by a technical committee to the Central Seed Committee, which releases or notifies the variety either nationally or for specific regions.1503 These released varieties may not be sold, kept for sale, offered for sale, bartered or otherwise supplied unless they conform to certain standards of germination and purity and they have to be labelled in the prescribed way.1504 Even more strictly monitored is certified seed. A variety becomes eligible for certification only after notification. The seed certification process, in theory, provides a comprehensive quality control procedure designed to secure prescribed standards of genetical and physical purity, physiological quality and health.1505 Under the 1966 Act, only the labelling of seeds is compulsory. While most public bred hybrid and variety seeds are certified, the proprietary hybrids and other varieties are rather sold under truthful label.1506 This has several reasons. According to CHOPRA, the release system limits each private company to a maximum of two entries. This forces companies to enter only promising varieties after 2-3 years of in-house testing, thus extending the total testing period to 5-6 years.1507 They also avoid certification of their own lines to keep the parentage secret.1508

a) Public sector

Agricultural policy has always particularly emphasized the establishment of an adequate seed production system. In the early 1960s a central seed organisation, the National Seed Corporation (NSC), was set up. Subsequently the system has been completed by other organisations, including the State Farms Corporation of India (SFCI) and a network of State Seed Corporations (SSCs).1509 All of them are involved in the multiplication of breeder seed, foundation seed, and certified seed.1510 Breeder and foundation seed from public breeders is distributed to both public sector organisations and private seed companies.1511

1503 See CHOPRA (2001), at 22, para. 72.1504 See Seeds Act, 1966, clause 7, reproduced in GOVERNMENT OF INDIA (1985).1505 The practice is heavily criticized by CHOPRA (2001), at 23, para. 80.1506 See CHOPRA (2001), at 16, para. 49; see also SINGH/ASOKAN (1994), at 7.1507 See CHOPRA (2001), at 22, para. 73. See also SINGH et al. (1990), at 23. 1508 See SINGH et al. (1990), at 13/14; GOVERNMENT OF INDIA (1993), at 19.1509 For details see SINGH et al. (1990), at 7 et seq.1510 On the signification of these terms, see above, note 1405.1511 See GROSSMAN et al. (1991), at 75/76; SINGH et al. (1995a), at 2.

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b) Private sector

Accordingly, private companies multiply breeder, foundation and labelled seed of their own lines along with foundation and certified seed of public hybrids/varieties. Private sector involvement in seed production started much earlier than private R&D activities, especially encouraged in the mid-1980s by the systematic supply of public sector breeder seed. According to estimates in 1992, the private sector accounted already for 35-40% of the total turnover of seed multiplication and distribution agencies in India.1512 In 1998, the private sector contributed around 60% to the seed transacted in the Indian seed industry.1513 According to SRINIVASAN, the private sector has established a dominant market share in maize, pearl millet, sorghum and sunflower.1514

The economical and technical barriers to entry are far lower than in case of varietal development.1515 This explains also the participation of medium and small sized firms in seed multiplication. However, multiplication of seed involves risks, significant skill requirements, important capital inputs and limited profit margins, even though the magnitude of these factors is considerably less than in the case of R&D work. Again the economical and technical characteristics vary across different crops. In the case of self-pollinated crops, the formal sector seed producers have to face considerable competition from farmers using and selling their crop produce as seeds. BASANT observes that “[o]nly firms which carry very low overhead costs and yet are able to produce seeds of consistently high quality (relatively small firms with a good technical base?) might be expected to profit from such activities. To achieve this, such seed multipliers would need to acquire improved varieties from public or private breeders at relatively low cost.”1516 Consequently a change in the public sector breeder seed supply policy might have a significant impact on the production of seed of self-pollinated varieties. Dr. BALA RAVI, former Assistant Director General (IPR), ICAR, considered it possible that in the future the public sector might charge a royalty fee for commercialising its varieties, but also acknowledged that in areas where seed sale turnovers are small and the private sector would not be ready to invest, the public sector may have to provide technology services at no return.1517 In contrast to self-pollinated varieties, hybrids, and improved open-pollinated varieties lose their genetic and/or physical integrity more or less quickly. Therefore production of high quality seed is very difficult for farmers and, generally, use of farmer saved-seed results in significant yield decreases. On the other hand hybrid production is costly.1518

1512 See GOVERNMENT OF INDIA (1993), at 5.1513 See SELVARAJAN et al. (1999), at vii.1514 See SRINIVASAN (2001), at 372.1515 See BASANT (1995), at 25.1516 See id. 1517 Personal conversation with Dr. BALA RAVI, Assistant Director General (IPR), ICAR, on 3 September 2001. Dr. BALA RAVI gave this interview in his personal capacity and did not necessarily express the official viewpoint of the ICAR. 1518 See SINGH et al. (2000), at 2.

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These technical characteristics condition the seed production portfolios of the different categories of seed companies. According to SELVARAJAN et al., across all crops in all categories of companies except for small companies, hybrid seed accounted for more than 60% of the varieties produced.1519 Conversely in small companies improved varieties accounted for 75% of the total number of varieties produced.

Table 5.9: Varieties produced in 1996/97 as percent of total1520

Big seed companies

Medium seed companies with joint ventures

Large multiproduct seed companies

Small to medium seed companies

Small seed companies

Improved varieties

34 7 34 40 75

Hybrids 66 93 66 60 25

Seen by crop group, the varieties produced were predominantly vegetables, cereals and fibres but with different emphasis in the different seed company categories.1521 In large multiproduct, small to medium self-reliant companies and small seed companies around one half of the crop varieties produced were cereals. Medium seed companies with joint ventures strongly concentrated on vegetables, whereas big seed companies had a more diversified portfolio. Again, across all companies pulses played an insignificant role and oilseeds received little attention.

Table 5.10: Varieties produced by crop group in 1996-1997 as percent of total1522

Big seed companies

Medium seed companies with joint ventures

Large multiproduct seed companies

Small to medium self-reliant seed companies

Small seed companies

Cereals 20 0 57 47 48Pulses 7 0 0 0 0Oilseeds 7 7 13 6 6Vegetables 45 93 5 15 36Fibres 21 0 25 32 10

It is interesting to note that due to land ceiling legislation preventing private seed companies from owing large tracts of land,1523 they are compelled to carry out seed production by organising individual farmers. These so-called contract growers commit themselves to strictly adhere to the recommended cultural practices.1524 Otherwise the produced seed crop risks not passing the quality tests laid down by the Central Board of Seed Certification.1525 According SINGH et al. the production of seed is

1519 See SELVARAJAN et al. (1999), at 24.1520 This table is derived from table 3 in SELVARAJAN et al. (1999), at 25.1521 See SELVARAJAN et al. (1999), at 25, table 3. 1522 This table is derived from table 3 in SELVARAJAN et al. (1999), at 25. 1523 See HALL et al. (2001), at 11; SINGH et al. (2000), at 2. 1524 These practices are well summarized by SINGH et al. (2000), at 58.1525 See id., at 57.

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consistently below the requirements in most of the crops.1526 One reason is that due to the high costs and risks involved, farmers are rather reluctant to take up seed multiplication.1527 SINGH et al., conclude that seed companies must ensure higher compensation.

3. Seed distribution

Interestingly, both public and private sector agencies market seeds through appointed distributors and dealers.1528 In some cases the NSC and the SSCs also sell their seeds through cooperative societies. The distributors are appointed by the respective public or private agency, generally for a district and in turn appoint dealers. Both operate on a commission basis and carry the risk of being left with some quantities of unsold seed.1529 In the case of high demand, dealers tend to exploit the situation and sell at a higher price and thus pass their financial risk on to the farmers to recover their losses.1530 According to CHOPRA

“[t]he dealers because of their direct link with the user farmers play a crucial role in popularizing use of specific hybrids. The companies therefore encourage their dealers to play an aggressive role and use all possible extension tools to popularize their products. The discounts and various forms of commission and incentives offered [to distributors, sub-distributors and dealers] now range from 15 to 30 percent (even more for new companies), depending on turnover. However, for public bred material the commission still ranges between 7.5 to 20 percent.”1531

The important role of input merchants as a source of information and advice is confirmed by TRIPP, who also observes that the dealers are “generally responsible in their recommendations, hoping to build a loyal patronage, but their advice is influenced by the size of mark-up they can charge and by the relatively undiscriminating demand of their clientele.”1532 Against this background, concerns about aggressive marketing by private sector seed firms of sometimes unadapted new technologies should be taken seriously.

C. FUTURE CHALLENGES AND STRATEGIES

I. Necessity of annual increase in productivity

Undoubtedly the achievements of the agricultural sector in India in the last decades have been significant. Agricultural growth transformed the former food-deficient

1526 See id., at 2.1527 See id.1528 See CHOPRA (2001), at 16, para. 50, and SINGH et al. (1990), at 31 et seq.1529 See SINGH et al. (1990), at 31.1530 See id., at 32.1531 See CHOPRA (2001), at 18, para. 51.1532 See TRIPP (2002), at 247.

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country from an importer of food grains into a self-sufficient country.1533 Food grain production rose from 89.36 mt in 1964-65 to about 211.32 mt in 2001-2002.1534 This is all the more impressive, since it is mainly the result of an increase in productivity rather than expansion in the area under cultivation.1535

However, there are also reasons for concerns and doubts whether these achievements will measure up to the requirements of the future.1536 In recent years, growth of food grain production was lower than the increase in population.1537 There is still a gap between the targets of food grain production set by the government in the 7th, 8th and 9th Five Year Plans and the achievements during these plan periods.1538 CHOPRA observes “a plateauing trend in crop productivity especially in the coarse cereal grains [since the late-1990s].”1539 The decline of the overall growth rate of crop production and crop productivity is also pointed out by the 10th FIVE YEAR PLAN.1540 To meet the future domestic human plus non-human demand plus export demand the 10th

PLAN envisages a 3.97% annual growth rate in the agricultural sector.1541 And even if these targets are met, food insecurity at the household level may persist.1542 SHAH holds that all the achievements of agricultural policy have done little to improve the conditions of the rural poor.1543 According to this author, India would need an agricultural output growth of 5-7% for the next 15-20 years to break out of the “poverty trap”.1544

The agricultural policy defined to meet these challenges is a key element in determining the shape of an IP system for plant genetic resources in India. The following sections will explore the question which participants in seed development/production activity need an incentive for what type of crop enhancement.

1533 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.3. The Planning Commission highlights that India has now even a surplus of food grains. See also VYAS (1994), at 54.1534 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.3. 1535 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.67.1536 See also SHAH (1993), at A-74 et seq.; VYAS (1994), at A-54; KUMAR/MATHUR (1996), at 1 et seq.; CHOPRA (1999), at iv et seq.; CHOPRA (2001), at 1.1537 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.40.1538 See VYAS (1994), at A-54; GOVERNMENT OF INDIA (2002-2007), at para. 5.1.39 et seq. and table 5.1.12.1539 See CHOPRA (2001), at 4, para. 17. Important crops of coarse cereals are maize, sorghum and pearl millet. 1540 GOVERNMENT OF INDIA (2002-2007), at 514, para. 5.1.7. The overall growth rate of crop production declined from 3.72% per annum during the 1980s to 2.29% per annum during the 1990s and of crop productivity from 2.99% per annum to 1.21% per annum.1541 See GOVERNMENT OF INDIA (2002-2007), at 527, para. 5.1.42.1542 The Planning Commission (GOVERNMENT OF INDIA (1997-2002), at 441 underlines this problem by defining food security “to mean adequate availability of basic food items particularly, food grains in the country as a whole and also availability of adequate purchasing power to meet the food requirements at the household level.” 1543 See SHAH (1993), at A-74.1544 See id., at A-76.

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II. The 9th and 10th Five Year Plans give important role to input intensive agriculture

The 9th FIVE YEAR PLAN (1997-2002) of the Planning Commission of the Indian Government proposes a set of regionally differentiated strategies based on agro-climatic conditions and land and water availability for increasing the pace of growth in all regions.1545 These strategies, which are confirmed by the 10th FIVE YEAR PLAN (2002-2007),1546 give an important role in all zones to the increase of agricultural inputs such as irrigation and fertilizers.1547 However, the 10th PLAN also recognizes the environmental constraints and proposes supplementary strategies.1548

Concerning the areas of interest here, i.e., above all, seed R&D, the Planning Commission stresses that

“[a] massive application of science and technology would enable Indian agriculture to face the serious challenges of food security and ensure a place for value added Indian agricultural products in the global markets. There are immense opportunities offered by technological revolutions in the field of molecular biology, biochemistry, physiology, Geographical Information System, system analysis, revolution in informatics, remote sensing etc.”1549

“Enhancing productivity through evolution of high-yielding hybrids and varieties” is named among the “major objectives” of Agricultural Research Education and Extension.1550 Explaining this objective, the Planning Commission states that:

“[i]mproved high yielding cultivators and large number of input technologies in the National Agricultural Research System (NARS) will be expanded with missionary zeal. Special focus will be on hybrid research and development and accelerated programmes for breeder seed production particularly of hybrids and improved varieties.”1551

“Seed procurement of superior varieties has been recommended by ICAR for each district and farming situation. Advance action for providing the required quantities of breeder and foundation seeds of appropriate varieties will be taken up. Promotion of varietal replacement and propagation of high yielding varieties of wheat, barley, other coarse cereals and hybrid seeds, promotion of production

1545 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.69.1546 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.45.1547 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.29 et seq.1548 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.10 et seq., 5.1.52, 5.1.59 et seq., 5.1.71 and 5.1.78. 1549 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.49; see also GOVERNMENT OF INDIA (2002-2007), at para. 5.1.65.1550 See GOVERMENT OF INDIA (1997-2002), at para. 4.1.141.1551 See id. at para. 4.1.142.

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of certified seed of HYV of crops specific to problem areas will be speeded up. […]”1552

This focus on HYVs in agricultural research and extension is in line with the view of the Indian private sector seed industry seeing a need “to continue the Green Revolution through the development and introduction of ‘technified’ seed of high yielding hybrid varieties.”1553 Members of the private seed sector place a special emphasis on the role of foreign germplasm and technology in the development of quality seed.1554 Their significance was recognized by the Government in its reform policy of 1988 which had the objective to make available “the best quality seeds and planting material from anywhere in the world.”1555

The finding that the Indian Government gives a significant role to modern agricultural technology is of importance in the context of IP protection for plant innovations as itmeans that the Government clearly sees a need for formal sector plant breeding and thus for incentives inducing this activity.1556 Yet, it is noteworthy that the 10th PLAN also mentions that the “production of traditional native cultivars, which are known to be sturdy, resistant, more nutritious and need low inputs, [will] be encouraged.”1557

III. Limits of high input technology

While these extracts of the 9th and 10th FIVE YEAR PLANS may rather suggest that there is still ample scope for productivity increase by the expansion of input intensive agriculture,1558 there are elements which inspire doubts whether the sustainable

1552 Id., para. 4.1.143. See also GOVERNMENT OF INDIA (2002-2007), at para. 5.1.44. The Planning Commission sees “a possibility to achieve a production level of food grains of about 245-248 mt by the end of the Tenth Plan, with adequate trust on maize, especially the multiplication of high yielding seeds on a massive scale and adoption of improved production technology. In addition, thrust on commercialisation of hybrid rice on a large scale and application of improved technologies in wheat could further boost the foodgrain production.” 1553 See CHOPRA (1999), at iv.1554 See CHOPRA (1999), at iv. and CHOPRA (2001), at 29, para. 111. Mr. Deepak MULLICK, Managing Director Advanta India Ltd., Director (International Affairs) of the Association of Seed Industry, pointed out that future gains in productivity will inter alia come from quality germplasm that is held by international companies which have been in breeding for many years. Personal conversation on 9 Sept. 2001. It should be noted that Mr. Mullick gave this interview in his personal capacity and did not express official views of Advanta or SAI.1555 Objective of the “New Policy on Seed” of 188, as quoted by SRINIVASAN (2001), at 352.1556 This is not to suggest that the results of modern plant breeding are necessarily input-intensive HYV. Modern breeding technology is capable of developing varieties for low input conditions. 1557 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.68.1558 This conclusion is also suggested by the fact that the 10th PLAN compares the per unit area productivity in India with that of other major crop producing countries, including those which apply input intensive agriculture. See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.8. Yet, it should be mentioned that in other passages the PLAN shows awareness of environmental and socio-economic problems. See, e.g. below note 1564 and id. at para. 5.1.46, on the need for technologies suited for small holdings, and at para. 5.1.70 , on the development of suitable varieties for adverse situations like drought-prone rainfed areas and lowland flood-prone water stagnant areas.

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agricultural growth could be achieved exclusively by pursuing the current pattern of agricultural development.1559

1. Environmental costs

The intensive use of inputs such as fertilizers, agrochemicals and irrigation water leadsto enormous environmental costs.1560 In the specialized literature it is suggested that the environmental unsustainability may partly explain the rising costs and slowing growth of productivity in agriculture, notably in the Green Revolution areas of Punjab and Haryana.1561 SWAMINATHAN, one of the fathers of the Green Revolution in India argues that “on an individual level, the future means little if you cannot survive the present.”1562 But he also advocates “greening” the Green Revolution by improving technical efficiency.1563 This seems to correspond to the standpoint of the Planning Commission showing at different points of the 10th PLAN awareness of this problem.1564

2. Regional limits of the Green Revolution

Besides having ecological implications, the input intensity of the Green Revolution technology has limited its success to certain regions and to certain socio-economic groups. Indian agriculture is still very much characterised by both, inter-personal and inter-regional disparities.1565 The availability of assured irrigation or rainfall continues being the essential pre-condition for the adoption of new seed-fertiliser technology in most crops.1566 Therefore, in the first phase of the Green Revolution, growth in food grain production was mainly limited to regions with favourable agro-climatic conditions, namely Punjab, Haryana and the western parts of Uttar Pradesh, which were able to use irrigation water in abundance. In the second phase, the spread of the Green Revolution technology and the rapid growth experienced by the eastern region was made possible by notable increases in the area under irrigation through substantial private investment in pump sets and tube wells.1567 Yet, to date, India has a large proportion of rainfed and unfavourable food-growing environments. Currently rainfed

1559 In the same vein KUMAR/MATHUR (1996), A-136 et seq.; GROSSMAN et al. (1991), at 67 et seq.1560 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.10 et seq.; VYAS (2000), at 18.1561 See SAXENA (2001), at 1.1562 See SWAMINATHAN (1996b), at 219. This dilemma is also stated by HARDON/DE BOEF (1993), at 65.1563 See SWAMINATHAN (1996b), at 212 et seq.1564 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.10 et seq. and para. 5.1.59 et seq. on overexploitation of ground water, at para. 5.1.78 on chemical pesticides, at para. 5.1.168 on the farming systems approach, at para. 5.1.167 on participatory research with farmers. See further GOVERNMENT OF INDIA (1997-2002), at 4.1.67. 1565 See BHALLA/SINGH (2001), at 203.1566 See BHALLA/SINGH (2001), at 209; see also CGIAR (1997).1567 According to BHALLA/SINGH (2001), at 209 et seq., an analysis of input use in various regions of India, including the eastern region, shows that both high levels of growth of yield and output were brought about through increased use of fertilisers and increased investment in minor irrigation.

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areas account for some 60% of the cultivated area.1568 More importantly, even if the irrigation potential could be fully exploited, still half of the cultivated land in India would depend only on rain.1569 While not all rainfed areas are excluded from modern agricultural development,1570 generally speaking, “[dependence] on monsoon has adversely affected the use of inputs and adoption of improved crop technologies, because of high risk involved and low/no profit margin.”1571 FAN/HAZELL estimate that some 35% of the total cropped area are low-potential rainfed areas, i.e. areas with poor soils, short growing seasons, lower and uncertain rainfall, limited infrastructureand poor market access.1572 Land productivity remains more than twice as high in irrigated and in high-potential rainfed areas than in low-potential rainfed areas.1573 The potential for expanding the area under irrigation being limited for economic and technical reasons, there are serious doubts whether the remaining regional disparities will be overcome by relying on input-intensive technology.1574

3. Social disparities

But the imbalance does not stop at the regional level. Critics reproach the input intensive Green Revolution technology for being scale biased.1575 The importance of this issue can only be understood against the background of the Indian agrarian structure, which is dominated by a large number of small-size holdings. According to the 9th FIVE YEAR PLAN, the holdings of small and marginal farmers constitute around 80% of the total holdings and their average size is less than one hectare.1576 A consequence of this land fragmentation is the growth of the subsistence sector. A huge

1568 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.121; GOVERNMENT OF INDIA (2002-2007), at para. 5.1.13.1569 Id.1570 The Planning Commission, in GOVERNMENT OF INDIA (1997-2002), at para. 4.1.121, mentions, for instance, that in areas with adequate rainfall and minimal flood or drought occurrence, “past experience shows that HYV technology has been adopted by farmers in rainfed areas.”FAN/HAZELL (2000), at 1458, point out that in the period from 1970 to 1994 agricultural production grew fastest in high potential rainfed areas, reflecting a catching-up effect as compared to irrigated areas.1571 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.13. See also id., at para. 5.1.60.1572 See FAN/HAZELL (2000), at 1455 and 1457. The authors classify districts as “rainfed” if the irrigated share is les than 25%. See id. at 1456. They then define 8 of the 20 Agroclimatic Zones identified by the ICAR as low potential areas, because of their poor soils, short growing seasons, and low rainfall. For details, see FAN/HAZELL (2000), table 1.1573 See FAN/HAZELL (2000), at 1458.1574 In the same vein, e.g. KUMAR/MATHUR (1996), A-137.1575 The criticism of the Green Revolution began immediately after its first successes. Some authors argued inter alia that small-scale farmers received a disproportionately small share of benefits. See BRUSH (2001), at 147 with references. However, BRUSH points out that later studies by economists at the IRRI measuring the impact of Green Revolution rice on different rural groups contradict these conclusions. This scale bias continues being criticised. See, e.g. VANDANA SHIVA (1991), at 171-192.1576 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.50.

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number of farming households produces no marketable surplus and can barely provide enough food for their families.1577

Input-intensive agriculture excludes many small and marginal farmers from increase of agricultural production. While from a technological point of view farm size as such proved to be no obstacle to the adoption of HYV,1578 many marginal and small holders lack purchasing power for the capital-intensive inputs required by modern methods of cultivation.1579 Moreover, many small-scale farmers live in agriculturally marginal and heterogeneous locations that are much more costly to reach with research and extension.1580 However, one has to be careful about generalizations. There is some evidence that far from all small-scale farmers lag behind in the adoption of input-intensive agriculture. VYAS observes that “marginal and small farmers also use purchased inputs to a substantial extent.”1581 “Nearly two-third of the operated area of the marginal and small farmers is treated with fertilizers. […] [T]he small and marginal farmers use their land more intensively with proportionately larger share in irrigation, and have proportionately more area treated by the fertilizers [than medium and large farmers].”1582 On the other hand, it has to be mentioned that small farmers are often taking existential risks when adopting input-intensive technologies. These risks may in many cases be successfully borne by small-scale farmers in irrigated areas and high potential rainfed areas, but in unfavourable agro-climatic environments, especially drought-prone areas, crop failures combined with heavy debt burdens and other factors have led to a large number of human tragedies.1583

For all these reasons the further spread of the input intensive Green Revolution technology is likely to reach its limits without ensuring a sustained food production growth providing food security for all regions and all socio-economic groups.

1577 See GROSSMAN et al. (1991), at 62, who speaks already at this period of 60 million farm households. The situation did apparently not improve. RAJAN (undated), Vice Chancellor of the Punjab Technical University, states in an article on India’s rural poverty that more than fifty years of India’s independence India’s rural poverty is of an unprecedented scale.1578 See BRUSH (2001), at 150, quoting studies done by IRRI economists with respect to rice. 1579 See BRUSH (2001), at 161; GROSSMAN et al.(1991), at 67. It may be recalled that HYV require increased fertilizer applications to realize their yield potential. See, e.g. FAN/HAZELL (2000), at 1457.1580 See BRUSH (2001), at 161; see also GROSSMAN et al.(1991), at 67.1581 See VYAS (2000), at 26. 1582 See id., at 26/27.1583 Andhra Pradesh, Karnataka and Punjab have experienced a series of suicides by a large number of farmers. See DESHPANDE (2002), at 2601 et seq. DESHPANDE stresses the multiplicity of causes. Nevertheless in his conclusion he observes that “though one cannot draw any one-to-one correspondence between distress in the farm sector and suicides, farm and farm-related activities have a large stake in explaining the unfortunate incidents. […] In a broader economic perspective, the farmers who died were entrepreneurs who tried to adopt new ventures.” (Id., at 2610) It is noteworthy that there was a concentration of victims in the backward regions. (Id., at 2609).

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IV. Strategies to overcome these limits

1. Greater research emphasis on rainfed agriculture and poor man’s crops

There is a consensus that the next agricultural growth has to come from rainfed areas.1584 The 9th FIVE YEAR PLAN, e.g., states that

“[i]t is increasingly difficult to obtain any sizable incremental production from the conventional Green Revolution areas. For the second Green Revolution, it is necessary to make grey areas green. Hence, a major support for the rainfed areas, especially in Eastern and arid peninsular India would be necessary.”1585

Yet, as mentioned in the previous section, a large part of rainfed areas did not share in the success of modern input-intensive seed-fertilizer technology. In a study of the National Centre for Agricultural Economics and Policy Research, the authors describe the problems as follows: 1586

“Rainfed farming poses particular challenges for the organisation of research and extension:- The wide diversity among agro-ecological and socio-economic conditions

makes it difficult to focus research.- Low capital resources and irregular rainfall make farmers perceive

intensification as risky in many areas.- Rainfed farmers are politically and economically marginalized, have low

levels of education and self-confidence, and limited ability to articulate their technology needs.

- Markets for individual inputs are small and fragmented, making the commercial sector unwilling to become involved.

- Government staff are reluctant to be posted to many rainfed areas; staff turnover is rapid, and the number of vacant posts is high.”

These difficulties in using input-intensive technology do not apply to the same extent to all rainfed zones,1587 but need to be kept in mind when considering the respective roles of public and private sector in seed research and extension.

At different points of the 9th and 10th PLAN the Planning Commission mentions measures to increase production in rainfed areas. In the zone specific strategies described above watershed development programmes and development of minor

1584 See, e.g. GOVERNMENT OF INDIA (1997-2002), at para. 4.1.69 and para. 4.1.121; GROSSMAN et al. (1991), at 83; KUMAR/MATHUR (1996), at 137 et seq.; VYAS (1994), at A-57 et seq. In the same vein FAN/HAZELL (2000), at 1458, who point out that production growth in irrigated and high potential rainfed areas slowed down in the early 1990s.1585 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.49. 1586 See FARRINGTON et al. (1998), at xiii.1587 FAN/HAZELL (2000), at 1455 et seq., distinguish high- and low-potential areas.

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irrigation play a primary role.1588 The 10th PLAN furthermore recommends “the development of suitable varieties for adverse situations like the drought-prone rainfed areas and the lowland flood-prone water stagnant areas,”1589 and an “intensification of research on under-utilised crops”, especially coarse cereals.1590 Both PLANS further emphasize the importance of a higher seed replacement rate in drought-prone, difficult, hilly and other non-accessible areas.1591 The increasing role of the private sector in seed production is emphasized.1592 It is noteworthy, that the 10th PLAN also proposes that the “production of traditional native cultivars, which are known to be sturdy, resistant, more nutritious and low inputs, would be encouraged.”1593 In the 10th

PLAN, attention is also drawn to the problems of small and marginal holdings and, besides consolidation of holdings, the development of technologies suited to such holdings to increase their productivity is suggested.1594

The necessity of a greater research emphasis on rainfed agriculture,1595 on low-input agriculture and agricultural technology adapted to the needs of small farmers,1596 and on poor man’s crops, i.e. traditional dryland crops (e.g. millet, sorghum and pulses)1597

is also stressed in the specialised literature.

2. Enhanced location-specific research

Some authors are sceptical about the possibility of solving the problems of agriculture in marginal environments by top-down approaches in international and national

1588 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.124 and 4.1.126; GOVERNMENT OF INDIA (2002-2007), at para. 5.1.51 et seq. Interestingly the Planning Commission, id. at para. 5.1.52, draws attention to the role of traditional knowledge in this area.1589 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.70.1590 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.169.1591 See GOVERNMENT OF INDIA (1997-2002), at para. 4.1.103; GOVERNMENT OF INDIA (2002-2007), at para. 5.1.65 et seq.1592 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.66: “The private sector will be encouraged to meet the requirements of seeds. The seed production by the Government agencies would be limited to the production of breeder and foundation seeds and the production of certified seeds would be left to the private sector. The private sector is already doing good job but is restricted to production of high value and low volume seeds, especially that of hybrids and that too mainly of vegetables, oil seeds, maize, pearl millet etc.”1593 See GOVERNMENT OF INDIA (2002-2007), at 533, para. 5.1.68.1594 See GOVERNMENT OF INDIA (2002-2007), at 528, para. 5.1.46.1595 See PERUMAL (2001), at 79; JHA (2001), at 66/67; KUMAR/MATHUR (1996), at A-137.1596 See JHA (2002), at 66/67; GROSSMAN et al. (1991), at 68; SWAMINATHAN (1996b), at 217. The needs of small farmers producing to a large extent for their household and farmers primarily producing grain for commercialization may indeed be very different. Commercial farmers will prefer varieties where the grain produce represents a large portion of the total biomass. Small farmers may prefer tall varieties as they use the straw for their cattle. (See SHARMA (1980), at 754.) They may also see an advantage in hardy, leafy cultivars that deny weed sunlight, as they may not be able to afford herbicides. (See PINSTRUP-ANDERSEN/COHEN (2000), at 154.)1597 See VYAS (1994), A-57 and VYAS (2000), at 31, 33; RAO (2003), at 4 of 11. Relevant pulses are in particular lentils, chickpeas, pigeonpeas; other dryland crops are barley and groundnut. See CGIAR (1997). JHA et al. (1995), at 3, recommend a shift in resource allocation away from wheat, pearl millet, barley, rapeseed, mustard towards rice sorghum, small millets, ragi, gram and other pulses, groundnut, linseed, sesanum, safflower, soybean, sunflower.

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research laboratories and trial stations. BERG explains that “[a] geographically-wide adapted sphere is feasible when varieties are bred for standardized cultivation methods. In areas with highly complex and varied farming systems it is much harder to achieve a site adaptation of breeding materials. In these areas local selection would be a more feasible solution.”1598 International and Indian analysts and scientists therefore call for a more location-specific approach to research and development, allowing for adaptation to the local environment and the specific needs of the concerned farm households.1599 This need for “precision farming” using low cost technologies modified to suit local conditions was, for instance, included in the “concert recommendations” of a National Symposium of Indian agricultural scientists on “Modernizing Indian Agriculture in 21st Century” in November 2000.1600 Interestingly, the development of location-specific technologies is also among the research priorities enumerated by the 10th FIVE YEAR PLAN.1601

The recognition that technologies need to be adapted to specific environments has resulted in a growing emphasis on research approaches which build upon farmers’ varieties and the capacities of farmers to engage in experimentation and adapt technologies to local needs.1602

3. Possibilities and limits of traditional agricultural techniques and landraces

a) Advantages of diversity in marginal environments

Especially in marginal environments suffering from drought, heat and soil problems, landraces combined with traditional cultivation systems can often compete with modern varieties, as the maintenance of a certain degree of variation within and between local landraces provides, generally speaking, more scope for adaptability to biotic and abiotic stresses and thus yield stability.1603 Besides this risk advantage of traditional varieties and cropping systems, in many cases there may also be yield advantages. As BRUSH reports, “[r]esearch on variety choice has revealed that farmers maintain local crop varieties in part because they perform better than other varieties in marginal environments [ref. omitted].”1604 The practices and varieties of traditional farmers thus provide an irreplaceable basis for participatory research to further improve productivity in these environments.

1598 See BERG (1993), at 73.1599 See, e.g. RAO (2003), at 4 of 11; KUMAR/MATHUR (1996), at A-138; PERUMAL (2001), at 79.1600 See HANSRA et al. (2001), at 275.1601 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.167.1602 See AMANOR et al. (1993), at 7. 1603 See, e.g. HARDON/DE BOEF (1993), at 67; WRIGHT (1996), at 10; AMANOR et al. (1993), at 2; BROWN (2000), at 31; SHARMA (1980), at 825. For a more sceptical view on the relationship between diversity and stability, see BRUSH (2000), at 15. 1604 See BRUSH (2000), at 15. Greater productivity at higher diversity can be explained by niche complementarity resulting from interspecific differences in resource requirements and in spatial and temporal space and habitat use or from positive interactions. See TILMAN et al. (2001), 843. For a good example see KOTHARI (1995), at 32, who refers to a practice of the Garhwal Himalaya, the “baranaja” which involves the sowing of a mixture of crops into a single plot of land.

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b) Value of landraces in modern crop breeding

Yet, landraces are in no way always more productive in marginal environments or less vulnerable to stress, pests and diseases than formal sector varieties,1605 nor are they always sustainable under increasing population pressure.1606 In the context of wheat research, for instance, LANTICAN et al. report that, using exceptional wheats bred for favourable cultivation conditions, researchers have developed varieties that exhibit the high yields and input responsiveness of cultivars bred for favourable environments as well as the drought tolerance and water-use efficiency of germplasm for semi-arid areas.1607 Such technologies may not solve long-term sustainability problems,1608 but is clearly an interesting option for farmers, and consequently in more recent years rates of adoption of modern varieties in marginal areas are catching up with those observed in favourable environments.1609

This creates a dilemma because crop genetic diversity is a prerequisite for future plant breeding.1610 This future role of landraces in plant breeding is the second reason for their importance in increasing food crop productivity and assuring food security. While at the individual farming level the maintenance of certain landraces may not be economically interesting, the discarded populations may contain valuable genetic material, which would be crucial for agricultural progress at the national or even global level. WILKES, points out that “[a]ny reduction in the diversity of resources narrows society’s scope to respond to new problems and opportunities [ref. omitted].”1611 There are many examples of crucial contributions of genes found in traditional germplasm to the performance of modern varieties.1612 It is also noteworthy

1605 On other reasons why landraces are grown by farmers, including the unavailability or unaffordability of advanced material, or cultural and aesthetic reasons, see BROWN (2000), at 32 et seq.1606 See HARDON/DE BOEF (1993), at 68 et seq.1607 See LANTICAN et al. (2001), at 40.1608 This is emphasized by BERG (1993), at 73.1609 See LANTICAN et al. (2001), at 42; BRUSH (2000), at 12, emphasizing that “[i]n situ conservation is very likely to be frustrated and fail if it sets as a goal the reversal of the historic and universal trends of integration [of local systems into larger socio-economic systems] and economic and technological transformation that have caused genetic erosion in the first place.” It should be mentioned that the displacement of landraces is not always due to a better performance of the new variety. WILKES (1992), at 12, observes that “[e]lite varieties also have a second force: they create market expectations. […] The market place also has the potential to influence and form a market focus for a single variety. These marketing forces of ‘volume sales’ and specialized handling of specific varieties actually have promoted the decrease in the total number of crop plants that enter commerce.” In the same vein, WRIGHT (1996), at 14.1610 See WILKES (1992), at 1; WRIGHT (1996), at 9 and 44 et seq.; BRUSH (2000), at 7 et seq.; ARUNACHALAM et al. (2001), at 113; SWAMINATHAN (1996a).1611 See WILKES (1992), at 2. See also SWAMINATHAN (1996b), at 231. 1612 The IRRI breeders, for instance, have incorporated some 885 landraces and some wild varieties in the 1709 IRRI releases in the period from the “Green Revolution” to 1996. They have especially incorporated successive single genes for pest and disease resistance. See WRIGHT (1996), at 16. A very illustrative example is the gene for blight resistance in rice discovered in a rice strain from Mali. It became famous because the Regents University of California obtained a patent (U.S. 5,859,339) for the gene encoding the polypeptides which enhance resistance, which a post-doc research fellow had been allowed mapping, sequencing and cloning at the IRRI. See BLAKENEY (2001), at 35 et seq.

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that a number of modern varieties of self-pollinated crops are basically mass selections from landrace populations.1613 Moreover, a broad genetic diversity among cultivars is crucial for crop yield stability. Reliance on a narrow genetic base for major agricultural crops makes agriculture vulnerable to pests and diseases.1614

c) Complementarity of in situ and ex situ conservation of crop resources1615

The dilemma described above has prompted agricultural scientists like SWAMINATHAN to call for “[compensating] local communities who continue to practice in situ conservation of agrobiodiversity for the economic loss they incur as a result of not substituting land races with high yielding cultivars, thereby providing an economic stake in conservation.”1616 Besides the natural rights argument, which has to be cautiously applied in the IP context, the above reasoning is the very basis for any reflection on IP protection for the enhancement and conservation activity of traditional farmers. The question of whether ex situ collections can all or partly replace in situmaintenance of landraces therefore needs to be shortly discussed.1617

Since the early 1970s concerns about the narrowing of the genetic resource base available for improving crop varieties have prompted the systematic collection of landraces and the establishment of ex situ facilities for their long-term conservation.1618 Meanwhile, an important part of the available traditional germplasm of major crops is thus conserved ex situ.1619 During the establishment of this conservation effort in the 1970s in situ conservation was dismissed as a possible alternative for several reasons, which still need attention:

“Most importantly, it was assumed that progress in achieving economic development in diverse agricultural systems inevitably requires the replacement

1613 See, e.g. SHARMA (1980), at 817, with respect to sorghum. See also below, chapter 7, B.I.2.1614 A notorious example for the dangers of genetic vulnerability of major crops was the epidemic of the southern corn leaf blight, due to the susceptibility to this disease of the Texas male sterile cytoplasm widely used in breeding hybrid corn. The epidemic caused a 15% corn output drop in the US in 1970. See WRIGHT (1996), at 4. Concerns about the presence of only moderate genetic diversity among Indian maize inbreds are also voiced by MAURIA et al. (2000), at 253. 1615 Ex situ conservation refers to maintenance of genetic resources in gene banks, botanical gardens, and agricultural research stations. In situ conservation designates the maintenance of genetic resources in the habitats where they arose and continue evolving. See BRUSH (2000), at 4 and BROWN (2000), at 29. 1616 See SWAMINATHAN (1996a).1617 Mr. ARORA, Secretary General of the Seed Association of India, for instance, in a personal conversation on 31 Aug. 2001, held the view that the responsibility to conserve biodiversity should be entrusted to the National Germplasm Bank, and the focus should be on ex situ conservation.1618 See KOO et al. (2002), at 6. 1619 According to WRIGHT (1996), at 7, “[c]ultivar collections are well on the way to becoming comprehensive in terms of cultivars (as distinct from the alleles present in their population) for most of the listed crops [including wheat, grain and oil legumes, rice, sorghum, maize, soybean, common potato] […].” BRUSH (2000), at 8 et seq., however, emphasizes the dynamic nature of crop genetic resources which continue evolving after collection has occurred. He observes that estimates on the percentage of crop genetic material captured in gene banks may be quickly rendered obsolete by continued crop evolution and suggests that much of the present diversity remains uncollected.

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of local crop populations with improved ones. […] Another reason […] is the assumption that farmers who grow traditional crop varieties would require a direct monetary subsidy to continue this practice once improved varieties become available. Such subsidies are not only expensive but also unreliable and difficult to manage for any length of time. Finally, crop scientists who promoted conservation were not interested in conservation alone, but also in using genetic resources for crop improvement. As long as breeders’ work is confined to experiment stations and laboratories, genetic resources that remain in farmers’ fields are not directly useful for crop improvement.”1620

Yet, in situ conservation has several functions that ex situ germplasm collections cannot fulfil:1621 First, crop genetic resources involve not only the “genetic raw material” of landraces, i.e. alleles and genotypes of crop populations, but also related species, agroecological interrelationships, and human management of diverse crop resources.1622 This complex agroecosystem cannot be captured by ex situ storage of alleles and genotypes.1623 Second, ex situ collections maintain the landrace germplasm in the state in which it was collected, whereas in situ crop genetic resources evolve in dynamic agroecosystems that continue generating new genetic resources in response to changing environmental factors.1624 A third advantage of in situ maintenance of crop genetic resources is that “[g]enetically diverse agroecosystems that harbor evolutionary processes such as gene flow between wild relatives and cultivated species, adaptation to coevolved pests and pathogens, and traditional knowledge systems and farmer selection offer a unique field laboratory to design and evaluate sustainable technologies.”1625 Research on those local agroecosystems would also help developing agricultural technology for farm groups and areas that are often bypassed by crop improvement programmes linked to ex situ facilities.1626 And finally in situpreservation avoids the necessary regeneration of ex situ collections due to their loss of viability.1627 Regeneration “without incurring genetic drift (from small samples) or genetic shift (from inadvertent selection in an environment remote from the origin of accession)” is still a serious challenge.1628

Analysts therefore agree on the complementarity of ex situ and in situ conservation efforts.1629 In spite of the recognized necessity to maintain crop genetic resources in situ, the problems of this conservation form addressed above remain valid. In particular, the plant material preserved in situ needs to be made accessible for crop

1620 See BRUSH (2000), at 7.1621 On these functions see also BROWN (2000), at 30 et seq.1622 See BRUSH (2000), at 8/ 9.1623 See id., at 8.1624 See WRIGHT (1996), at 41, and BRUSH (2000), at 8. As will be seen below, this dynamic aspect of in situ conservation of landrace populations impacts the possibility of granting plant breeders’ rights.1625 See BRUSH (2000), at 11.1626 Id., at 10.1627 For details on storage techniques, see WRIGHT (1996), at 12.1628 See BROWN (2000), at 32.1629 See WRIGHT (1996), at 48 and 56; BRUSH (2000), at 7; BROWN (2000), at 30; HARDON/DE BOEF (1993), at 67/68.

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improvement by identification and evaluation and transfer of information to those involved in plant breeding.1630 Further, the scope of in situ conservation is the object of lively debate. BRUSH concludes that “in situ conservation is not a sector-wide strategy for a nation’s agriculture but one targeted to a few locations”. 1631 This seems to be a too pessimistic view in the Indian context, given the extent of marginal environments and small holdings, at least if conservation does not mean freezing the present stage, but rather building on farmers seed management skills which favour diversity and specific adaptation.1632

4. Farmer participatory research

There is an increasing recognition in the public and the private sector of the necessity to integrate farmers in the process of agricultural technology development in order to make this technology more relevant to farmers’ needs.1633 Agricultural scientists participating in a National Symposium on “Modernising Indian Agriculture in 21st

Century: Challenges, Opportunities and Strategies” of November 2000 stated in their “concert recommendations” that “[f]armers should be directly involved from planning stage till the development, transfer and utilization of technologies.” 1634 Likewise, the 10th FIVE YEAR PLAN includes among the proposed research strategies “participatory research with farmers in order to develop location-specific technologies which are environmentally sustainable and socially acceptable.”1635 In the specialised literature, many authors even see a possible approach to solving the dilemma of increasing food production while conserving the natural resource base in “developing a complementary relationship between local crop development and modern plant breeding.”1636 SWAMINATHAN speaks of a creative blending of new and traditional

1630 Mr. ARORA, Secretary General of the Seed Association of India, in a personal conversation on 31 August 2001, emphasized the advantages of ex situ conservation. He explained that many institutions conduct trials and that the established passport data allow seed firms to look for useful traits. See also WRIGHT (1996), at 42.1631 See BRUSH (2000), at 12.1632 For a good introduction to the possible complementarity of farmers’ experimentation and formal crop research, see AMANOR et al. (1993), at 4 et seq.1633 For the private sector see, e.g. HARINARAYANA (2001), at 13; for the public sector see the next two footnotes. On the progressive development of farmer participatory research approaches and the different strategies for interaction, see AMANOR et al. (1993), at 5. FARRINGTON et al. (1998), at 12, rightly point out that “the term ‘farmer participatory research’ has come to mean very different things to different types of organisation. Many NGOs, for instance, pursue intensive, long-term types of participation which aim to empower farmers to recognise the conditions underlying their poverty, draw on their own resources as far as possible to improve these conditions, and draw in external resources (eg, from the state) where necessary. NGO’s freedom to mandate themselves to work intensively in a few villages makes these empowering types of participation feasible. By contrast, public-sector services such as research and extension have to be spread much more thinly over a wide area. The concern within the public sector is therefore largely with functional types of participation which do not directly take on the major task of empowerment, but aim for the more modest goal of making public-sector services more relevant to farmers’ needs.” 1634 See HANSRA et al. (2001), at 275. See also the individual papers of SAWANT (2001), at 29 and 33; KANNAIYAN (2001), at 51; CHANDRAN (2001), at 85 et seq.; ADHIKARI/MOMI (2001), at 103 et seq.; ARUNACHALAM et al. (2001), at 112 et seq. 1635 See GOVERNMENT OF INDIA (2002-2007), at 557, 5.1.167. See also id., at 532, para. 5.1.64.1636 See, e.g. HARDON/DE BOEF (1993), at 69.

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technologies,1637 JHA of marrying latest technology with ancient wisdom.1638

AMANOR and BERG, each highlight that farmers’ breeding activities could be enhanced by giving them access to a wider range of germplasm.1639

It is important to note that in view of participatory research approaches, traditional seed management practices, including seed saving, identification of good material in neighbouring fields, seed exchange and seed sales among farmers, and farmer experimentation with germplasm from diverse sources are not a “necessary evil” to be tolerated at the present development stage in order to permit resource-poor farmers to survive – these practices are part of the research-political solution outlined in the previous paragraph. Precisely these practices would form part of the knowledge basis for developing varieties adapted to marginal environments.1640

5. Role of recombinant DNA technology in increasing productivity in a sustainable way

Plant transformation by recombinant DNA techniques has made revolutionary developments possible, including the transfer of genes between unrelated species. At the same time these new possibilities make this technology highly controversial. Opportunities and risks of this technology need to be balanced against each other. Reviewing this debate would go beyond the scope of this paper. But a few issues will be briefly revisited. In view of the uncertainties that characterise the debate, the view of stakeholders and of the public in India on these issues and their willingness or reluctance to take the risks in order to exploit the potential of this new technology seem to be ultimately the decisive point.

a) Potential of genetically modified crops

The question of whether biotechnology can contribute to solving food security problems in developing countries has been extensively debated elsewhere.1641 Major aspects may be resumed as follows: On the one hand, it is often argued that the transgenic varieties commercialized until now rather focus on agriculture in developed countries and have little to do with the specific needs of marginal farmers in drought-prone areas.1642 On the other hand, other genetically modified (GM) crops already

1637 See SWAMINATHAN (1996a), at 218.1638 See JHA (2001), at 67.1639 See AMANOR (1993), at 62 and BERG (1993), at 72 et seq.1640 For a detailed discussion on possible restrictions on some of these practices by PBRs and the necessary scope of the farmers’ privilege, see below, chapter 6, D.1641 On the benefits and risks of crop biotechnology, in general, see, e.g. GM SCIENCE REVIEW PANEL (2003); PERSLEY/SIEDOW (1999); NUFFIELD COUNCIL ON BIOETHICS (1999); ROYAL SOCIETY OF LONDON et al. (2000). For a focus on developing countries, see, e.g. PERSLEY/LANTIN (2000); PINSTRUP-ANDERSEN/COHEN (2000); TRIPP (2002); PAARLBERG (2000); LUIJBEN/COHEN (2002).1642 See, e.g. BRUSH (2001), at 143; PINSTRUP-ANDERSEN/COHEN (2000), at 151 et seq. The trait which has been consistently dominant in terms of distribution of transgenic crops is indeed herbicide tolerance occupying 77% of the global transgenic area in 2001. Herbicide tolerance is followed by insect resistance, with 15% planted to Bt crops, and 8% planted to crops with stacked genes for herbicide tolerance and insect resistance. See JAMES (2001), at 11.

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commercialized or under development suggest that the potential of genetic engineering goes far beyond these traits. A large range of pests and diseases has been in the focus of research and some GM crops are in an advanced stage of research or even commercial production.1643 A series of crops resistant to viruses or to fungal attacks will be available in the short run.1644 Moreover, a number of transgenic crops are under development or have already been developed, which have enhanced nutritional properties or may provide safer food.1645 Perhaps most importantly in the present context, work which is currently at the research stage also covers traits with the potential to improve crop production in marginal environments, especially by increasing resistance to abiotic stresses such as drought, moisture, acidic soils or salt.1646 On the other hand, genetic engineering for drought resistance seems to have limited success so far.1647

It has to be emphasized that genetic engineering techniques, at least at present, can be applied only to qualitative traits1648 that are governed by a single gene or a small number of genes. However, important crop traits are polygenic.1649 “In general, it is thought that productivity including mean yield and stress tolerance are determined by multiple genes.”1650 Notwithstanding these limitations, transgenic methods seem to have greater potential than conventional techniques to add certain valuable traits. At the same time it is evident that for small and marginal farmers to be able to capture the potential benefits of genetic engineering, the policy environment into which the technology is introduced will be critical.1651

1643 See GM SCIENCE REVIEW (2003), at 166; PERSLEY/SIEDOW (1999), at 3; ZHANG (2000), at 46/47; ALVAREZ-MORALES (2000), at 92. The Indian public and private sector show a strong interest in pest resistance in their R&D programmes. See GHOSH (2002), at 296 et seq., table 3, or DHAR (undated), at 34, table 15. Of the approximately 30 transgenic development projects enumerated by GHOSH, adviser in the Department of Biotechnology, around half are concerned with pest resistance. Many are at the stage of green house testing or even field trials. See also CHATURVEDI (2005), at 14, table 2 "Current profile of GMOs under research in India".1644 See GM SCIENCE REVIEW (2003), at 167 et seq. PERSLEY/SIEDOW (1999), at 3, enumerate virus-resistant melon, papaya, potato, squash, tomato, and sweet pepper as traits presently being field-tested. The University of Delhi has successfully completed transformation of a fungal resistant tomato plant. See GHOSH (2002), at 296 et seq., table 3.1645 See GM SCIENCE REVIEW (2003), at 62; PERSLEY/SIEDOW, at 4; ARENDS/BROWN, at 15.1646 The Indian Agricultural Research Institute has inserted a gene for increased moisture stress resistance into mustard/rape plants which are now ready for field trials. See GHOSH (2002), at 299, table 3. SWAMINATHAN (2000), at 38, mentions a research programme to breed salt-tolerant varieties of rice and other crop plants in coastal areas where the donor of the salt tolerance gene was a mangrove species belonging to the family of Rhizophoraceae.1647 See id.1648 A qualitative trait is a character which is governed by one or a few major genes and concerns discontinous variations, i.e. differences which can be classified into discrete classes.1649 See BERG (1993), at 73. Polygenic means that they are controlled by a high number of genes, each with a small additive effect.1650 See WRIGHT (1996), at 52; see also EVENSON (2002), at 12.1651 In the same vein PINSTRUP-ANDERSEN/COHEN (2000), at 155 et seq., esp. at 159: “Unless developing countries have policies in place to assure that small farmers have access to extension services, productive resources […], markets, and infrastructure, there is considerable risk that the introduction of agricultural biotechnology could lead to increased inequality of income and wealth,

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b) Risks of genetically modified crops

Rarely any agricultural technology has met with such intense opposition to its diffusion. There is increasing literature dealing with the potential negative impacts on human health and environmental implications of this technology.1652 The following is naturally only a short summary. But it permits placing the risks in the context of other breeding technologies and highlights limits of existing knowledge.

aa) Parallels and differences between conventional and genetic engineering methods

Few breeding targets pursued in plant genetic engineering programmes are actually new.1653 They have been addressed until recently through conventional approaches of crop improvement. These methods include techniques to artificially create new variety in germplasm. Modified genes are created by tissue culture methods and induced mutations. The latter method is often cited by genetic engineers as being socially accepted and yet less precise than genetic engineering.1654 Only careful selection in the progenies allows desirable transformations to be identified and the tens of thousands of plants with undesirable mutations to be discarded.1655 And yet, “mutation breeding underpins the plant pedigrees of many of the food crops we eat daily (especially cereals)”.1656 In many cases health and environmental issues are therefore not unique to GM crops. In other cases, however, genetic engineering techniques may introduce novel sources of uncertainty.1657

bb) Health risks

All participants in the debate acknowledge health risks.1658 But views differ on the question of whether or not the food safety considerations raised by plants modified by recombinant DNA techniques are fundamentally of the same nature as those that relate to crops bred by other techniques. The Report of the 2000 FAO/WHO Expert Consultation emphasizes that many concerns raised by transgenic plants are not

because larger farmers may capture most of the benefits through early adoption of the technology, expanded production, and reduced unit costs. […] Growing concentration among companies engaged in agricultural biotechnology research may lead to reduced competition, monopoly or oligopoly profits, exploitation of small farmers and consumers and extraction of special favors from governments. Effective antitrust legislation and enforcement institutions are needed […].” On the social impact of GMOs, see also BRUSH (2001), at 135 et seq.1652 See, e.g. GM SCIENCE REVIEW (2003), with further references. 1653 An illustrative example for different approaches to the same breeding target can be found in the area of plants with altered metabolic products. See WILLNEGGER (2003), at 815 with references.1654 See GM SCIENCE REVIEW (2003), at 51. 1655 See id., at 50. 1656 See id. (2003), at 50.1657 An example are “the biochemical implications of introducing familiar enzymes under the control of novel systems […] and the implications to the host of introducing novel enzymes”. See id. (2003), at 57.1658 See, e.g. GM SCIENCE REVIEW (2003), at 61; PERSLEY/SIEDOW (1999), at 6; FAO/WHO (2000), at 1 et seq.

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specific to this technique but can occur in conventional breeding.1659 Other experts point to the fact that “by virtue of the different processes involved, there will be some source of uncertainty and potential gaps in knowledge that are more salient with respect to GM food production techniques.”1660

It is generally agreed that the safety assessment of food derived from GM plants requires an integrated and stepwise, case-by-case approach.1661 As a starting point, the genetically modified organism is compared with its closest traditional counterparts in order to identify intended and unintended differences.1662 Intended differences arise from the intentionally inserted proteins and metabolites. They are tested for stability of digestion, homology to known toxins or allergens, and acute (single dose) and sub-acute (repeat dose) toxicity.1663 The risk that an allergic protein could be transferred from one organism to another and not be recognized in regulatory screening evidently raises concerns.1664 Further, recombinant DNA techniques have the potential to cause unintended modifications in protein expression and the levels or nature of plant metabolites.1665 The tests currently carried out include extensive selection and laboratory testing, checking for compositional equivalence for major constituents to the conventional counterparts, testing for phenotypic and agronomic equivalence and for nutritional and toxicological equivalence.1666 Critics consider the genome to be comparable to an ecosystem, because no gene functions in isolation, and emphasize the existing gaps of knowledge.1667 They therefore call for clinical-trial type experiments with human volunteers.

1659 See FAO/WHO (2000), at 6 et seq.1660 See GM SCIENCE REVIEW (2003), at 61.1661 See FAO/WHO (2000), at 4.1662 For details on this concept of substantial equivalence, see FAO/WHO (2000), at 1 et seq.1663 See GM SCIENCE REVIEW (2003), at 65.1664 On the issue of allergenicity of food derived from genetically modified organisms (GMOs), see GM SCIENCE REVIEW (2003), at 79 et seq.; FAO/WHO (2000), at 13 et seq.; LEHRER (2000), at 149 et seq.; KRIMSKY (2000), at 235/236.1665 See GM SCIENCE REVIEW (2003), at 70; FAO/WHO (2000), at 6/7 and 9. Such effects can be generated either through the action of the transgene product, or through the random insertion events which might result in disruption of existing genes, modifications of protein expression or formation of new metabolites. See GM SCIENCE REVIEW (2003), at 134; FAO/WHO (2000), at 6. Another example of unintended effects is based on the hypothesis that the Cauliflower mosaic viral promoter (CaMV 35s) could be mobile in the plant genome. See HO, M.-W., RYAN, A., CUMMINS, J. (1999) “Cauliflower mosaic viral promoter – a recipe for disaster?” Microbial Ecology in Heath and Disease 11: 194-197, as quoted by the GM SCIENCE REVIEW (2003), at 244. On the latter issue see also KRIMSKY (2000), at 234.1666 See GM SCIENCE REVIEW (2003), at 70.1667 A good summary of both approaches and their implications is given by KRIMSKY (2000), at 231 et seq. FAO/WHO (2000), at 6/7, also point out that besides the analysis of specific components of the modified plant, in order to increase the probability of detecting unintended effects, profiling techniques are useful alternatives. “However, they are not yet fully developed and validated and have certain limitations.” Id., at 7.

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The potential transfer of transgenic DNA of bacterial or viral origin to gut microflora and mammalian cells is another issue of concern.1668 The FAO/WHO Consultation comes to no conclusion on the significance of this risk, as the available knowledge of the bacteria of the gut microflora is very limited.1669

cc) Environmental impact of genetically modified crops

The topics discussed include inter alia the invasiveness of GM crops,1670 their toxicity to wildlife,1671 the development of new forms of pests, diseases and weeds1672 gene flow from GM crops to other plants and organisms1673 and the reduction of biodiversity. This latter concern is a technology-transcending risk which is not restricted to GM crops and refers back to the discussion at in sub-section 3 above.1674

Regarding invasiveness, the available evidence suggests that transgenic crops will generally behave the same way as conventionally bred crops. But the issue is unique to transgenic crops in so far as GM techniques may in the future enable breeders to insert new fitness enhancing traits.1675 Concerning toxicity of transgenic crops to wildlife, there is a scientific agreement that transgenic plants engineered to contain active toxins may be toxic to non-target species.1676 Yet, there is little research evidence on the ecological impact in the field, especially in comparison to the impact of accepted agricultural practices using conventionally bred pest resistance traits and pesticides, which already have an adverse impact on biodiversity and soil functioning.1677 The evidence on Bt crops suggests that they are generally beneficial to in-crop biodiversity

1668 See FAO/WHO (2000), at 11 et seq.; GM SCIENCE REVIEW (2003), at 93. On the question of whether consumption of feed derived from GMOs by farm animals increase the heath hazard for consumers of the resulting food products, see GM SCIENCE REVIEW (2003), at 100, et seq.1669 See id.1670 See GM SCIENCE REVIEW (2003), at 111 et seq.1671 See GM SCIENCE REVIEW (2003), at 119 et seq.1672 See GM SCIENCE REVIEW (2003), at 137 et seq.1673 See GM SCIENCE REVIEW PANEL (2001), at 195 et seq. and the crop-wise discussion by EASTHAM/SWEET (2002).1674 For a detailed discussion with respect to GMOs, see AMMANN (2003). 1675 GM SCIENCE REVIEW (2003), at 111 et seq. The PANEL predicts a trend in GM crop R&D towards crops that are better adapted to biotic and abiotic conditions of cultivated environments. These crops will need less human intervention to survive and thrive. By definition, they may be better able to persist and become invasive. 1676 See GM SCIENCE REVIEW (2003), at 119.1677 See GM SCIENCE REVIEW (2003), at 119 and 129 et seq. An illustrative example is potato cyst nematode (PCN) resistance (see id. at 172): “The current control of PCN in the UK is based on oxime carbamates/carbamates that are highly toxic to most animals. One (Temik or aldicarb) will be withdrawn by the EU in a few years. The future of the other main chemical […] is uncertain. Aldicarb is very water-soluble, becomes stable in groundwater and kills soil animals e.g. earthworm populations and has the potential to kill birds if not used correctly. […] A GM approach developed by the University of Leeds involves a plant gene naturally expressed in rice seed. Similar proteins are found in maize seed, egg white and saliva. […] [These proteins] interfere with the nematode’s ability to digest its dietary protein. Several field trials in the UK have established that [they] provide a useful level of resistance when expressed in potato [reference omitted]. The resistance has recently been shown to stack with natural partial resistance and obtain full control of PCM [reference omitted]. Preliminary biosafety studies indicate that soil microbes, earthworms, aphids and leafhoppers are not affected by plants expressing [the relevant protein].”

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when compared to insecticide applications, but the knowledge on the effects of Bttoxins on non-target herbivores and prey-mediated effects on predators and parasitoids is still limited.1678

Gene flow occurs by mating between plants of sexually compatible plant species. Some crops are able to exchange genes with their wild relatives.1679 Crop-to-crop gene flow can be controlled to a certain extent by employing separation distances between GM and non-GM crops and by implementing agronomic practices that minimise the dispersal of genes through seed.1680 Given the current structure of the Indian seed market with informal seed sources playing a major role, gene flow is likely to occur on a large scale. Thus, fixing thresholds of maximum GM presence in non-GM crops might become impossible.1681 Whether gene flow has a negative impact will depend on the effect of the modified gene and its persistence in individuals in future generations.

There are also concerns that there might be a potential for gene transfer from GM crops to soil microbes and to viruses.1682 Again, the issue is not unique to GM crops, but the probability of such an uptake may be higher for the transgenes currently in use than for native plant DNA, because they contain DNA derived from bacteria and are therefore more likely to contain homologous DNA sequences.1683 The harmfulness of this integration will depend on the persistence of the gene and its effect.1684 A further issue is the gene transfer from GM plants to viruses, when the transgenic plant contains non-coding elements derived from plant viruses or expresses one or more functional or dysfunctional viral sequences. The GM SCIENCE REVIEW PANEL acknowledges that “[i]t is theoretically possible, but without precedent, that any tested and approved viral transgene sequence could, or would render any invading wild-type

1678 GM SCIENCE REVIEW (2003), at 119 and 125 et seq. Yet, it is mentioned that Event 176 Bt corn might be a possible exception. This Bt variety caused significant adverse effects in Monarch larvae. (Id. at 126 and 129)1679 This concern is voiced by BRUSH (2001), at 140. On gene flow among maize landraces, improved maize varieties, GM crops and teosite, see CIMMYT (1997).1680 On the necessary separation distances, see ARENDS/BROWN (1999), at 15.1681 The co-existence of genetically modified, conventional and organic crop systems would require the unintended presence of GMO in non-GM crops to stay below a fixed legal threshold. On possible genetic mechanisms for containing crop-to-crop gene flow, so-called “genetic use restriction technologies” (GURTS), see GM SCIENCE REVIEW (2003), at 207/208. Yet, these technologies are highly controversial, as they would not only contain gene flow but also prevent farmers from seed saving. PINSTRUP-ANDERSEN/COHEN (2000), at 150, stress an additional problem: “This technology is not appropriate for small farmers in developing countries because existing infrastructure and production processes may not be able to keep fertile and infertile seeds apart. Small farmers could face severe consequences if they inadvertently planted infertile seeds.” The same concerns are expressed by TRIPP (2002), at 242. 1682 See GM SCIENCE REVIEW PANEL (2003), at 225. 1683 See id., at 232.1684 See id., at 225. On the potential acquisition of antibiotic resistance genes by disease-causing bacteria, see id. at 331, and FAO/WHO (2000), at 12. The FAO/WHO Consultation recommends avoiding certain antibiotic resistances. Another – hypothetical – example is the acquisition of a glyphosate resistance gene by a fungus, to which the herbicide glyphosate is normally toxic. The transgenic fungus would then possibly spread within the herbicide-treated environment at the expense of other fungi. See GM SCIENCE REVIEW (2003), at 321.

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virus more pathogenic, affect its transmissibility, pathogenicity or other characteristics.”1685 On the other hand, the PANEL argues that the natural presence of different viruses in infected plants and current agricultural practices provide far greater opportunities for recombination to create new virus strains.1686

c) Attitude of the Indian public and stakeholders towards biotechnology

As concerns the passionate public polarization that accompanies the introduction of transgenic crops into agriculture, India has been no exception. During the last few years, GM crops have become the subject of a fierce debate joined by scientists, federal and state governments, environmentalists, NGOs and media.1687 The spectrum of opinions ranges from total rejection of transgenic crops in any form of agriculture, to statements that biotechnology holds “the promise of great benefits for small, and easily controllable risks.”1688 An important feature of the debate is that biotechnology is inscribed into the wider controversy on development, globalisation, and IP issues.1689

Some Indian NGOs are very active in the debate, on the proponent as well as on the opponent side. Vandana SHIVA is among those spearheading the opposition to biotechnology.1690 SHIVA’s criticism is predominantly linked to technology-transcending issues, such as dominance of multinational corporations, loss of biodiversity due to monocultures, reduced access to seed due to IPRs, and loss of control of farmers over the resources in their fields.1691 The scepticism about transgenic varieties is consistent with her long-standing opposition to Green Revolution technology, or more generally, any formal sector plant breeding.1692 The distrust of HYVs due to negative experiences with “chemical agriculture” and the strong feeling that crops that kill insects are dangerous, is also behind the “prajateerpu”, i.e. “people’s verdict”, developed in a combination of citizen’s jury and scenario workshop in Andhra Pradesh.1693 The twelve jury members, the majority small and marginal farmers, after an expert hearing opposed GM crops and “[w]asting

1685 See GM SCIENCE REVIEW PANEL (2003), at 236. For further references to the scientific debate, see id., at 237. 1686 For references to contrary views, see GM SCIENCE REVIEW PANEL (2003), at 240. GM crop field trials and commercial scale cultivation of virus resistant GM crops have yielded no evidence for horizontal gene transfer to viruses so far. (See id., at 241)1687 An excellent, albeit slightly caricatured, summary of the “orchestra of positions” is given by VISVANATHAN/PARMAR (2002).1688 See VISALAKSHI/GOSH (2002), at 268.1689 See, e.g. SHANTHARAM/MONTGOMERY (1999), esp. at 91 et seq.1690 Other organisations besides those named in the text include the Andhra Pradesh Coalition in Defence of Diversity, the Deccan Development Society and the South Asia Network for Food, Ecology and Culture. See, e.g. DDS et al. (2002), “The Hyderabad Statement of Solidarity against genetic engineering, intellectual property rights and for diversity in agriculture” signed by the two latter NGOs; See also TIMES OF INDIA (2003). 1691 See, e.g. SHIVA (1995). See also the summary of her position by VISVANATHAN/PARMAR (2002), at 2722.1692 See e.g. SHIVA (1995), at 199.1693 See PIMBERT/WAKEFORD (2002), at 9 et seq.

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money on research and development into inappropriate technologies […].”1694

Likewise, certain farmer leaders and their supporters have rallied against the introduction of GM crops, especially Prof. NANJUNDASWAMY and his organisation, Karnataka Rajya Ryota Sangha (KRRS), and TIKAIT, a farmers’ leader from Uttar Pradesh. Again, the biotechnology concerns of these groups are intertwined with fears related to globalisation, and monopolistic control of MNCs over seed.1695

The first large scale field trials of Bt cotton in Karnataka and Andhra Pradesh have provoked protests from farmers who burned trial plants and prompted the Government of Andhra Pradesh to stop trials on farmers’ fields and restrict them to trial stations of the N.G. Ranga Agricultural University.1696 One of the arguments of the demonstrators was the erroneous rumour that the crops contained a “terminator gene”.1697

Some farmer leaders, however, favour the introduction of transgenic crops as they see economic opportunities in this new technology and fear being bypassed by this scientific development.1698 In the NGO sector, Suman SAHAI, president of the “Gene Campaign” and professor of human genetics at the University of Heidelberg, takes a middle position. On the one hand, she stresses the enormous potential that national biotechnological research could have in solving food security problems1699 and making India a global player in an important future field of technology.1700 Against this background, she rejects purely ethical considerations against biotechnology arguing that “[d]eveloping countries should not just follow the moral dilemmas of the North, but balance ethics of biotechnology against ethics of poverty. […] Is it more unethical to ‘interfere in God’s work’ than to allow hunger deaths when these can be prevented?”1701 On the other hand, she stresses the importance of biosafety issues.1702

In the context of Bt cotton, she has strongly criticised the introduction in India of GM crops developed for totally different climatic and socio-economic conditions,1703 rising unrealistic expectations coupled with insufficient education of farmers about the

1694 See id., at 9.1695 See the description of the movement by VISVANATHAN/PARMAR, at 2718 et seq.1696 See id.1697 See TRIPP (2000), at 5.1698 VISVANATHAN/PARMAR (2002), at 2723, mention Sharad JOSHI, PIMBERT/WAKEFORD (2002) the leader of a lobby group for larger farmers, Chengal REDDY. 1699 See SAHAI (undated brochure); SAHAI (1995a), at 2917.1700 See SAHAI (1995a), at 2917.1701 See SAHAI (1999b). See also SINHA/SAHAI (1999), at 159 et seq. 1702 See id.1703 As background information, it is useful to know that two transgenic varieties recently have become available in India, one marketed by Mahyco-Monsanto after having received official approval in March 2002, the other illegally supplied by the Navbharat seed company the year before. SAHAI (undated leaflet 1) argues that Bt cotton was developed for countries where the predominant pest is the bollworm and where pest attacks are not heavy because of the cool climate. In tropical countries pesticide use will have to continue, as pest attack is far more intense and as there are many kinds of cotton pests apart from the bollworm. She reports that farmers are not ready to set 20% of their acreage aside for non-Bt cotton (see undated leaflet 2), and warns that the bollworm will quickly become resistant to the Bt toxin, with severe consequences for small farmers who depend on the success of each crop for their existence. The available statements on the current performance of Btcotton in India are contradictory. See WHITFIELD (2003); MENON 2001; DAVID/SAI (2002); AP COALITION IN DEFENSE OF DIVERSITY (2003).

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dangers of not observing the refuge prescriptions,1704 and lax governmental monitoring and regulation of the first GM crops released for field trials and commercialization.1705

There seems to be a widespread sentiment among leading Indian agricultural researchers and other scientists that the potential of genetic engineering should be exploited to improve agricultural production.1706 One of the most important advocates for biotechnology among scientists is M.S. SWAMINATHAN, “father of the green revolution and in terms of policy impact the most influential scientist of the era”,1707

former Director of the IRRI,1708 who integrates biotechnology into his concept of ecological and social sustainability.1709 However, SWAMINATHAN also draws attention to health and environmental safety issues,1710 as well as to a number of technology-transcending risks.1711 Contrary views, of course, also exist in the scientific community.1712 Yet, they are much less apparent. Private sector seed companies in India have shown a great interest in the opportunities of biotechnology.1713 However, it also has been reported that this enthusiasm has cooled off recently possibly due to public opposition and regulatory uncertainties.1714

Concerning the views of the general public in India, the results of the International Bioethics Survey conducted in 1993 in ten countries including India suggest that it has a less reserved attitude towards genetic engineering than in Europe.1715 But still a large

1704 See SAHAI (undated leaflet 2).1705 See SAHAI (undated leaflet 2). On the failures of the government in preventing the diffusion of illegal Bt cotton, see also MENON (2001).1706 See, e.g. BHALLA/SINGH (2001), at 212; HANSRA/PERUMAL/CHANDRAKANDAN (2001), at 277, reproducing the concert recommendations endorsed by the participants of the National Symposium on “Modernising Indian Agriculture in 21st Century: Challenges, Opportunities and Strategies”; V.L. CHOPRA (1993), at vi; SHARMA (2000); SELVARAJAN/JOSHI/O’TOOLE (1999), at 3; RAO (2003), at 4 of 11; RAMANI/VISALAKSHI (2000), at 298; RHOE/SHANTHARAM/BABU (2002), at 275; VISVANATHAN/PARMAR, at 2720/2721, mention D.M. Balasubramanium and Pushpa Bhargay of the Centre for Cellular and Molecular Biology, G. Padmanabhan of the Indian Institute of Science, as well as Indian scientist in the diaspora, namely Chanapatna Prakash, professor of plant molecular genetics at Tuskagee, Gurudev Khush of the IRRI, winner of the 1996 World Food Prize and Manjunath, who now heads the Monsanto Centre in Bangalore. The positive attitude towards genetic engineering of these scientists does not exclude awareness of biosafety implications. See, e.g. GHOSH (2002), at 292 et seq.1707 See VISVANATHAN/PARMAR, at 2716.1708 See SWAMINATHAN (1996b), at 243 et seq., and SWAMINATHAN (2000).1709 SeeSWAMINATHAN (2000), at 41. 1710 See id., at 38/39. 1711 See id., at 39.1712 DHAR (2001) even states that “[b]iotechnology has been received with a considerable degree of scepticism in Indian agricultural circles.” 1713 See in particular the picture drawn by SELVARAJAN/JOSHI/O’TOOLE (1999). See also the statements of important persons of the seed industry, e.g. CHOPRA (1999), at vi, President of the Seed Association of India.1714 See PADMANABHAN (2001), referring to the Delhi-based company Proagro PGS, who was conducting glass house and limited field experiments for tomato, brinjal, cauliflower and cabbage, suspending the work in 2001.1715 On the following see MACER et al. (2000). For this survey “questionnaires involving 150 questions in total, including 35 open-ended questions, were developed to look at how people think

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portion is opposed to the use of this technology. Three population samples were chosen, namely the “public”, university students and high school teachers. It has to be mentioned that the survey was performed in English and that the “public” samples from India had a higher level of formal education than the average population. A common pattern in all countries was that many people perceived both risks and benefits simultaneously and were attempting to balance these.1716 In response to a question on the environmental use of genetically engineered organisms designed to produce better tasting tomatoes, assuming that “there was no direct risk to humans and only very remote risks to the environment” 73% of the Indian public sample approved this use.1717 Approval was even higher with 78% for disease resistant crops. Yet, confronted with gene transfer between unrelated species1718 or even organisms of different kingdoms1719 only 56% of the public samples found plant to plant gene transfers acceptable, and only 29% held this view concerning gene transfers from animals to plants.1720

The Indian Government leaves no doubt that biotechnology, including recombinant DNA technology, is a research priority and seen as a technique of great potential to ensure future food security. As early as 1982 the Indian Government established a National Biotechnology Promotion Board as a nodal agency for the promotion of biotechnology in India. The Board was converted in 1986-87 into the Department of Biotechnology, a separate government department under the aegis of the Ministry of Science and Technology.1721 Publicly funded research institutes like the ICAR, the Indian Council for Medical Research (ICMR), the Department of Scientific and Industrial Research (DSIR) and the Council for Scientific and Industrial Research (CSIR), as well as university research institutes followed this policy and have engaged in biotechnological research programmes.1722 The 9th FIVE YEAR PLAN enumerates biotechnology among the “key elements of [the] growth strategy”.1723 In the 10th FIVE YEAR PLAN genetic engineering is still seen as a great opportunity, but safety concerns are mentioned.1724 The view of the central Government of India is shared by

about diseases, life, nature, and selected issues of science and technology, for example biotechnology, genetic engineering, genetic screening, and gene therapy.” Id., at 315.1716 See MACER et al. (2000), at 317 et seq.1717 See MACER et al. (2000), at 321, table 1. The percentage of medical or biology students and school biology teachers was even higher.1718 The survey question read as follows: “Genes from most types of organisms are interchangeable. Would potatoes made more nutritious through biotechnology be acceptable or unacceptable to you if genes were added from another type of plant, such as corn?” See MACER et al. (2000), at 318.1719 The survey question read as follows: “Would such potatoes be acceptable or unacceptable to you if the new genes came from an animal?” See MACER et al. (2000), at 318.1720 See MACER et al. (2000), at 318/319.1721 See RAMANI/VISALAKSHI (2000), at 302.1722 See DHAR (undated), at 7 et seq. and GHOSH (2002), at 297 et seq. for examples. There are about 800 researchers in the public sector working on biotechnology. See RAMANI/VISALAKSHI (2000), at 303. 1723 GOVERNMENT OF INDIA (1997-2002), at para. 4.1.42.1724 See GOVERNMENT OF INDIA (2002-2007), at para. 5.1.168: “With technological advancement, a very valuable tool in the form of ‘genetic engineering’ has become available for mankind. The seed technology/genetic engineering are to play a major role in evolving high potential material to meet the future requirement of food, feed and fibre and the raw material to various industries. Whereas these

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a large number of State governments. According to SHARMA, “States are taking keen interest in developing biotechnology-based activities. The States of Uttar Pradesh, Arunachal Pradesh, Madhya Pradesh, Kerala, West Bengal, Jammu and Kashmir, Haryana, Mizoram, Punjab, Gujarat, Meghalaya, Sikkim and Bihar have started large-scale demonstration activities and training programmes.1725

6. Conclusions

There is a wide consensus, albeit not shared by all participants in the debate, that there is a need for modern agricultural technology, especially advanced varieties, to meet the challenges posed to Indian agricultural policy. Consequently there is a need for formal sector research and development of improved varieties. At the same time, the in situ conservation and enhancement of traditional varieties by farmers is of crucial importance for future modern breeding.

There seems to be an agreement that rainfed areas will play an important role in achieving sustained agricultural growth. Technical progress particularly in these areas is needed. Yet, low capital resources and irregular rainfall make agricultural intensification more risky for farmers. For these difficult agro-climatic environments many authors claim a stronger research emphasis on low-input agriculture and poor man’s crops, e.g. on coarse cereals and pulses. It is suggested that new research approaches should be developed for these areas, which should be location-specific, involve farmers in research and experimentation and build on local knowledge and farmers’ varieties.

Genetic engineering has the potential to address some stress factors (such as pests, diseases, flood, salt, drought) which presently limit agricultural output. But transgenic crops also present new risks which are still poorly understood. In India, there appears to exist a widespread approval at the governmental level and also in the milieu of plant breeders and scientists of an approach which leaves the option of recombinant DNA techniques open in order to secure agricultural growth including in marginal environments. Yet, most proponents rightly stress that genetic engineering is not a miracle cure, but only one element in a comprehensive innovation strategy for broad based agricultural growth.1726

V. Need for increased private sector participation

The issue of what role the public and private sectors could play in pursuing the above strategies, is evidently crucial when discussing the impact of IPR protection. One of the primary aims of PBRs and patents indeed is to provide an incentive for private sector investment in R&D activities.

technologies are required to be developed and adopted, the country has to be careful about the likely adverse impacts of Genetically Modified Organisms (GMOs). While research activities relating to this need to be intensified, the commercial utilisation of GMOs must be allowed only after thorough testing.”1725 See SHARMA (2000), at 56.1726 See, e.g. CHOPRA (2001), at 26, para. 97 and at 28, para. 109 et seq.

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In the Indian debate it is often argued that the public seed sector proved by and large up to the challenges of the last thirty years, especially by attaining a large number of varietal breakthroughs which permitted the continued success of the Green Revolution. Therefore the agricultural research structure should remain as it has been until recently, i.e. with a private seed industry concentrating on hybrids and a strong public sector taking care of the technological advance in all other areas.1727 This opinion is often coupled with the conviction that private enterprises would not take care of the needs of the farming community, the private sector being largely controlled by narrow profit motives.1728 Even leaving this latter line of argument aside, the achievements of the past indeed begs the question why Indian agricultural research policy should be changed in this respect.

1. Shortcomings of public R&D

One recurrent argument is the superior efficiency of private sector research. It seems that the Indian public seed system does not escape the familiar problems of public sector organisations.1729 According to JHA, several assessments indicate a decline in productivity of public science and technology institutions, including those in agriculture in recent years.1730 This has even prompted the government to constitute a committee “to review the administrative structure of the Indian Council of Agricultural Research (ICAR) and its administrative and financial linkages with agricultural universities in order to streamline this apex body in view of the emerging challenges of Indian agriculture and agricultural research […].”1731 JHA states that “[a]ny scientist in ICAR will endorse that bureaucracy and associated evils are the root cause of inefficiency. Obstructive rules and procedures, complete absence of accountability, stifling centralisation, lack of performance based incentive system and monitoring and evaluation processes, are some examples.”1732 RAMANI and VISALAKSHI further identify a hierarchy problem and fluctuating research strategies depending on the respective government.1733 SRINIVASAN highlighting trends in public agricultural research expenditures,1734 observes a decline in the growth rate of research expenditures after the mid-1980s compared to the previous two decades while at the

1727 See, e.g. the “plea for status quo” of V.K. RAMACHANDRAM, in SWAMINATHAN (1995a), at 227; SAHAI (1994c), at 90, also pleads for keeping plant breeding in the public domain.1728 See PANDEY (1994), at 10, referring to the argumentation of the Karnataka Rajya Ryota Sangh (KRRS), a farmers’ organisation lobbying against private sector involvement in seed supply.1729 On the general theory of public vs. private provision of goods and services, see JAFFE/SRINIVASTA (1992), at 12 et seq. On problems which may be associated with public sector varietal development operations, see id. at 24. Interesting in the present context also FARRINGTON et al. (1998), who point out a number of weaknesses of the current research and extension system, yet do not take a position on the possible desirability of private sector involvement. 1730 See JHA (2002).1731 Quoted id.1732 See id.1733 See RAMANI/VISALAKSHI (2000), at 301. See also PERUMAL (2001), at 80, stating that work culture in publicly funded institutions is fading and reflecting on how to develop work efficiency/accountability.1734 See SRINIVASAN (2001), at 354 et seq.

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same time a growth of personnel has occurred.1735 This leads to an unfavourable composition of ICAR research expenditures, with establishment costs (mainly salaries) representing a share of 63% and operating expenses having declined to 23%, a large part of which is dedicated to infrastructure maintenance.1736 The scenario in State Agrucultural Universities (SAUs) is similar.1737 “The declining trend in expenditure per researcher has adverse implications for the productivity and efficiency of the public research system.”1738

SRINIVASAN sees the lack of efficiency confirmed by the low rate of adoption and diffusion of varieties released by the public sector research system.1739 In his case study on wheat he observes that only 65% of the released varieties have ever made it to the seed production chain, and only some 30% remained in the seed production chain for more than two years. The top ten varieties accounted for 57% of the breeder seed production and the top 40 for 90%. While varietal concentration is a phenomenon which is not foreign to industrialized country markets dominated by the private sector either,1740 “the high rate of attrition of public varieties after they have been extensively tested for more than three years in multi-locational trials” is a matter of concern.1741

Whether the problem lies in financial and managerial weaknesses of the public seed production and distribution system or whether the failure has to be sought in the poor adaptation of many public varieties to the actual needs of farmers is controversial.1742

A partial explanation may be sought in the limited knowledge of farmers on available commercial varieties/hybrids and their specific characteristics.1743 But the weaknesses of the centralised “top down” research approach completely divorced from the commercialization of their varieties and lacking an effective feedback mechanism are widely recognized.1744 In this respect, the private sector might have advantages over public sector organisations as there are stronger organisational linkages between seeddevelopment and marketing and the strategy will be rather demand-driven. There evidently may be counter-examples of supply-driven private activities. Especially international firms may be tempted to build up markets in India for already existing products, which may not be appropriate for the Indian environment, rather than creating new technologies for local needs.1745

1735 See id., at 357.1736 See id., at 358.1737 See id., at 359.1738 See id., at 359. 1739 See SRINIVASAN (2001), at 360 et seq..1740 See RANGNEKAR (2000b), at 9 et seq.1741 See SRINIVASAN (2001), at 363. 1742 See SRINIVASAN (2001), at 366.1743 See TRIPP (2002) and TRIPP/PAL (1998), at 5 et seq. Fellow farmers are a principal source of information for farmers for choosing a variety. This evidently leads to a multiplier effect once some farmers have successfully adopted a variety. 1744 See SRINIVASAN (2001), at 366; KANNAIYAN (2001), at 51; JHA (2001), at 67; SWAMY (2001), at 96 et seq.1745 The case of Bt cotton may illustrate this phenomenon, as there are reasonable doubts whether the resistance strategy developed for these varieties will work in India under different climatic conditions with increased pest levels and likely failures in the observation of refuge practices.

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It may be hoped that public sector reforms under way will eventually remedy shortcomings of the public sector seed development and production system and address issues such as reward systems, accountability, monitoring, decentralisation, farmers’ feedback, etc. Nevertheless, the obvious weaknesses of the public sector organisation suggest that private sector intervention may be an alternative worth considering in areas which can be adequately serviced by commercial agencies.

2. Financial constraints

The second and more important argument is the financial constraints experienced by the public sector in India. SRINIVASAN identifies a need for agricultural research expenditures to be increased substantially, as the percentage of agricultural research expenditures to agricultural GDP is estimated to be only 0.3, whereas the norm recommended by the UN World Food Conference in 1974 is 0.5%, the target advocated by the World Bank even 2%.1746 In spite of the economic reforms undertaken in 1991 the fiscal situation of the Centre and the States has deteriorated severely in the 1990s, especially since 1997.1747 The level of non-performing assets is high and the trade deficit is large.1748 Tax revenue receipts at the central level have fallen from 11.3% of GDP in 1989-1990 to 8.8% in 1999-2000, whereas total expenditure has remained at around 16% in the last decade.1749 The fiscal deficit lies around 6%.1750 Interest payments represent over 28% of the centre’s total disbursements in 2003/2004. Distressingly, as percentage of the GDP, the central government’s total liabilities have continuously risen from 51% in 1995-96 to 65% in 2003-04.1751 This is bound to have repercussions on R&D expenditures. SRINIVASAN concludes that “[g]iven the current level of fiscal deficit of the Government of India (6-8% of GDP) and the pressure to reduce it, it is unlikely that public research spending can be substantially stepped up. Much of the increase in research expenditures may have to come from the private sector.”1752

Even if at the national level the effort would be made to step up R&D investment, the picture at the international level is rather worrysome too. It may be recalled that the success of the Green Revolution was based on a partnership between international research programmes and national research and extension programmes in developing countries.1753 The repetition of the Green Revolution success-model seems doubtful, as the international funding for agricultural research slowed markedly after 1990 and demonstrated the vulnerability of the system.1754 An illustrative example for the changed climate of international agricultural research funding is the situation of the

1746 See SRINIVASAN (2001), at 359.1747 See SAXENA (2001), at 3; CHOPRA (2001), at 2.1748 See CHOPRA (2001), at 2.1749 See SAXENA (2001), at 3; EPW RESEARCH FOUNDATION (2003), at 1887.1750 See EPW RESEARCH FOUNDATION (2003), at 1887; SRINIVASAN (2001), at 359.1751 See EPW RESEARCH FOUNDATION (2003), at 1887.1752 See SRINIVASAN (2001), at 359.1753 See BRUSH (2001), at 160. On contributions of international research to the development of modern varieties, see also EVENSON (2002), at 4 et seq.1754 On this slowdown see BRUSH (2001), at 160, referring to Jock R. Anderson, “Selected Policy Issues in International Agricultural Research”, 26 World Development (1998), 1149, 1151.

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International Crop Research Institute for the Semi-Arid Tropics (ICRISAT) at Hyderabad,1755 which was only able to continue important research projects by building up a partnership with private seed companies.1756 More generally, the CGIAR system experienced a crisis in the mid-1990s when a drop in support from four major donors curtailed the budget and hampered implementation of research programmes.1757

A renewal programme which aimed inter alia at refocusing the research agenda, creating greater transparency, ensuring efficiency and effectiveness was carried out and permitted the CGIAR to regain the confidence of its sponsors. The funding for high priority CGIAR research has thus reexpanded from the pre-renewal low of US$220 - 240 million to an estimated US$ 335 - 340 million for 1998.1758 In 2001 CGIAR Members contributed US$ 337 million to the CGIAR’s research budget.1759 Yet, seen in the context of the general trend in external assistance to agriculture, this rather points towards a stagnation or even decline, not towards the necessary increase in investment in R&D for adaptation of crops to developing country agro-environments.1760 It is also noteworthy that the CGIAR is far behind the private sector technically in its basic capacity to develop transgenic varieties.1761

Public sector seed development, production and extension are likely to remain financially constrained and the pressure towards “slimming-down” and re-focusing is likely to continue. Many authors and, importantly, also the Indian government therefore agree on the desirability of a stronger private sector participation in seed R&D as well as production. In the Recitals of the Protection of Plant Varieties and Farmers’ Rights Act the legislator stresses that “[…] for accelerated agricultural development in the country, it is necessary to protect PBRs to stimulate investment for research and development, both in the public and private sector, for the development of new plant varieties”.1762 Many authors share the view that the contribution of the private sector to agro-technological progress is necessary to solve the challenges outlined above.1763 Yet, it seems very likely that there will be areas where the public

1755 The centre works on sorghum, millet, groundnut, chickpea and pigeonpea and has provided germplasm, segregating lines and even finished hybrids and varieties to both public and private sector companies in India. See CHOPRA (2001), at 16.1756 See CHOPRA (2001), at 20. CHOPRA reports that “[…] ICRISAT has recently been facing financial crunch which threatened continuation of important research projects which are useful to the nascent Indian seed industry R&D efforts. Hence ICRISAT sought funds from private seed companies who have benefited economically from its research in the past and stand to benefit in the future. Nine seed companies have signed a ‘Memorandum of Understanding’ and provided budgetary support of approximately US$ 276,000 to each of the pearl millet and sorghum programs over 5 year period (2000-2005). An effective partnership is thus likely to evolve among the NARS [National Agricultural Research System], public sector and private sector which are becoming stronger and are increasingly establishing collaborations with IARCs, such as, ICRISAT.”1757 See CGIAR (website history).1758 See id.1759 See CGIAR (2001).1760 On the decline of external assistance for agricultural development, see FAO (2002), point 5. 1761 See PAARLBERG (2000), at 169.1762 See 2nd Recital; for the government viewpoint, see also RAI (1994), at 127. Dr. Mangla RAI spoke in his position as Assistant Director General (Seeds), ICAR.1763 See SRINIVASAN (2001), at 359, 403/404; SELVARAJAN et al. (1999), at vii; RAO (2003), at 4 of 11, stressing also the limits of private sector participation and identifying a need to avoid

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sector will continue playing a vital role in enhancing the performance of the seed system even after the introduction of an IPRs regime. The potential degree of private sector involvement and the trade-offs that should be made to give the private sector a maximum incentive are a controversial issue and probably the core question of the plant IPR debate in India.

D. CHAPTER CONCLUSIONS

The Indian seed sector has specific features that distinguish it from seed sectors in industrialized countries and need to be taken into account when shaping a plant related IPRs regime for India. First of all, India has still a low seed replacement rate. Currently most of the seed production and distribution is carried out by the farmers themselves. Moreover, India has a huge number of farmers in heterogeneousenvironments and the question to what extent the private sector will be interested in these small and fragmented markets needs to be considered.

Until recently most of the formal sector R&D was carried out in the public sector. This has started changing due to a more liberal government policy which counts increasingly on the contribution of the private sector in providing improved varieties to farmers. However, in the absence of PBRs protection, the private sector has so far focussed on hybrid breeding.

The status quo is unsatisfactory, as the Indian agricultural sector is under enormouspressure to in increase production. The Government of India, the private sector seed industry and many Indian authors stress the importance of modern agricultural technology in achieving this aim. They also see a great opportunity in agricultural biotechnology. Especially for the development of this technology, private investments are urgently needed as the public sector faces severe budgetary constraints. On the other hand, many experts also emphasize the importance of the maintenance and use of in situ genetic diversity which requires that farmers are willing to engage in conservation of traditional germplasm instead of switching to modern crops.

There is a consensus that the next growth will have to come from rainfed areas. Further, it will have to include marginal farmers which have been excluded from the success of the input-intensive Green Revolution technology. While modern agricultural technology will play an important role in addressing the needs of farmers in rainfed zones, there are areas which are characterised by a wide diversity of agro-climatical conditions, low capital resources and where farmers perceive intensification as risky. When framing an IPR system it has to be kept in mind that these areas may require other strategies that involve enhanced location specific research, integrating farmers in experimentation and crop improvement and building on traditional practices

overlapping between the two sectors even as the complementarities between them are fully exploited; DAR (2001), Dar is Director General of ICRISAT; RHOE et al. (2002), at 272 on public/private collaboration in the area of biotechnology; for an international commentator, see HALL (2001). The “concert recommendations” of the National Symposium on “Modernising Indian Agriculture in 21st

Century: Challenges, Opportunities Strategies” only address the need for pluralism in extension. See HANSRA et al. (2001), at 275.

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of seed management. These challenges call for the contribution of all three stakeholder groups in providing the necessary technology for future agricultural growth, namely the private sector, the public sector and farmers in their role as seed providers and enhancers.

In a nutshell: Firstly, there is a role for modern research in agricultural production in India, but not all solutions to the problems which the Indian seed sector faces will come from this side. Local practices of farmers, who adapt, improve and disseminate crop genetic material should therefore not be considered as undesirable leftovers from traditional agricultural practices which have to be replaced by modern practices including annual seed replacement. Local adaptation, the use mixed populations and free exchange of local germplasm are part of the solution. Secondly, there is an important role for the private sector in the future development of the seed sector, but it has to be discussed to what extent private firms will take care of the needs of those farmers still by-passed by the Green Revolution.

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CHAPTER 6: THE DEBATE ON POTENTIAL IMPACTS OF PLANT RELATED IPRS ON THE SEED SECTOR IN INDIA

In chapter 4, the economic theory of IPRs and the empirical evidence on its impacts in industrialized and developing countries were outlined. Chapter 5 described the present status of the Indian seed sector, especially its particular structure marked by a very strong informal sector and a focus of the private sector on hybrid breeding. It has also addressed the future challenges that seed sector policy will have to solve, possibly also by IP protection. The findings of these two chapters form the background for the following discussion which will specifically address the potential impacts of the introduction of IPRs on the seed sector in India.

While the analysis in chapter 4 provided arguments in favour of IPRs protection in industrialized countries, at least in industries where fixed costs of R&D are high and imitation easy, there are few certainties when it comes to the positive or negative effects of IPRs in developing countries. Many authors suggest that developing countries only benefit from the introduction of IP protection if they possess the capacity for technological innovation. Yet, there is no answer to the question when exactly in the catching up process of emerging countries the advantages of IP protection, in particular technology spillovers via voluntary technology transfer and a possible push of domestic firms towards innovation, outweigh the disadvantages, in particular the restriction of access to new foreign technologies via imitation. Consequently the following analysis can only be a speculation on plausible scenarios. The objective of this chapter is predominately to present the Indian discussion on the potential impact of plant IPR in the seed sector in India and to measure some of the arguments against the findings of chapter 4.

What makes the prognosis all the more difficult is that the effects of IP protection depend to a large extent on the particular features of the specific regime. A differentiation between the effects of a PBRs system in line with the UPOV 1978 Convention, on the one hand, and of a system of patent protection for plant related innovations, on the other hand, is crucial and often missing in the Indian debate.

Part A will discuss potential impacts on the private sector seed industry. Part B will address the impact on public sector seed organisations, and part C the implications for farmers of different models of plant IPRs. Finally, part D shortly addresses the question of whether the introduction of plant IPR leads to the erosion of genetic resources.

A. IMPACT ON THE PRIVATE SECTOR SEED AND PLANT BIOTECHNOLOGY INDUSTRY

I. Increasing private investment in R&D

Stimulating private investment in research by providing appropriate returns in such investments is one of the major arguments in favour of the introduction of IP

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protection in the area of plant breeding and plant biotechnology.1764 While the basic relationship between appropriability and investments seems to be quite well established1765 and is confirmed by the behaviour of the Indian private seed industry concentrating on hybrid development and production,1766 the argument raises a number of specific controversies in the Indian context which need to be highlighted here.

Firstly, to avoid misunderstandings, it seems appropriate to recall that this strong pro-argument is based on two assumptions, namely that there is a need for modern agricultural research by professional breeders and genetic engineers and a necessity for private investment. Both assumptions are challenged by plant IPR opponents in India.1767 While the analysis in this chapter will be based on the conclusions of chapter 5, it is only fair to emphasize that the rejection of IP protection may be a coherent consequence of a different analysis.

Secondly, since the introduction of a relatively weak PBRs system has been, from the beginning on, the most realistic option, an important issue of debate has been the extent of private sector engagement under such a regime and, conversely, the areas which would still necessitate public sector investment.1768 This question, which is of particular importance against the background of the structure of the Indian farming sector and the significance of marginal areas for future growth, will be discussed in sub-section 1.

Thirdly, many opponents to plant IPRs do not principally question the incentive effect for the private sector, but argue that mostly foreign firms would respond to these incentives and that plant IPRs might thus accelerate a process where domestic firms are driven out of the market. For the discussion of possible scenarios in sub-section 2 the effects of PBRs protection and of patent protection will have to be distinguished.

1764 See e.g. an interview with R.A. MASHELKAR, Director-General, Council of Scientific and Industrial Research (CSIR) in MENON (1996); RAVISHANKAR/ARCHAK (2000), at 1; M.S. SWAMINATHAN RESEARCH FOUNDATION (1996), 16; SINGH/ASOKAN/ASOPA (1990), at 136; ICAR (1994), at 130.1765 See above chapter 4, A.I.1 and B.I.1.1766 See chapter 5, B.II.1.b), especially tables 5.5 and 5.6.1767 SHIVA takes the most radical stand and questions modern agricultural development as such, and consequently also the research that has led to it. She argues that the term of “improvement” in the context of HYV is biased as the output in terms of biomass did not increase. According to SHIVA, high yields are not intrinsic to HYV, the only distinguishing feature being the high responsiveness to inputs such as fertiliser and irrigation. See SHIVA (1995), at 199 et seq. In its generalisation, this view underestimates the potential of modern plant breeding. The yield increases due to hybrid technology, for instance, have their cause in favourable allelic combinations, not in increased absorption of input. Other authors disagree with this assessment of the Green Revolution, but argue that there are important reasons for limiting private sector involvement in seed R&D and production of food grains. Agriculture being the livelihood of the majority of the Indian population, the Government had to take the responsibility for ensuring that reasonably priced seeds for diverse agricultural conditions were available to farmers. See e.g. SAHAI (1995b), at 1573. The analysis of this paper is based on the conclusion that the question who, in the ideal case, should take the responsibility to provide good quality seed to farmers is irrelevant, as the future need for agricultural R&D cannot be met by state funding alone. See above chapter 5, C.V.2.1768 See, e.g. BASANT (1995), at 28 et seq.

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1. Probable limits of private sector involvement

Concluding from the experience gained in the US described in chapter 4,1769 in all likelihood there will be areas where the public sector will continue playing a vital role in enhancing the performance of the seed system after the introduction of a PBRs regime. The remaining question is in which areas and to what extent. Obviously this answer is contingent upon the strength of the protection regime and the resulting degree of appropriability. The Indian farmers’ privilege including a right to sell seed under certain conditions is to a certain extent comparable to the farmers’ privilege under the plant variety protection regime in place in the US until 1994. It has to be kept in mind that the scenario described below would be gradually different in case of a stronger protection preventing farmers from seed selling, seed exchange or even seed saving for their own holdings. Yet, with a stronger protection just as with the weak protection assumed here, the picture of private sector engagement would not be uniform and there would be areas which are of less interest to private investment.

a) Self-pollinated crops

As explained above, the existence of a hybridisation system – which could be “replaced” by appropriability through IPRs – is not the only factor influencing private sector crop portfolios. For instance, high-volume crops, such as rice, wheat, barley and various legumes, leave less margin for charging a higher price for seed.1770

Consequently, they are less attractive for seed firms, especially in self-pollinated crops. Yet, other factors such as scope for value addition and market size also play a role. The latter would favour investment in cereals, especially wheat and rice. The available evidence from the US suggests that the introduction even of a weak PVP system may induce the private sector to make considerable investments in specific profitable self-pollinated crops, in the case of the US in soybean and wheat. In contrast, minor crops such as barley and dry beans received virtually no attention. Analysts point out that “[t]he economic costs of plant breeding programmes determine that single varieties should have a wide usage, which limits investment in minor crops.”1771 Private seed companies in India are likely to be no exception and invest little in minor crops such as pulses (with the exception of soybean).

The Indian seed firms surveyed by SRINIVASAN seemed to suggest that even a relatively modest rise in replacement rates to a level of 10-15% might generate sufficient volume to render plant breeding expenditures worthwhile in the open-pollinated crops such as pearl millet and maize and even in self-pollinated crops such as wheat, rice, soybean.1772 The companies considered that, given the exemptions for use of farm-saved seed, the PVP by itself might not increase the seed replacement rate.

1769 See above chapter 4, B.II.1.a).1770 See above, chapter 5, B.II.1.b).1771 See HARDON/DE BOEF (1993), at 66. See also JAFFEE/SRIVASTAVA (1994), at 107.1772 See SRINIVASAN (2001), at 394. It is noteworthy that the question did not refer to concrete plans of individual companies but to a general prognosis: “How do you think PVP will affect the sales of varieties? Why? Why should sales increase given that farmers can use farm-saved seed of protected varieties?”

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But they suggested that the volume of seed sales of improved varieties might increase if unauthorised multiplication by traders and competitors were to be controlled. Further, they observed that seed replacement rates even for many self-pollinated crops, such as wheat, rice, and soybean, were rising steadily. In the same vein, Dr. BALA RAVI, Assistant Director General (IPR), ICAR, saw an opportunity for the private sector in self-pollinated crops where there is a huge volume potential, as even with a low seed replacement rate, the annual demand could still represent a massive quantity of seed.1773 In contrast, Mr. ARORA, Secretary General of the Seed Association of India (SAI) considered the Indian legislation too weak to induce a change in the pattern of private sector involvement. He predicted that the seed industry would continue concentrating on hybrids.1774

The results of the survey question of SRINIVASAN on future company portfolios suggest that only few companies plan to take up R&D in the area of self/open-pollinated varieties.1775 But these results may only reflect a short-term vision.1776

“When specifically asked about diversification into self/open-pollinated crops, allcompanies stated, in one way or another, that diversification into self/open pollinated varieties would be contingent upon the effective implementation of PVP in India.”1777

From the answers to a question on the varieties the company would attempt to introduce if the PVP legislation was enacted, SRINIVASAN concludes that the legislation will have its major impact on vegetables and maize, followed – at some distance – by soybean, wheat and sunflower.1778 Eleven companies out of 24 considered adding vegetables (open-pollinated varieties and hybrids) to their portfolio, eleven expected an impact on maize, with seven of them specifically stating that PVP might induce them to introduce single-cross hybrids.1779 Five seed firms considered the introduction of soybean varieties. Four predicted an impact on their willingness to include wheat in their portfolios, four made the same statement with respect to sunflower. Of the four companies showing an interest in wheat, some stated that they would not undertake their own wheat breeding research, but rather screen varieties

1773 Personal conversation on 3 Sept. 2001. It should be noted that Dr. Bala Ravi did not express official positions of the ICAR.1774 Personal conversation with Mr. ARORA on 31 Aug. 2001.1775 This picture is confirmed by a survey carried out in 2004 by LOUWAARS et al.. They report that“there is relatively little evidence at this early stage that the new PVP will elicit much additional breeding activity outside of hybrids. There are a few private companies that already have their own OPVs [open-pollinated varieties] (e.g. rice, cotton, and certain vegetables); they expect the new legislation will help protect them from competitors, but at this point they have no plans to expand their breeding in this direction. A few companies say that if PVP legislation is effective they may expand into non-hybrid seed, but many others reject the possibility, at least in part because of the very liberal scope for farmer seed saving and exchange. Some seed companies express interest in non-hybrids as a way into the hybrid market.” See LOUWAARS et al. (2005), at 92.1776 On the following see SRINIVASAN (2001), at 387 et seq.1777 See id. at 387.1778 See id. at 390. The question was formulated as follows: “Can you give some idea of what varieties you will attempt to introduce in India if the PVP legislation is enacted?”1779 The companies implied that in the absence of PVP, the protection of parental lines of single cross hybrids was difficult. See id. at 390.

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developed by their collaborators to explore possibilities for commercialization.1780

Three companies predicted an impact on cotton, two on mustard, two on rice, and two on oilseeds respectively, and one considered sudangrass, sorghum, potato, and groundnut respectively.1781

It appears therefore that investment of private companies in R&D for self-pollinated crops will depend on the enforceability of PBRs against competitors and seed traders and the size of the seed market for specific crops.1782 Investments may be expected in soybean, wheat, and possibly also in rice and oilseeds.

Concerning seed production, it would seem that again self-pollinated high-volume crops are less interesting, but that major crops represent an important enough sales volume to attract investments of private firms. TRIPP points out that “when the conditions are appropriate, the private seed industry can […] play an important role in marketing seed of self-pollinated varieties, as illustrated by the case of rice in Andhra Pradesh […].”1783

b) Small farming conditions and high potential rainfed areas

It has been argued that private firms are unlikely to devote resources to the improvement of the productivity of small farmers.1784 Yet such a generalisation – at least if small farmers are not equated with subsistence farmers – seems reductionist. As pointed out by YVAS, small scale farmers do use and purchase inputs, proportionally even to a larger extent than larger farms.1785 They may therefore represent an interesting market as long as they belong to a relatively broad homogenous agro-climatic domain. Likewise, it is suggested here that private seed firms are likely to invest in certain technologies having a wide adaptability in rainfed areas, as their high involvement in coarse cereal hybrid production shows.1786 Short duration high yielding varieties are another technology for rainfed areas for which private seed firms may expect a sufficiently large market.1787

1780 See id., at 390.1781 See id.1782 See also BASANT (1995), at 30.1783 See TRIPP (2002), at 245, referring to Tripp, R., Pal, S., “The private delivery of public crop varieties. Rice in Andhra Pradesh”, World Development 29 (2001), 103-117. 1784 See PINSTRUP-ANDERSEN/COHEN (2000), at 149.1785 See above, chapter 5, C.III.3. See also SRINIVASAN (2001), at 371, highlighting that sorghum and pearl millet hybrids are crops extensively grown by small resource-poor farmers.1786 See above chapter 5, B.II.1.b), table 5.5.1787 See CHOPRA (2001), at 6, para. 20. CHOPRA, President of the Seed Association of India, speaks of “exciting opportunities” offered by recent breakthroughs in this area. Another concrete example of private sector involvement in breeding for drought-prone areas is a sunflower hybrid developed by Advanta India Ltd. specifically for these zones. Personal conversation with Mr. MULLICK, Managing Director, Advanta India Ltd., Director (International Affairs) of the Association of Seed Industry, on 9 Sept. 2001. Mr. Mullick gave this interview in his personal capacity and expressed merely his own views, not the official opinions of Advanta or the ASI.

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c) Marginal and heterogeneous environments

On the other hand, rainfed areas include to a considerable degree agriculturally marginal and heterogeneous locations that are more costly to reach through research and extension.1788 Moreover, unfavourable agro-climatic environments will be less interesting for commercial seed firms as farmers rightly perceive the adoption of a new technology as risky. These areas will in all likelihood need continued involvement of public sector technology development and extension. Similarly, subsistence farmers and poor farmers are not likely to represent an interesting market for private firms as they produce no marketable surplus that would allow them to purchase new seed on a regular basis.

d) Low-input agriculture

Investment of private firms in low input agriculture is not excluded if it is understood simply to mean a reduction of overall input costs, and if an approach can be taken which promises wide adaptability, as is the case, for example, with Bt crops. Yet, sustainable low input agriculture aiming at a maximal independence of farmers from external inputs will also require location adaptation of technology. According to HARDON/DE BOEF, both public and private sector research have a “poor understanding of the genetics of tolerances and adaptations to environmentally induced complex biotic and abiotic stress factors, and difficulty in handling these factors under experimental conditions. Yet these factors are a pre-condition for successful performance of crops under [low external input agriculture].”1789 A statement by CHOPRA suggests that the private sector considers involvement in varietal development in area specific trials and selection.1790 But the private sector remains confronted with a major constraint which is not totally foreign to the public sector either: “[S]cientific breeding […] has been conditioned by the requirements of the formal seed supply system for broad adaptive qualities and uniformity in modern varieties for mass dissemination.”1791 The area or the climate it represents needs to be important enough to promise sufficient returns on investment. Concerning farmer participatory research, a clear answer seems difficult. Some forms of participation of farmers in crop development processes in the private sector will certainly be possible. Relying on a rather decentralized system with a strong interest in client feedback, the private sector may even have some advantages over the public sector. On the other hand, the private sector will be reluctant to part with its germplasm and to encourage farmers to experiment with it, adapt it to their specific individual farming conditions,and exchange these selection results among each other. In this area the public sector would be clearly more flexible.

1788 In the same vein, BRUSH (2001), at 161. It is noteworthy, that the entire formal research system including the public sector has to date difficulties in addressing these areas. See HARDON/DE BOEF (1993), at 67. 1789 See HARDON/DE BOEF (1993), at 66.1790 See CHOPRA (2001), at 6, para. 21: “The research and extension system needs revitalization and integration for the resolution of area specific problems of increasing and sustaining the productivity. This will need relook at farming practices based both on science and information technology.” 1791 See BERG (1993), at 73.

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e) Conclusion

To summarize, it may be assumed that the private seed sector in India, in a different legal environment, would be ready to increase R&D investment. The impact on the development of self-pollinated crops is likely to depend on the seed replacement rate. It seems reasonable to think that the seed replacement rate will reach a threshold where some firms may find investment worthwhile for some major crops, such as wheat and soybean, but that the public sector will continue playing an important role in minor self-pollinated crops. It is suggested here that the technologies developed by the private sector will target and reach also certain groups of small farmers and that high potential rainfed zones1792 will profit from private sector varietal development. On the other hand, there will be limits to private sector involvement which concern especially poor farmers and marginal heterogeneous environments.1793

This scenario would change if stronger PBRs or even patented rights were introduced, restricting rights of farmers to sell, exchange, and possibly even save seed. The seed replacement rate would be bound to increase and thus the interest of private seed firms in self- and open-pollinated crops. Depending on the market size even minor self-pollinated crops might attract attention. Yet, the needs of poor farmers and marginal heterogeneous environment are not likely to be addressed.

2. Incentive for local R&D?

If one acknowledges the argument that plant IPR stimulate private R&D activity in areas which provide some scope for commercial profit the question still arises which types of firms in the private sector will respond to the incentives provided by IPR. An important line of argument invoked by Indian opponents to stronger IP protection is linked to the concern that IPR might not foster the development of indigenous R&D, but rather benefit multinational corporations (MNCs).1794 It is feared that IPRs would create additional constraints for domestic firms trying to catch up with these technological leaders and rather deter them from additional investment in R&D.

Before deducing an argument against patent protection from the above scenario, the issue needs to be raised whether the emphasis should indeed be on building up an indigenous industry in the long run rather than solving the technological needs of farmers as soon as possible by attracting foreign technology and investments. As seen in chapter 4, stimulating location-specific technology could be a motive for a developing country to protect patent rights, even if the country has strong free-riding incentives otherwise.1795 However, there is a strong opinion in India that the IP system

1792 High potential rainfed zones as opposed to low potential rainfed zones. See above, note 1459.1793 In the same vein, LOUWAARS et al. (2005), at 9: “There are still serious challenges with respect to delivering useful varieties, particularly of non-hybrids and so-called ‘orphan crops’, to smallholders. The combination of limited and isolated markets with widespread seed saving means that even fairly strong IPR regimes are unlikely to elicit commercial interest in the near future.”1794 See, e.g. SAHAI (1996b), at 23; RAMANNA (2002), at 18 et seq.; BHUTANI (2004); DASGUPTA (1999).1795 See above chapter 4, A.III.2.

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has to serve the establishment of a domestic innovative industry.1796 The local working requirement which is still present in the Indian legislation even though not TRIPSconform is an expression of this consensus.1797 Some authors even link this question to state sovereignty and food security. SAHAI, for instance, states that

“[i]f a significant proportion of seed production is in foreign hands, then those foreign companies are in a position to wield disproportionate influence on Indian policies. […] Control over seed production means control over food supply. No self-respecting nation can allow foreign companies to threaten its food security by allowing it to control the means of food production.”1798

While this mistrust against foreign enterprises is not shared by all commentators and stakeholders,1799 even those who plead for India’s cooperation with enterprises from industrially more advanced countries in the foreseeable future to add value to its genetic resources, also emphasize the need for a strategy for enhancing the indigenous scientific and technological capabilities.1800 Building up an indigenous innovative industry obviously remains the long-term goal.

When discussing the incentive effect or constraints generated by IP protection for domestic innovative firms, it is important to distinguish between patents and PBRs.

a) Patents

Patents may indeed reduce the “freedom to operate” of competitors of the patentee and of innovators developing down-stream technology.1801 This may increase the entry barriers for newcomers and the costs of research of existing private firms unless they benefit at the same time from the patent system. The economics literature and the debate in India clearly show that emerging countries face a dilemma as long as their domestic companies lag behind their international competitors:1802

1796 See e.g. KEAYLA (1996), esp. at 22 et seq., with respect to the pharmaceutical sector; SAHAI (1994c), at 90, calling for self-reliant growth; WATAL (2000b), at 54; RAMANNA (2002b); KUMAR (2002), at 6 et seq.; and the “Statement on Dunkle’s Draft” adopted in an “All Party Meeting held on 29.01.1992”, reproduced in NATIONAL WORKING GROUP ON PATENT LAWS (1993), at 40. The above view is also underlying the statment of DASGUPTA (1999), at 983.1797 See Sec. 84(1)(c) of the Patent Act.1798 See id.1799 See, e.g. BASANT (1995), at 31/32 who refers to a survey of Indian public and private seed companies conducted in 1988. The majority view was that MNCs will enter India gradually. Most institutions, both public and private, thought it desirable to increase MNC participation through collaborative work on biotechnology in plant breeding. However BASANT also points out that “any legislation on PBR was not on the cards at that time”, let alone patent protection.1800 See GADGIL et al. (1996), at 50. In this report the Subgroup on Biodiversity of the Karnataka Planning Board made recommendations to the Government of Karnataka.1801 “Freedom to operate” is understood here as access to all technologies required to launch a product. See also SEHGAL (1999), at 214. 1802 See e.g. RAMANNA (2002), at 18 et seq.

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aa) Increased FDI, technology transfer and local R&D of multinational corporations

On the one hand, patent protection is likely to facilitate technology licensing arrangements with foreign firms, the transfer of know-how, and FDI in R&D facilities and may thus accelerate local capacity building.1803 The often apprehended strong role of MNCs in the Indian biotechnology industry cannot be equalled with a scenario where these companies merely serve the market by imports of finished products, even though this constellation does occur.1804 Stakeholders predict that patents couldprovide an incentive for foreign firms to choose India as an outsourcing destination for technology development and establish local R&D.1805 The available empirical evidence on the relationship between strength of IP protection and investment in R&D facilities in developing countries is mixed. Many authors find a link between IPRs strength and inward FDI in emerging countries or a link between IPR strength and investment in R&D facilities.1806 However, while KUMAR confirms that the overall strength of the IP regime in an industrialized country affects the level of R&D investments, he finds that this is not true for developing countries.1807 He gives two possible explanations: R&D based in industrialized countries may be more creative or more new- development-oriented, hence demanding stronger protection. On the other hand, MNCs may consider registering patents in their home countries economically more interesting. Both explanations suggest that IP may start playing a role where the MNC outsources more genuine R&D and targets the market of the host country by producing location-specific goods.

bb) Balancing benefits and constraints for domestic firms

On the other hand, Indian authors argue that foreign actors will be able to take advantage of the new patent scenario on a much larger and much faster scale than domestic actors.1808 This also means that, when enforcing their exclusive rights, they

1803 RAVISHANKAR/ARCHAK (2000), at 1, for instance, predict increased technology transfer through joint ventures and/or mergers and acquisitions between domestic and foreign firms.1804 CHATUVEDI (2002a), at 15, mentions the case of Mahyco Seeds which has a tie-up with Monsanto. The company has developed transgenic cotton seeds through back-crossing with transgenic material obtained from Monsanto.1805 With respect to the pharmaceutical sector, IPR emerged as a major issue for most of the speakers at the Bio Asia summit held in Hyderabad in February 2004 jointly organized by the Government of Andhra Pradesh and the All India Biotech Association. (See INFORMATION COMPANY (2004); AIBA (2004)). Speakers at the conference held that unless India recognized product patents, future progress in biotechnology research and development in India would be significantly curtailed. Stephen E. LAWTON, Vice-President for regulatory affairs and general counsel of the international Biotechnology Industry Organization (BIO) representing over 1000 biotechnology companies, institutions, and state biotechnology centres worldwide, suggested that India could be an outsourcing destination for US companies, if India undertook immediate steps to protect IPRs. Since the cost of drug development in India was extremely low, US companies would be able to develop drugs at a fraction of the cost incurred in other countries, while India could thus benefit from the extensive know-how available in developed countries.1806 See above chapter 4, B.I.4.1807 See KUMAR (1995), at 21/22.1808 Id. at 21; DASGUPTA (1999), at 982.

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could hamper the latter in their efforts to build up their biotechnology capacity. SAHAI observes that “[t]he level of intellectual property protection that each country allows is directly related to its level of development.”1809 She refers inter alia to the development with respect to chemical and pharmaceutical inventions. “Industrialised countries kept for themselves the choice of when to switch from process to product patents, making a switch only when they felt they had acquired competitive advantage.”1810

In order to demonstrate that most Indian firms are not likely to benefit from patent protection yet, RAMANNA analyses the recent surge in patent applications in India in the post-1995 period as a result of the policy changes taking place in line with the WTO.1811 The number of patent applications filed with the Indian Patent Office has risen by approximately 150% in 1997-98 compared to 1993-94, crossing the 10,000 mark for the first time in 1997-98. After 1998 the number decreased, dropping below the mark of 5000 in 1999-2000, but rising again to 10,592 in 2001-2002.1812 What is interesting in the present context is that there is an increase in the ratio of foreign to domestic applications in the post-1995 period as compared to previous years. RAMANNA highlights that the rise in patent applications is mostly due to the increase of foreign applications, which were two times higher than the number of domestic applications in 1998-99. In the year 2001-2002 applications originating from India contributed only 22.38% of the total number of applications.1813

Concerning the dynamic perspective, as outlined in chapter 4, we know actually very little on how the development of innovative capacity in developing countries occurs. Economic scholars highlight the need for further research on the relationship between imitation, the development of absorptive capacity for advanced technology, and the presence of MNCs in a developing country.1814 The concern of many Indian authors,1815 which is obviously shared by the Indian legislator, that (at least premature) introduction of patents in the area of biotechnology could lead to a long-term dependence of Indian firms on foreign technology cannot be refuted against the background of the scant findings of economic theory and empirical research. On the other hand, other scenarios are just as possible and are envisaged by Indian experts and

1809 See SAHAI (1994a), at 158.1810 See id., at 159.1811 On the following see RAMANNA (2002), at 18 et seq.1812 See RAMANNA; id., and TIFAC (2004), at 1. RAMANNA explains the increase in patent applications by the policy changes in India’s patent policy. The decline in 1998-1999 is due to the time period provided by the PCT after the Indian accession rather than to a decline in interest in patent filing in India.1813 See TIFAC (2004), at 1. 1814 See above, chapter 4, A.III.1815 See, e.g. DASGUPTA (1999), at 983, who fears that MNCs have sufficient money power and brain to perpetually maintain their lead over the less developed countries. In the same vein, KHURANA (2002), at 12. The domination by MNCs is also a concern expressed in the “Statement on Dunkel Draft Text”, above note 1796, adopted by representatives of the Indian political parties. RAMANNA (2002a) qualifies this concern by pointing out that a minority of domestic firms could benefit from the patent system. See also CHATURVEDI (2002a), at 36, who mentions the antagony of transnational corporations and Indian firms in a slightly different context.

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stakeholders.1816 The investments of MNCs could permit domestic scientists and entrepreneurs to acquire excellency in biotechnology research, product development,and commercialization and in the long run gain back market shares. Conversely, when patent protection is lacking, due to a lack of funding, Indian private R&D could possibly remain marginal in spite of free-riding opportunities. The responsibility to develop technological solutions to the challenge of increasing agricultural productivity would then be entrusted solely with the public sector which also suffers from resource constraints. Whether this situation would be preferable to a strong involvement of foreign firms is ultimately a “question of faith”. The fear of “recolonization”1817 may appear exaggerated from a Northern perspective, but it is very comprehensible that Indian analysts are more sceptical against any form of foreign influence on their agricultural policy than analysts from the Northern hemisphere would be.

Strong arguments for a push towards domestic innovative capacity to occur can only be put forward where the domestic industry has already reached a competitive technological level and consequently will invest in further R&D in the expectation of taking the lead in certain areas and obtaining patents.

cc) Need for a sector specific analysis

The overall positive effect of the presence of MNCs on the enhancement of the domestic capacity being unclear, a definitive incentive effect for domestic firms can only be expected where some of them have already the capacity to win “patent races” in specific fields.

This raises the question of the biotechnological capacity of the Indian industry. The Indian government had recognized the importance of biotechnology already in the 1980s and set up a separate government department under the aegis of the Ministry of Science and Technology to coordinate public R&D. Many publicly funded research institutes and university institutes have engaged in biotechnological research programmes. Numerous Indian States are taking a keen interest in developing biotechnology-based industries.1818 Commentators point out that India’s success in IT may lend credibility to its biotech aspirations.1819 These elements suggest that a closer look at the Indian biotechnology industry might be necessary before the arguments of RAMANNA can be applied to this sector. Part C below will therefore discuss the available evidence on the Indian biotechnology capacity.

1816 It is important to emphasize that Indian authors are split over the strategy to take. Not all consider that the introduction of patents would hamper the development of the Indian biotechnology industry. SEN (2001), at 2 cites Inder VERMA, scientist at the Salk Institute for Biological Studies, California, with the statement that the absence of patent rights has been a stumbling block for the Indian biotechnology industry.1817 This term is for instance used by Raghavan (1991), or by SHIVA (undated c).1818 See above, chapter 5, C.IV.5.c).1819 See USDIN (2001), at 1. However, the same author also highlights that “building biotech companies is far more complex. And to achieve its potential in biotech, India will have to overcome some significant barriers, including a confused regulatory environment, uncertainties about intellectual property protection and the slow pace of integration between academic and commercial science.”

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Furthermore, it should be considered that there are intermediate solutions between fully-fledged product and process protection for all inventions in a specific industry sector and no protection at all for any invention in this area. At the end of chapter 3, a few suggestions have been made how the legislature could address certain concerns voiced inter alia by breeders in Europe. In particular claims to DNA molecules could be restricted to purpose-bound claims.1820 The Indian legislature could even go beyond these suggestions. As seen in chapter 2, Art. 27(3)(b) of the TRIPS Agreement could be interpreted to mean that not only entire plants, but also parts of plants may be excluded from patentability. While it should be mentioned again that this interpretation could possibly be challenged by some Member States, the possibilities that the more generous interpretation would provide to the Indian legislator should be discussed here. This would mean in particular that India could frame a patent protection regime for small steps of innovation in the area of transgenic plants and chimeric genes used for the transformation of plants. A possible approach to narrowing patent protection in this field might be to link the enabling disclosure requirement more strictly to the working examples described in the patent application.1821 This solution could seem unfair in some cases as the contribution to the art may go far beyond these examples, but it would take into account the fact that quite often competing firms race towards the same technological opportunity. Such an approach would smoothen the winner-takes-all principle of patent law. Yet, it would certainly reduce the incentive to make significant break-through inventions, but may be adapted to developing countries, where “it is hard to find seed money for a high-tech venture” and for the moment “barring exceptions, only large established firms have the luxury to dream about radical innovations requiring significant investment”.1822

b) Plant breeders’ rights

The situation with regard to PBRs protection is different in the sense that it does not risk to “choke” the rise of domestic innovative capacity. The high costs and risks, long gestation periods, and high technical, capital, and human resource requirements associated with plant breeding generate high technical and financial entry barriers giving an advantage to firms of a certain scale and established firms. Yet, what is important in the present context is that these entry barriers are not increased by PBRs,

1820 It is important to mention in this context that Dr. K.K. NARAYANAN, Managing Director of Metahelix, Bangalore, i.e. of one of the few Indian companies, doing genuine R&D in plant related biotechnology, replied to a question on whether product protection for genetic components should be absolute or purpose-bound, i.e. limited by the formulation of the claims to the function disclosed in the patent application, that the protection should be purpose-bound. Source: Personal correspondence of 13 August 2004.1821 It should be noted that this would deviate from the way the disclosure requirement is normally interpreted and would contradict the TRIPS Agreement if transgenic plants or genetic components of plants could not be excluded under Art. 27(3)(b) of the TRIPS Agreement.1822 See RAMANI/MARIA (2004), at 7. The development of a venture-backed company has three basic financing stages: (i) seed capital is provided to research, assess, and develop an initial concept; (ii) start-up financing is provided for product development and initial marketing; (iii) expansion financing is provided for the growth and expansion of a company that is breaking even or trading profitable. See DEVLIN (2003), at 18.

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but rather lowered, as PBRs generate more returns on the necessary investments.1823

Newcomers and existing competitor firms are not constraint in their R&D activity by these rights. Breeders who do genuine breeding work, not only “cosmetic breeding”, are free to use protected varieties as breeding material. The only exception are firms engaged in biotechnological R&D using protected varieties as a basis for developing an essentially derived transgenic variety.1824

Under these conditions, Indian firms can compete with MNCs. This is at least the feeling expressed by government representatives and private seed firms.1825 It cannot be ignored, however, that many Indian private firms have sought collaborations or even offered majority stakes to foreign firms in order to increase their competitiveness. But even if the firms with foreign participation may have a head start advantage, PBRs do not reinforce this constellation.

c) Conclusions

The general comparison of the numbers of domestic and foreign patent applications seems to confirm the concern of many Indian authors that strengthening patent protection would benefit foreign companies rather than the domestic industry. The argument that patent protection may hamper the up-grading of the capacity of the local industry by preventing imitation is difficult to refute against the background of the scant empirical evidence on the impact of patents in developing countries.

On the other hand, this general picture may not reflect the needs of the Indian biotechnology industry. The impact of IPR on R&D of Indian firms will depend on their ability to respond to the incentives and become technology leaders able to win patent races. An outline of available literature and of expert views will be given below in part C. Furthermore, when drawing conclusions from part C, it needs to be kept in mind that IP protection can be modulated. When finding a balance between protecting innovative domestic firms against the less performing domestic competitors and leaving enough space for imitating foreign technology until the catching up process is completed the Indian legislator could possibly have recourse to very narrow patents for biotechnological inventions.

The PBRs system does not increase the entry barriers to genuine varietal development, as breeders continue to have access to protected varieties as source of variation for further breeding. PBRs therefore does not strengthen the position of MNCs vis-à-vis domestic breeding firms with an own R&D programme.

1823 They do of course rise the entry barriers to seed production.1824 If the plant variety regime contains the concept of essential derivation they need the authorization of the breeder of the protected variety (unless there is a compulsory licensing clause as provided in the EC Biotechnology Directive). Yet, the scenario where an Indian biotechnology firm depends on the variety germplasm of an MNC for implementing its genetic engineering invention should be rather rare.1825 See the statement of Mangala RAI, Assistant Director General (Seeds), ICAR, in SWAMINATHAN (1995a), at 235/236; and the statement of B.R. BARWALE, Maharashtra Hybrid Seeds, id. at 63.

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II. Impact on knowledge dissemination and germplasm exchange

Two contradictory effects on exchange of information and materials among scientists and firms are expected by analysts and stakeholders from the introduction of plant related IP. On the one hand, the concern has been expressed that this could adversely affect the free exchange of knowledge and germplasm and thus be slowing down varietal development and/or biotechnological crop improvement.1826 On the other hand breeders in India argue that the introduction of PVP in India will facilitate access to elite material from abroad.1827 Again, it is important to differentiate between the two principal IP protection regimes for plant innovations.

1. Impact of patent protection

Recalling that patents have a double effect: On the one hand, they oblige the patentee to publish and thus disseminate his knowledge. On the other hand they allow him to prevent others from the commercial exploitation of his knowledge. Yet, the benefits from the dissemination effect are less significant in a multi-country setting as researchers have access to patent applications published abroad. Thus the constraints created by the exclusive patent rights could be balanced only by the positive incentive effect discussed above and a positive impact on technology transfer.

a) Constraints created by patent rights

The concern that numerous and diffuse property claims over building blocks necessary for R&D could stifle follow-on inventions resulting in a paralysis of R&D in the relevant field has already been mentioned in the previous chapter. This apprehension is also very present in the Indian debate and is coupled with the apprehension of a domination of multinational firms. SAHAI warns against a scenario where “MNC-owned varieties with patented genes in them […] debar Indian scientists from using their own genetic material.”1828 The broadly defined claims directed to a plant resulting from a cross with the Indian Nap Hal landrace explained in chapter 3 seems to confirm these concerns.

It should be kept in mind that patent protection for plant related biotechnological inventions would not necessarily need to include protection for naturally occurring genes, even in their isolated form or plants obtained by conventional breeding steps. Nevertheless the protection might cover DNA transfer technology, gene expression technology, important markers, to name only a few examples. The argument that this protection would debar Indian scientists from their own genetic material is less applicable to these cases. But the argument that they would need to seek licenses before commercializing their own innovations using such technology remains valid. It

1826 This issue is for instance discussed by BASANT (1995), at 28.1827 See e.g. ARORA (1995), at 9; Deepak MULLICK, Managing Director, Advanta India Limited, Director (International Affairs) of the Association of Seed Industry, in a personal conversation on September 9, 2001. See also Mangala RAI, Assistant Director General (Seeds), ICAR, statement in an expert discussion, see SWAMINATHAN (1995a), at 236.1828 See SAHAI (1996a), at 443.

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may be recalled that the scant evidence from industrialized countries on the impact of patenting of genetic inventions on access to technology does not confirm the scenario of the “tragedy of anti-commons”.1829 While there are some examples where companies used their exclusive right to block commercial application of their technology, most of the surveyed stakeholders stated that firms and public sector research institutes had been able to develop “working solutions” that allowed their research to proceed.

Nevertheless, experts point to the fragility of the current balance.1830 WALSH et al.observe that the danger remains that progress in a broad research field could be significantly impeded by a patentee trying to reserve this field exclusively for himself. Other experts warn that that those public institutions that lack proprietary technologies to cross-license and those public and private research programmes that target minor crops or minor agronomic traits might get priced out of the market for new proprietary technology.1831 In a developing country context this danger seems more imminent than in industrialized countries as long as there is still a significant gap between the competence of international firms and of local research institutions. The particular problem of the public sector, which is in charge of providing technological solutions to resource poor farmers and may have to bear increased costs due to the use of proprietary technology, will be discussed in the next section. The private sector targeting commercialization will in many cases be able to obtain a license for the technology they are interested in. The evidence from industrialized countries outlined in chapter 4 suggests that patent holders generally have an interest in licensing their genetic inventions, except between direct business competitors. Nevertheless, royalty stacking resulting from the need to take licenses under numerous patents to market a single product emerged as a problem from the above mentioned studies. This is particularly relevant in the present context, as high negotiation and transaction costs may have a more stifling impact in developing countries where access to financial resources represents a greater constraint.

FUGLIE et al. argue that there are several ways in which patent legislation can be modified to reduce the likelihood of unduly restricting scientific development.1832

They suggest a broad research exemption, compulsory licensing based on a reasonable licensing fee, and a narrow scope of patent claims.

b) Positive effect on technology transfer

The (scant) available evidence rather confirms the hypothesis that foreign firms would license their technology more readily to foreign affiliates or unaffiliated foreign partners if IP protection is provided.1833 This argument is also raised by Indian authors

1829 See above, chapter 4, B.I.7.1830 See WALSH et al. (2003), at 335.1831 See, e.g. PHILLIP/STOVIN (2000), at 273; NOTTENBURG et al. (2001), at 30.1832 See FUGLIE et al. (1998), at 46/47.1833 See above chapter 4, B.I.4.

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in favour of patent protection.1834 The benefits of this voluntary technology transfer generally go beyond those of spillovers via imitation of technology that becomes accessible through international publications, as it permits the involved Indian firms to acquire additional know-how.

2. Impact of plant variety protection

a) Impediment to free flow of germplasm?

Indian analysts rightly emphasize that the ability of plant breeders to develop new strains depends, among other things, on the availability of genetic material containing desirable characters, such as higher yield or disease resistance.1835 SAHAI voices the concern that the present situation that allows scientists to use “any gene anywhere in the world” will change “if the GATT IPR regime of protecting plant varieties and their genes, by patents or UPOV-type Plant Breeders Rights is enforced.”1836 However, legally speaking, a UPOV 1978 type PBR legislation does not hamper free access to protected varieties as initial source of variation for creating and marketing other new varieties. The new variety only has to be distinct from the initial variety and may not be essentially derived. The concept of essential derivation is, as seen in chapter 3, a very narrow concept of dependence.1837

Yet, since through the adoption of PBR the economic value of novel germplasm would increase, breeders might become more reluctant to share their plant breeding technologies and knowledge. Surprisingly, this assumption has not been confirmed by empirical evidence. The study by BUTLER/MARION mentioned in chapter 4 of this paper found that according to the majority views of industry and public plant breeders the PVPA appeared to have had a neutral or even positive effect.1838 Concerning the access of private companies to public sector breeding material, evidence from Argentina and Chile suggests that it was the budgetary pressures that changed the terms on which public sector material is made available to the private sector rather than the introduction of PVP. Likewise in India, the public sector considers requiringroyalties from private companies that multiply public varieties.1839 But PBRs protection will only be a tool in, not the cause of this policy.

1834 RAVISHANKAR/ARCHAK (2000), at 1, for instance, predict increased technology transfer through joint ventures and/or mergers and acquisitions between domestic and foreign firms.1835 See BASANT (1995), at 28.1836 See SAHAI (1996a), at 443.1837 See chapter 3, A.IV.2c).1838 For details, see chapter 4, B.II.5.1839 Personal conversation with Dr. BALA RAVI, Assistant Director General (IPR), ICAR, as above note 1517. Mr. BALA RAVI explained that the public sector had two responsibilities: first, to compete with the private sector in major crops and hybrids; and second, to develop varieties in crops not attractive to the private sector. He stated that, possibly, in the first area the public sector may be able to raise funds by licensing out its varieties.

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b) Access to elite material and advanced technology from abroad

Indian breeders and experts point out that the adoption of PBR may facilitate international collaboration in R&D relating to new plant varieties/hybrids and increase access to the best and most recently bred foreign varieties.1840 According to ARORA industrialized countries account for 95% of worldwide expenditures for plant research and development.1841 In the absence of IPR protection many multinational corporations are not willing to introduce their up-to-date seed materials that might also be relevant for Indian agriculture. RAI, Assistant Director General (Seeds), ICAR, stresses that “the Indian farmer has a right to have the best plant breeding material available anywhere in the world to enhance his farm productivity and income”.1842

3. Conclusion

The introduction of patent protection bears both risks and chances for knowledge dissemination and germplasm exchange. On the one hand, it is likely to positively impact voluntary technology transfer. On the other hand, Indian companies without foreign affiliation risk being priced out of the market for proprietary technology if they lack such technology to cross-license. However, this risk could probably be reduced by narrowing the scope of patent claims.

Plant variety protection is likely to have an overall positive effect on germplasm flow, since there is little doubt that the provision of PVP will encourage foreign firms to give Indian partners access to their elite breeding material. Restrictions on the availability of public sector germplasm which are expected in India in the near future are not due to the introduction of PVP.

III. Impact on seed industry structure

One of the major fears of IPRs opponents is that IPR might lead to a dominant role of a few players in the seed market, which may then abuse the monopoly position they may reach in specific sectors. Even with respect to industrialized countries authors have pointed out that “the increasing dominance of a few major players, and the biotechnological and chemical patent restriction on what competitors can do, raise questions regarding the potential for too much market power in parts of the seed and the chemical industry.”1843 In India, this issue is again closely linked to the issue of MNCs competing national firms out of the Indian seed market. In the scenario described by IPR critics it is generally MNCs which achieve market positions which would permit them to impose monopoly prices and to decide on the direction of R&D.1844

1840 See ARORA (1995), at 9; JOSEKUTTY/MATHEWS (1994), at 216; BASANT (1995), at 23.1841 See ARORA (1995), at 9.1842 Statement in an expert discussion, see SWAMINATHAN (1995a), at 235.1843 See HAYENGA (1998), at 54.1844 See, e.g. SAHAI (1992), at 879; KHURANA (2002), at 11 et seq. See also NATIONAL WORKING GROUP ON PATENT LAWS (1993), reproducing a declaration adopted by an “All party

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1. Impact of patents

a) Recent developments in the plant biotechnology industry in India

Firms that would be affected in the short run by the introduction of patent protection for plant related biotechnological inventions are mainly companies with in-house biotechnology capacity or aiming at such capacity. In the long run, plant biotech patents might perhaps also impact firms which rely merely on conventional breeding, for instance if crossing in certain transgenic characteristics, e.g. a specific resistance, becomes unavoidable when competing with other seed firms.

The enterprises of primary interest here are therefore at the intersection of the seed companies characterised in chapter 5 and the biotechnology industry which includes, besides agricultural biotechnology firms, health related and environmental biotechnology companies. According to the 2003 directory of the Biotech Consortium India Limited (BCIL) on biotechnology institutions and industries, there were in total 401 biotechnology firms present in India out of which 32,9% were agriculture based companies, i.e. some 132 companies.1845 When comparing this number with other information, it appears that it must include different categories of biotech firms apart from those in the focus here, i.e. it includes companies which focus on biofertilizers or biopesticides and firms which are not active in crop R&D, but offer routine biotechnological services to the breeding industry, such as micro-propagation.1846 But the figure also comprises two categories of firms which are engaged in plant biotechnology. Firstly, there are the seed firms expanding their R&D to cover biotechnology. As outlined in chapter 5, among these firms, mainly medium seed companies with foreign joint ventures, big seed companies, and large multiproduct seed companies were targeting in-house agro-biotech R&D capacity. CHOPRA estimated in 2000 that there were about 10 large seed companies and about 25 medium sized companies.1847 Not all have in the meantime acquired biotech competence.1848

Secondly, besides the seed companies, which cover all stages of development production and marketing of a transgenic variety from biotech R&D over varietal development to extension, there are a few smaller upcoming companies with a strong

Meeting held on 29.01.1992 – Statement on Dunkel’s Draft Text”, which warns that extending IPRs to seeds, plants an biogenetic substances will result in greater domination of agriculture by MNCs.1845 See CHATURVEDI (2005), at 19.1846 Seec also CHATURVEDI (2005), at 19, who states that "[i]n the agricultural sector, there are very few firms in the business of transgenics. There are largely firms dealing with biofertilisers, biopesticides and tissue culture." 1847 See CHOPRA (2001), at 17.1848 Personal survey carried out in the second half of 2004 by sending survey questionnaires to some 80 sample firms. The survery has due to the weak response no representative character, but still permits to observe that not all small and medium sized firms have in-house biotech capacity. Of the 8 firms answering the questionnaire, only one company had in-house biotech capacity in India, one was a subsidiary company of a company which had biotech capacity abroad, and one was venturing into a collaborative programme to develop in-house capacity. Of the firms without in-house capacity one, with a turnover exceeding Rs. 500 million, can be considered as a large company. Two firms had a turnover exceeding 250 million, one exceeding 50 million and can be categorized as medium companies.

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science base offering contract biotech R&D, with expertise in marker-aided selection, genome sequencing, gene discovery, plant transformation, 3D structure-function analysis.1849 The enumeration of some 15 companies (including subsidiaries of MNCs and Indian companies, some with foreign participation) by RANADE/KAPUR as active plant biotech companies omits some companies which definitely have plant related biotech capacity,1850 but may nevertheless come close to reality.1851 Only part of them are domestic companies.1852

The need to invest in R&D, in particular in order to acquire biotechnology capacity, apparently has not led in the past to a consolidation process in the Indian seed industry.1853 Indian firms have preferred to seek foreign participations in order to remain competitive in the new environment, since the “phase of development of the private seed industry based on multiplication and distribution of public varieties appears to be well and truly coming to an end”.1854 Consequently, MNCs have already taken participations or even majority equity stakes in a large part of the leading Indian seed firms. At the beginning of this decade, among the top ten companies (in terms of sales turnover) 5 were 100% subsidiaries of foreign firms, in 2 companies foreign companies had majority equity stakes (74% and 51% respectively), one foreign

1849 No estimates of the number of these contract R&D firms have been found. CHATURVEDI (2002a), at 15 and 24/25, refers to the companies Meta Helix and Avesthagen. VISALAKSH, senior researcher at NISTADS (National Institute of Science, Technology and Development Studies) with a focus on the health biotechnology sector, in a personal communication of 21 July 2004 confirmed that most domestic biotech firms still only pursue independent development of existing biotechnology products. Only few, maybe 2 or 3, were equipping themselves to be competitive. She added Gangagen to the two firms cited by CHATURVEDI.1850 They do not refer to Avesthagen and Meta Helix, for instance, which definitely are involved in plant biotech R&D.1851 RANADE/KAPUR name Hindustan Lever, Monsanto, Pro Agro Dupont, Indian-American Hybrid Seeds, ITC Zeneca, Hoechst Schering AgrEVO-PGS, Pioneer Hi-Breed, SPIC, Novartis, AV Thomas, EID Parry, National Organic Chemical Industries Ltd., Rallis, Cadila Plant Biotechnology and Godrej Biotech as active plant biotech companies in India. See RANADE/KAPUR (2001). RAO (2003), at 10 even cites an estimate according to which the overall number of companies in all biotechnology sectors engaged in sophisticated biotechnology business amounts only to 20. Only part of this would be specialised in plant biotechnology.1852 Monsanto, Pro Agro Dupont, Novartis, A V Thomas are subsidiaries of the respective companies. Unilever holds 51% equity in Hindustan Lever (see http://www.hll.com/knowus/past_milestones.asp, last visited 29.10.05); ITC Zeneca, now Advanta India Ltd. is the joint venture company of Advanta B.V., which holds 50% (see above table 5.1 and http://www.btgenes.com/in/content/view/82/85, last v. 29.10.05); SPIC is a100% subsidiary of DuPont (see http://www.dupont.co.in/incorp/overview/glance, last v. 29.10.05). Indian-American Hybrid Seeds still seems to be an Indian owned company (see abobe table 5.1 and website http://www.indamseeds.com); EID Parry is part of the Indian Murugappa Group (see http://www.eidparry.com/aboutus.asp, last v. 29.10.05); there seem to be no foreign participations in National Organic Chemical Industries Ltd. and Godrej; Rallis is a TATA enterprise (see http://www.rallis.co.in/research/index.asp, last v. 29.10.05); likewise Cadila is an Indian company (see www.cadilapharma.com, last v. 29.10.05).1853 SELVARAJAN et al. (1998) estimated that, in 1996, there were some 150 private seed companies in India. CHOPRA (2001), at 17, para. 50) estimated in 2001 that their number amounted to over 235.1854 See SRINIVASAN (2001), at 381.

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company held precisely 50%, and the leading Indian company had transferred a minority equity stake of 26% to a foreign firm.1855

The total turnover of these top ten companies constituted nearly 55% of the total turnover of the organised private seed industry,1856 bearing in mind that the public sector share of the commercial seed market was probably some 30%.1857 As a result, the top ten private companies had a share of 39% of the commercial seed market. The problem of dominance of MNCs left aside, and with the reservation that market shares in individual crops may be much higher, this evidence does not suggest that the current market shares of leading private companies could seriously hamper competitive market forces.

b) Potential future development

RAMANNA who analyses the patent application statistics in all sectors draws attention to the disparity between the minority of domestic firms that will be able to transform their potential into greater patent activity and the majority that will not. This is likely to be true also for the seed companies planning to use recombinant DNA technology. She deduces an argument against patent protection and concludes that “India’s patent position shows that India must focus on ensuring access [to technology] for the majority that would not be able to compete.”1858 But free access of a majority of Indian firms to technology via imitation may not be the ultimate aim of a balanced IP regime fostering domestic capacity. A process of restructuring of the breeding industry which permits Indian firms to reach the critical size necessary for R&D would not have to be seen in a negative light.

What exactly the impact of patent protection on the structure of the Indian seed and plant biotechnology industry in the long run would be is, however, difficult to predict. On the one hand, patents are especially important for small and medium biotechnology firms that have no other activity than R&D and therefore do not directly exploit their inventions, apart from selling the right to exploit them to other firms.1859 A division of labour in the biotechnology industry is therefore facilitated by patent protection. Patents are intensively used by start-up companies. On the other hand, the available evidence from industrialized countries suggests that the need to control IP assets has been a driving force behind the consolidation of the life-science industry.1860 It should be kept in mind however, that such a process may also be linked with unclear legal situations or broad claims covering an entire technological area, which would not need to be the case under a patent regime tailored for India.

A certain consolidation process is likely to take place in the plant biotechnology industry, as some firms which rely mainly on the adaptation of technology developed

1855 See above, chapter 5, table 5.1.1856 See SRINIVASAN (2001), at 380.1857 See id., at 369.1858 See RAMANNA (2002), at 29.1859 See DEVLIN (1993), at 13.1860 See chapter 4, B.I.6.

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in industrialized countries might not obtain licenses or lose their competitiveness when they have to incur the additional costs of royalties. On the other hand, if Indian scientists have the technological capacity to respond to this new incentive, increased patent protection might also lead to the set-up of new companies. A more detailed analysis of the processes that have taken place in industrialized countries and of the situation in India would be necessary to give a well-founded prognosis in this respect.

2. Impact of plant breeders’ rights

Part of the issue has already been discussed from a different angle above. It may be recalled that, legally speaking, PBRs create constraints only for those companies which multiply varieties developed by other private or public sector institutions. As a result only those companies which do not have the critical size to undertake their own R&D will have to pay royalties to the breeders of the variety they multiply and some may lose their competitiveness due to these additional costs.1861 A certain concentration process is likely to take place because of this. Yet, it is important to note that the European experience suggests that the introduction of PVP more often leads to the emergence of an industry structure marked by small and medium enterprises.1862

PBRs protect small steps of innovation and therefore always leave space for competing products. This makes the establishment of a monopolistic market structure that would permit firms to charge higher prices, suppress inventions, or produce varieties with uneconomically short lives unlikely. The experience of fellow-farmers is still a major source of information for farmers choosing their seed. At least if combined with a broad farmers’ privilege seed users would be able to react quickly to any tendency of the market leader to abuse its position.

The role of the small companies which are threatened with extinction is seen in the diffusion of public and private varieties at low costs. However, whether or not they will continue this role will mainly depend on the policy of public sector breeding institutions. Even now these small seed companies mainly multiply certified or „truthfully labelled“ seed of hybrids/varieties developed by the public sector R&D system.1863 As highlighted earlier in chapter 5, most of the R&D work on self-and open-pollinated crops is done by the public sector institutions whereas the private sector concentrates on hybrid seeds, precisely in order to protect themselves against competition from farmers and other seed firms.1864 PBR protection is only the legal instrument that will permit public sector institutions to force private firms which successfully market public varieties to share in the development costs. Where a

1861 See BASANT (1995), at 29.1862 Personal correspondence from Dr. Margaret LLEWELYN, dated 8 October 2002, as above note1349. See also BASANT (1995), at 31, mentioning the “meagre available evidence on the US experience [which] does not suggest that plant variety protection led to mergers or monopolization in the seed industry” with reference to IHNEN, J.L. (1989), “U.S. Proprietary Rights for Plants Germplasm” in Guleria, A.C. (ed.), “Proceedings of a Seminar”, New Delhi 1989.1863 See BASANT (1995), at 27.1864 See above chapter 5, B.II.1.

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particular variety targets marginal environments and leaves little profit margin, the public sector is free to let private companies distribute the variety at production costs.

3. Conclusion

A prognosis of the impact of patents on the development of the structure of the seed and biotechnology industry is difficult. While a certain consolidation process is likely to take place in the plant biotechnology industry, patents may also foster the emergence of small and medium contract R&D companies. The shape of the patent regime may further diminish incentives for take-overs, if patent claims are clearly delimitated and cover only small technological areas.

In contrast, the evidence from Europe suggests that an industry concentration endangering a competitive industry structure is not to be expected from the introduction of PBRs.

IV. Conclusion of part A

PBRs are likely to have a positive incentive effect on the R&D activity of the private sector seed industry. It can be expected that even with a strong farmers’ privilege the seed replacement rate in self-pollinated crops will reach a threshold where firms may find investment worthwhile for some major crops such as wheat and soybean. It is suggested here that the technologies developed by the private sector will target and reach certain groups of small farmers also and that high potential rainfed zones will profit from private sector R&D. On the other hand, the public sector will have to take charge of the needs of poor farmers and marginal heterogeneous environments. The incentive effect of PBRs will not be limited to MNCs, as the PBRs system does not strengthen the position of MNCs vis-à-vis domestic firms. Moreover, the overall effect of PBRs on the availability of germplasm for breeding is likely to be positive. Likewise, an industry concentration which would put the proper functioning of competitive market forces into question is not to be expected from the introduction of PBRs.

Different scenarios following the introduction of patent protection for plant biotechnological inventions are conceivable. This makes it difficult to contradict the majority view in India which opposes plant related patent protection, as this view gives priority to the development of domestic innovative capacity in the long run over the rapid provision of technological solutions. Since the way of how the development of innovative capacity in developing countries occurs is unclear, a more or less certain incentive effect for domestic companies can only be expected where they have reached a technological level which permits some of them to become technology leaders in specific areas. The concerns of patent opponents concerning access of Indian firms to proprietary technology and industry concentration have to be taken very seriously. The introduction of patent protection bears risks and chances for knowledge dissemination and germplasm exchange. Likewise patent protection may potentially lead to both to the emergence of biotech start-ups as well as to a concentration process in the Indian life science industry.

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B. IMPACT ON PUBLIC SECTOR SEED ORGANISATIONS

It is widely believed,1865 even by authors generally favourable to PBRs, that the public sector will continue to play a predominant role in research for drought-prone, coastal, salt-affected, and hilly areas, since the private sector would only concentrate on agro-ecological favoured zones that provide a sufficient market potential. The freedom to operate of the public sector will therefore be of great importance for assuring food security for certain groups of farmers. The impact of IP protection on the capacity or facility of the public sector to fulfil this role will again vary according to the strength of the regime introduced.

I. Patents

1. Risk of being priced out of the market for proprietary technology

When it comes to making a balance between the benefit of increased private sector research expenditures and the costs of exclusive rights which force the public sector to invent around, seek licenses, or convince IP owners to relinquish claims on humanitarian grounds,1866 the national research capacity again appears to play a key role. The first two policy options require significant additional funds. The worst case scenario is that key technologies of importance for improving crops for marginal environments are patented by private companies which are only a short time ahead of public research. The public sector institutions would then have to bear the cost of both advanced research in the pertinent field and of technology licensing.

Experts warn that those public institutions that lack proprietary technologies to cross-license and those public research programmes that target minor crops or minor agronomic traits might get priced out of the market for new proprietary technology.1867

Only provisions on compulsory licensing could then prevent that the public sector fulfilling its mission is totally blocked out of a certain technological area by the rights holder. Other authors are less pessimistic and suggest that in a scenario with IPR segmented markets could be used to establish private/public partnerships. The public sector would distribute biotechnology products to certain sectors such as resource-poor farmers, while the private sector would supply the same seed to commercial farmers.1868

1865 See QUASIM et al. (1994), at 133; SINGH et al. (1990), at 140; VERMA (1995), at 288; Mangala RAI (Assistant Director General, Indian Council of Agricultural Research), statement in an expert discussion, SWAMINATHAN (1995a), at 236.1866 See KRATTINGER (2002), at iii. 1867 See, e.g. PHILLIP/STOVIN (2000), at 273; NOTTENBURG et al. (2001), at 30. LOUWAARS et al. (2005), at 9, further express the concern that “[m]ost NARIs [National Agricultural Research Institutes] are too poorly organized to acquire access to complementary technology on equitable terms or to assess their ‘freedom to operate’ with protected techniques and tools. NARIs are no match for the legal and negotiation skills and resources of major technology firms.” 1868 See RHOE et al. (2002), at 272, with reference to Byerlee, D./Fisher, K. (2001) “Accessing modern science: policy and institutional options for agricultural biotechnology in developing countries”, ECAPAPA Electronic Newsletter, Vol. 4, No. 2-4. ECAPAPA, Entebbe, Uganda.

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Nevertheless, it would seem that, from a public sector perspective, the balance of the introduction of patent protection becomes positive only if the public sector has excellent biotechnological competence which not only enables it to win a “patent race” from time to time, but also makes research cooperation interesting for the private sector, thus enlarging its bargaining power and leaving more space when determining its policy.

2. Constraint to reorientate public sector R&D?

Generally, without focusing on the crop improvement sector, RAMANNA observes that only few government research institutions have been able to increase their patenting activity. One of the few exceptions is the Council of Scientific and Industrial Research (CSIR) which has been active in the patent field in Indian for several years and has increased its share of patent applications both in India and abroad significantly.1869 Between 1992 and 1997 the CSIR filed 120 patents abroad, but in 1998-1999 already 110 applications. Yet RAMANNA points out that

“the CSIR’s ability to increase its patent activity as compared to other public sector institutions arose because it adopted a global market focus rather than a domestic one; initiated a number of collaborations with foreign companies; and promoted a cultural shift away from publications and social objectives towards patents and commercial goals.”1870

She rightly observes that “[i]t is important to ensure that the public sector intervenes in areas where the private sector may under-invest due to various market failures”.1871

But this focus may not necessarily be contrary to a strategy to increase patent activity and foreign collaboration. Certain technologies in the plant improvement sector would be extremely useful for resource-poor farmers in India, while at the same time prove being highly relevant for international science. In the ideal case these projects could be money spinners in international markets and provide the funds for adapting this technology to heterogeneous and marginal environments by breeding it into specifically adapted varieties and distributing them at very low cost.

However, leaving aside this controversy about the benefits and dangers of a reorientation of public research strategies, CSIR is an exceptional case. RAMANNA’s argument that public sector institutions would rarely be the leader of a patent race is difficult to refute. RAMANNA reports of a study by TIFAC based on a survey in 1998-99 which found that only few public sector undertakings (PSUs) were actually involved in filing patent applications. Out of 240 PSUs only 24 had filed a total of 372 applications in 1995-99. She doubts whether many other public sector institutions apart from CSIR would have the capacity to make its shift, not only in terms of R&D investment, but also in possessing sufficient resources to attract the private sector.1872

1869 See RAMANNA (2002), at 25.1870 See RAMANNA (2002), at 27/28. 1871 See id., at 28.1872 See id., at 28.

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Likewise, few teaching and research institutes have been able to increase their patent applications in the 1995-1998 period studied by RAMANNA.1873

3. Need for a sector specific analysis

This overall picture suggests rather that public sector research institutions having limited funds and being unable to focus on commercial goals only would for the moment lose more from the introduction of IPR than they would gain in terms of royalty income or intensified foreign collaborations. Again the question arises if the situation is different in the sector of plant related biotechnology. India is one of the few developing countries to have recognized the importance of biotechnology as a tool to advance agricultural growth as early as at the beginning of the 1980s.1874 A government department, the DBT, was established to identify priority and coordinate research. Already in 1993, there existed 19 CSIR units, 34 ICAR units, 10 ICMR units, 42 universities supported by the state, and 61 independent research or teaching institutes active in biotechnology.1875 The DBT also created a patent unit quite early dealing with patenting information and starting schemes to spread awareness and simplify the business of patenting for innovators.1876 The available information on the biotechnology capacity of the public sector therefore needs to be reviewed in part C, before an attempt can be made to evaluate the balance of costs and benefits for the public sector.

II. Plant breeders’ rights

1. Plant breeders’ rights as means for rising funds

As mentioned in the context of private firms, PBRs create little constraints for the public sector which has been involved for decades in genuine breeding of new varieties and is unlikely to use private varieties to produce essentially derived varieties. More likely is that PBRs could provide a mechanism in the future for raising funds through the, possibly selective, commercial exploitation of the developed varieties. Private firms which had so far received public varieties free of charge could be obliged to pay royalties/licence fees. This opportunity to augment its scarce resources should perhaps not be overestimated since the public sector would at the same time face competition in those areas which might still have been profitable.1877

1873 See id., at 28.1874 See CHATURVEDI (2002a), at 4 et seq.1875 See RAMANI/VISALAKSHI (2000), at 302/303.1876 See MENON (1996), at 74.1877 BASANT (1995), at 28, discusses the risk of shifting public sector research to background breeding and thus removing it as a force in the commercial seed market, but points to the fact that there is no evidence from other countries that the introduction of PBRs has resulted in a significant shift in the scope of public sector research. BALAKRISHNA (1994), at 256, does not agree with the hypothesis that PVP will reduce the activity of the public sector, as it would encourage the public sector, e.g. universities to protect their varieties and receive royalties for their effort. LOUWAARS et al. (2005), at 103, cite a few recent examples in which Indian public institutes or universities have entered into non-exclusive agreements with companies for access to breeding lines, but they provide

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LOUWAARS et al. (2005) report from their case study in India that there is no indication at present that research administrators have plans to adjust their portfolios because of potential royalties. “Institute administrators believe that royalties [...] will be remitted to ICAR headquarters [...], thus providing limited incentives for shifting priorities in favor of royalty-earning crops. Administrators of the agricultural universities that were interviewed also emphasized their mandate towards serving the needs of their state’s farmers. [...] ICAR leadership identifies a role for the public sector in complementing as well as competing with the private sector as IPRs threaten to concentrate the market.”1878

2. Possibility of focus on specific areas

Another argument put forward in favour of PBRs is that strong private sector R&D programs could discharge the limited budget of public research institutions to a certain extent, since they would be relieved from the duty of providing varieties/hybrids of all crops for all agro-climatic conditions. Public research policy could de-emphasize in particular public breeding of commercial hybrids, in order to complement private research efforts instead of competing with them. According to BASANT, this, in turn, is expected to stimulate demand for private hybrids, thus making private research in this area more profitable.1879 The limited public resources could thereby be saved for certain priority areas, including basic research.1880

SRINIVASAN argues furthermore that PBRs could help increase the effectiveness of development and dissemination of public varieties. He identifies two important problems facing the public research system:1881

“1. Under the existing institutional arrangements, the role of breeders in variety development end with the release of a variety. They are completely divorced from the commercialisation of their varieties. Consequently, there is no mechanism for evaluation of research outputs in terms of adoption and use by farmers. There is also no pressure on public breeders to breed varieties for commercial success.

2. The public research system, at the same time, lacks opportunities to explore alternative arrangements for dissemination of its varieties, independently of the weak parastatals [national and state level public sector seed corporations].”

He points out that PVP could help address both shortcomings:1882

no information on the extent of interaction public and private sector and the revenues this generates for the public sector.1878 LOUWAARS et al. (2005), at 110/111.1879 See BASANT (1995), at 28.1880 ARORA (1995), at 9; RAI, M., “The current situation of the plant breeders and seed industries in India – the policy on protection of new varieties”, in: Proc. Seminar on the Nature and Rationale for the Protection of Plant Varieties under the UPOV Convention, Beijing, China, September 1993, as quoted by ARORA (1995), at 4.1881 See SRINIVASAN (2001), at 366.

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“By giving the public research system clearly demarcated rights over its varieties, it could pave the way for licensing of varieties (on an exclusive or non-exclusive basis) to seed production agencies best suited to the task of dissemination and marketing. These agencies could be in the public sector or the private sector. At the same time, licensing arrangements will force the public sector to evaluate varieties in terms of the potential for adoption by farmers and the sales volumes that they can generate. This will create the much-needed market orientation in public sector variety development. This may well be the most important contribution that PVP makes to the public research system, even if the revenues generated through protection do not make any significant contribution to the research budget (as appears to have been the case in the U.S. (Alston and Venner: 1998).”

This mechanism would need to be applied in a flexible way, since the role of the public sector will precisely be to provide new varieties for agro-climatic and socio-economic conditions which do not offer profit margins large enough to interest the private sector. Nevertheless, rights over their varieties will at least permit the public sector to obtain feedback.

III. Conclusion of part B

From the perspective of the public sector, the balance of benefits and constraints of patent protection becomes positive only if the public sector has an excellent biotech competence permitting public sector institutions to obtain patents which can be bargained for private proprietary technology and makes partnerships interesting for private companies. Generally public sector research agencies in India do not seem ready for the strengthening of patent protection. Again the question arises whether the situation might be different in the biotechnology sector, where the Indian government has recognised the immense opportunities for India quite early and has developed an extensive research infrastructure.

PVP increases the possibilities of the public sector to raise funds by collecting royalties for public sector varieties. Furthermore, PVP could discharge the public sector institutions which face enormous budgetary constraints from the duty to provide varieties/hybrids of all crops for all agro-climatic conditions. PBRs could further help to increase the effectiveness of development and dissemination of public varieties.

C. TECHNOLOGICAL CAPACITY OF THE INDIAN CROP BIOTECHNOLOGY SECTOR

It has already been mentioned earlier that only a small number of Indian firms seem to be active in plant biotechnological R&D.1883 Drawing up a comprehensive picture ofthe technological capacity of the plant biotechnology sector in India would go beyond the scope of this paper. Additionally, there is only scant up-to-date information available specifically on the Indian plant related biotechnology capacity. Most articles

1882 See SRINIVASAN (2001), at 367.1883 See above, point A.III.1.a), esp. footnotes 1850, 1851 and 1852.

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focus on the pharmaceutical sector. The following can therefore only be a rough sketch of the existing situation, which may nevertheless provide some idea on what India’s stand would be in the race towards plant biotechnology patents, should product patent protection be introduced.

I. Research output

With respect to crop biotechnology in the public sector, a summary on the DBT-website gives an overview of achievements, which include among other things the development of molecular markers for tagging genes linked with quality traits and the development of transgenic cotton, rice, mung bean, and tomato resistant to various biotic and abiotic stresses.1884 The list sounds impressing, but provides no basis for a comparison with international science.

A frequently used indicator of R&D activity in a certain sector is patent data. Yet,some authors guard against the credibility of this indicator with respect to the commercialization of Indian biotechnology research for a number of reasons, inter aliabecause the Indian IP regime is not well defined, and it is both difficult and costly to settle patent disputes in court while patenting at the international level is too costly for most Indian units.1885 This certainly has to be kept in mind.

A study of the Technology Information, Forecasting & Assessment Council (TIFAC) is based on the applications filed in the Indian Patent Office from 1995 to June 2003.1886 It should be noted that no differentiation is made between different segments of the biotechnology industry.

Figure 6.1: Trend of biotechnology patent applications in India

0

100

200

300

400

500

1995 1996 1997 1998 1999 2000 2001 2002

Number of patentapplications

The Indian Council of Scientific and Industrial Research (CSIR) has emerged as the single major applicant in the field of biotechnology taken as a whole. It is followed, however, by a number of international companies. In table 6.1 below, only Avestha

1884 See DBT (undated).1885 See RAMANI/VISALAKSI (2000), at 304.1886 See TIFAC (2004b).

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Gengraine Tech is a domestic company. In all other companies the majority stake is held by a foreign company.

Table 6.1: Major biotechnology patent applicantsApplicants Number of patents

filed till June 20031. CSIR 2022. BASF Aktiengesellschaft 883. Novo Nordisk 794. The Procter and Gamble Co 555. F Hoffmann La Roche AG 366. Smithkline Beecham 357. Hindustan Lever 288. American Cyanamid Co 259. Avestha Gengraine Tech 2310. Zeneca Inc 2211. Pfizer 21

At the international level, Indian biotechnology firms have increased their patenting activity in recent years, but still lack behind industrialised countries. The following table focuses on genetic engineering and presents patent data available in the EPO esp@cenet database "worldwide", which enables users to search for information about published patent applications from over 70 different countries and regions.1887

Table 6.2: Biotechnology applications worldwide filed by applicants from selected countries in IPC class C12N15/00Country/year 1999 2000 2001 2002 2003 2004Belgium 11 14 16 21 18 10Canada 43 47 35 48 46 25France 34 44 34 67 45 32Germany 64 54 81 147 114 67India 2 7 4 8 8 6Italy 9 5 11 10 7 7Korea 2 19 22 23 24 9Switzerland 19 17 23 28 24 13United Kingdom 86 98 75 84 64 59US (approximately)1888

950 1080 1230 1620 1340 940

1887 The search was done in the category advanced search (http://ep.espacenet.com/search97cgi/ s97_cgi.exe?Action=FormGen&Template=ep/en/advanced.hts). In the field applicant the country code was inserted in square brackets, in the field International Patent Classification (IPC) the relevant class "C12N15/0", which refers to "Mutation or genetic engineering; DNA or RNA concerning genetic engineering, vectors, e.g. plasmids, or their isolation, preparation or purification; Use of hosts therefor" (see http://www.wipo.int/classifications/fulltext/new_ipc/index.htm). The results displayed contain only one patent document per family. 1888 Unfortunately, beyond the number of 500 results the espacenet database gives only approximate results, as duplications are only eliminated as the user goes through the result pages. Only the first 500 results can be displayed, which means that beyond 500 there is an error margin. The number of results is is generally slightly higher than the actual number of results.

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It should be noticed that some of the applications are filed by Indian applicants together with foreign partners. Some of the applications also originate from companies located in India in which a foreign company has a majority stake, such as Hindustan Lever.

Even if the above mentioned cost factor is taken into account, international patent data rather confirm the concerns of Indian authors who stress the still existing technological gap between the Indian science and leading international firms. While a few Indian companies and public institutions definitely have reached a competitive level,1889 given the size of the country the number of Indian players applying for (Indian or foreign) patents in the area of genetic engineering is rather small. This is all the more the case, if the emphasis is put on plant genetic engineering. Only about one third of the applications are related to this area.

II. Research input constraints

RAMANI/VISALAKSHI explain the substantial gaps in the creation of industrial competence in biotechnology between the USA and countries in Europe and a developing country like India inter alia by a variety of resource constraints.1890

1. Research funding

Based on figures of 1994, they observe that there is a serious resource constraint in terms of financial capital available for investment in research, both to the government and industry. In 1994, the total expenditure on biotechnology research in India amounted only to US$ 28 million. Only 15% were contributed by the private sector. In comparison with this, under the French national biotechnology program Bioavenir alone (1992-1997) US$ 58 million were spent annually with about 62% coming from the private sector. At the same time, in 1994, the funding of biotechnology R&D in the USA exceeded US$ 5 billion, with industry contributing over 80%.

a) Public sector funding

Concerning public sector funding, in recent years, the comparison between budgetary allocations to biotechnology in India and in a number of industrialized countries has become more favourable for India. However, the limitations of the following analysis have to be emphasized. When using statistical sources on allocations to biotechnology it has always to be kept in mind that there is no internationally agreed definition of this sector.1891 Moreover statistics on budgetary allocations to R&D may or may not include expenditures of the higher education sector. Finally, in India it is virtually impossible to precisely estimate budgetary allocations to biotechnology. There are

1889 In the area of plant genetic engineering Avesthagen Graine Technologies, the Council of Scientific and Industrial Research, the University of Delhi and the Department of Biotechnology are the relevant corporate/institutional applicants.1890 On the following, see RAMANI/VISALAKSHI (2000), at 307 et seq.1891 On the efforts of the OECD to agree on a statistical definition, see DEVLIN (2003), at 6/7; on the problem of lack of a common definition of biotechnology in Indian statistics, see CHATURVEDI (2002b), at 26/27 and CHATURVEDI (2005), at 10.

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several public agencies that have programmes supporting biotechnology.1892 Their total budgets have gone up in recent years,1893 and each of them is likely to have increased allocations to biotechnology. Unfortunately, apart from the Department of Biotechnology, no agency separately lists allocations to biotechnology.1894 Therefore the following rough comparison with allocations in industrialized is based merely on allocation to the DBT.

As table 6.3 on allocations to the DBT under the current 10th Five Year Plans shows, a share of some 18% has been allocated to the scheme “Research and Development”. But other schemes may contain items which would fall under “R&D” in statistics of other countries. The total allocation to the DBT during the period 2002-2003 amounted to US$ 162 million (PPP adjusted), the allocations to the scheme R&D to some US$ 29.4 million (PPP adjusted). The R&D allocations of the DBT have risen to US$ 53,2 million (PPP adjusted) in 2004-2005. Again, it has to be kept in mind, that other Indian public agencies also invested in biotechnology R&D.1895 This means that Indian public R&D allocations are probably at the level of smaller industrialized countries by now. But there seems to be still a gap to investments in major industrialized countries, such as Germany.1896

Table 6.3: Allocations to the DBT under the 10th Five Year Plan (million US$ PPP adjusted)1897

S.No Name of the Scheme Tenth Plan(2002-2007)

of which 2002-03

of which 2003-04

of which 2004-05

01 Biotech facilities, centres of excellence & programme support

110.2 22.6 22.6 25.2

02 Research & development 214.3 29.4 37.2 53.2Agricultural Biotechn. 61.2 10.6 16.9 25.2Medical Biotechn. 122.4 14.3 14.7 22.4Environmental Biotech. 30.6 4.5 5.6 5.6

03 Biotechnology for societal development

30.6 4.0 7.9 11.2

04 Bio-process and product development

61.2 9.0 7.9 13.4

Food biotechnology 24.5 4.0 3.9 4.5Microbial and industrial biotechnology 24.5 4.4 3.4 7.8IPR & biosafety 12.2 0.6 0.6 1.1

05 International co-operation 49.0 6.6 9.1 11.2

1892 These include the Department of Scientific and Industrial Research (DSIR), the Department of Science and Technology (DST), Department of Biotechnology (DBT), Indian Council of Agricultural Research (ICAR) and the Indian Council of Medical Research (ICMR). See CHATURVEDI (2002b), at 13.1893 See CHATURVEDI (2005), at 15, table 3.1894 See CHATURVEDI (2002b), at 13, and CHATURVEDI (2005), at 15.1895 The ICAR, for instance, has established a National Research Centre on Plant Biotechnology (NRCPB) which is fully dedicated to work on plant biotechnology. According to CHATURVEDI (2002a), at 9, annual expenditure over the projects at the NRCPB is Rs. 150 million.1896 See below, table 6.4.1897 Derived from table 13 in CHATURVEDI (2005), at 27. From the context it becomes clear, that these figures refer only to allocations to the DBT.

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06 Human resource development 110.2 10.6 14.7 20.107 Bioinformatics 85.7 8.8 11.3 20.108 Autonomous institutes 520.3 71.0 70.0 110.1

National Institute of Immunology 183.7 26.8 28.2 39.1National Care for Cell Science 73.5 11.3 10.1 16.8Centre for DNA Finger Printing and Diagnostics

91.8 10.0 9.1 13.4

National Brain Research Centre 91.8 12.6 12.4 23.5National Centre for Plant Genome Research

61.2 8.8 7.9 13.4

Institute of Bioresources and Sustainable Development

18.4 1.5 2.3 3.9

09 I&M sector 24.5 0.1 16.9 0Grand Total 1206.0 162.0 197.7 264.4

Table 6.4: Public/Government R&D expenditure in selected industrialized countriesPublic R&D expenditure in million US$ 1999 2000 2001

Australia1898 150(2000/01)

Canada1899 256(1999/2000)

Denmark1900 123

Finland1901 22 73

Germany1902 262 241 290

Italy1903 52New Zealand1904 78

Norway1905 40(PPP adjusted)

1898 DEVLIN (2003), at 23. This figure includes the spending by the state and commonwealth governments on biotechnology R&D, which amounted to US$ 76 million (PPP adjusted) as well as the spending of the higher education sector, which spent another US$ 74 million (PPP adjusted).1899 See id., at 28, referring to Federal biotechnology research and development expenditure. Conversion by the author based on the average annual exchange rate, not PPP adjusted.1900 See id., at 34, referring to government intramural R&D funding. 1901 See id., at 35, referring to total public sector R&D funding. Conversion by the author based on the average annual exchange rate, not PPP adjusted.1902 See id., at 41, referring to federal government research funding. To this EU funding and funding by the local Länder governments would need to be added. See DEVLIN (2003), at 22 and 41. Conversion by the author based on the average annual exchange rate, not PPP adjusted.1903 See id., at 51, referring to government budgetary allocations/outlays for R&D. Conversion by the author based on the average annual exchange rate, not PPP adjusted.1904 See id., at 58, referring to government funding on biotechnology related research. Conversion by the author based on the average annual exchange rate, not PPP adjusted.1905 See id., at 60, referring to public R&D expenditure.

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Spain1906 114

b) Private sector funding

Private sector funding, however, seems to remain a problem. Several experts identify funding as major constraint for the Indian biotechnology sector.1907 While the investments of Indian biotechnology firms seem to compare favourably to countries such as Switzerland or Belgium,1908 they clearly lag far behind major players. Biotechnology related R&D expenditures of the US industry amounted to US$ 16.4 billion in 2001.1909 Compared to this, the total investment (not only in R&D) of Indian biotechnology firms of US$ 10,616 million in 2002 is rather small.1910

Table 6.5: Investment of the biotechnology industry in India (millions of US$ PPP adjusted)1911

Field 1999 2002Agriculture 900 3,350Environment 3 253Health 2,118 5,024Industrial Biotechnology -- 635Other 101 1,354Total 3,122 10,616

WAWLYN points out that the high cost of loan or equity capital in developing countries is one of the reasons that developing countries lag significantly behind OECD nations in their ability to benefit from the recent advances in biotechnology.1912

Particularly, the unavailability of adequate venture capital fund is a major constraint. “[V]enture capital has emerged as a major source of funding frontier technologies

1906 See id., at 63, referring to government budgetary allocations/outlays on biotechnology R&D. Conversion by the author based on the average annual exchange rate, not PPP adjusted.1907 See RAMANI/VISALAKSI (2000), at 307 et seq.; RAMANI/MARIA (2004), at 8; SEN (2001), at 2.1908 Belgium biotechnology companies spent a total of EUR 409 million on biotechnology R&D in 2003. Total intramural biotechnology R&D expenditures of private firms in Switzerland amounted to CHF 301.85 million (approximately US$ 158 million PPP adjusted) in 2000. See DEVLIN (2003), at 26 and 66. Again no direct comparison is possible as no time series data are available and as the available figures from European countries refer to biotechnology R&D investement, whereas the figure from India, US$ 10,616 million in 2002 refers to total investment of biotechnology firms. But even if only a small share of the Indian investments are dedicated to R&D, India seems to have reached at least the level of smaller industrialized countries.1909 See DEVLIN (2003), at 69.1910 See below Table 6.5.1911 See CHATURVEDI (2005), at 21, table 10. PPP stands for purchasing power parity.1912 See WALWYN (2004). He focuses on the pharmaceutical industry, but developing transgenic crops involving likewise large upfront investments with an uncertain return, his conclusions also apply to the crop biotechnology sector. He demonstrates that the total research expenditure of a nine year project to launch a new drug is increased by 60% if the base rate changes from 5% to 15%. The real interest rate per annum in India is 8.7% as compared to 2.9% in the UK, 1.8% in Germany and 1.1% in the US.

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across the world.”1913 The available information on venture capital investment suggests that India is well placed in Asia, but lags far behind Europe and the United States.1914

Table 6.6 shows details on the number of companies which received venture capital across major Asian economies.1915 Figure 6.2, however, shows that the countries used for comparison account for a very small share of global venture capital investment in biotechnology.

Table 6.6: Venture capital disbursement in selected countries (2001) in $ million1916

Country Investment No. of Recipient CompaniesJapan 1,858 39India 1,105 91South Korea 1,054 19Singapore 965 26Australia 548 81China 393 11Hong Kong 263 23

Figure 6.2: Biotechnology venture capital investment shares in 20011917

However, it would be reductive to deduce an argument against patent protection from this research input constraint. RANADE/KAPUR argue that one of the risk factors deterring venture capital in (pharmaceutical) biotechnology is the absence of product patents.1918 The introduction of patent protection would therefore reduce this constraint.1919 Yet, patent protection is only one factor among many determining the attractiveness for investors and interest rates.

2. Manpower

Table 6.7: Number of employees in the biotechnology industry in India1920

2001 2002FieldTotal % Technical % Total % Technical %

Agriculture 15 029 24.8 5 217 30.8 32 623 20.3 12 206 31.3Environment 66 0.1 30 0.2 6,136 3.8 3 295 8.5

1913 See CHATURVEDI (2002b), at 17.1914 For a detailed description of the venture capital market in India, see CHATURVEDI (2002a), at 21 et seq.1915 See id., at 17, 18. The table is based on statistics provided by the Indian National Association of Software and Service Companies (NASSCOM).1916 See CHATURVEDI (2002a), at 22.1917 See DEVLIN (2003), at 20.1918 See RANADE/KAPUR (2001).1919 Venture capital funds within developing countries being limited (See WAWLYN (2004), at 60), it would again be mainly foreign capital. However, the implications of the involvement of venture capital funds are quite different from those of FDI of multinational seed firms and the concerns voiced against the engagement of the latter do not seem to apply here.1920 See CHATURVEDI (2005), at 20, table 8, Source: RIS based on BCIL 2001 and 2003.

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Health 28 520 47.1 3 066 18.1 85 600 53.2 11 948 30.6Industrial Biotech. -- -- -- -- 14 514 9.0 3 335 8.6Other 16 905 27.9 8 619 50.9 22 026 13.7 8 228 21.1Total 60 520 100 16 932 100 160 899 100 39 012 100

Availability of English speaking well-trained manpower is often cited as major advantage of the investment destination India.1921 According to VISALAKLSHI, there are 39 public academic and research institutions which impart training in biotechnology at the post-graduate level, as well as hundreds of private colleges and management schools offering courses in biotechnology at graduate and post-graduate levels. There are also around 50 public research institutions and universities which take research scholars for training in biotechnology research.1922 Nevertheless, she states that

“[p]aradoxically despite producing about 1000 PGs every year and around 100 PhDs, there is still shortage of manpower. This is due to migration of PGs to labs of advanced countries and mismatch of quality of manpower with the requirements of the Industry.”1923

Other authors also identify a shortage of qualified manpower as a constraint.1924

III. Views of experts on Indian biotechnology capacity

Authors rarely make statements precisely on the question of whether the Indian biotechnology industry has reached a sufficient level of competence to be competitive in the environment of patent protection. Nevertheless, the following views are of interest in the present context, as they complete the above rough sketch of the Indian biotech capacity.

RAMANI and VISALAKSHI find that “India’s weakness is not in scientific competence but in commercialisation of science for industrial use of sales”.1925 They emphasize the substantial gaps in the creation of industrial competence in biotechnology between the USA and countries in Europe and between the latter and a developing country like India.

1921 See e.g. EMBASSY OF INDIA (2002-03), at 2. According to Confederation of Indian Industry estimates, India produces roughly 2.5 million graduates in IT, engineering and life sciences, about 650,000 postgraduates and nearly 1500 PhDs qualified in biosciences and engineering each year. See id.1922 Information given by S. VISALAKSHI, senior scientist at the National Institute of Science, Technology and Development Studies (NISTADS), in a personal communication of 21 July 2004. For detailed figures on human resources development and training, see CHATURVEDI (2005), at 31. 1923 Id.1924 See, e.g. CHATURVEDI (2005), at 34, referring to the experience of Indo-American Hybrid Seeds. Company officials point out that despite so many institutes and universities offering training in biotechnology the company is not getting the relevant manpower for their R&D units. See also RAMANI/VISALAKSHI (2000), at 307. 1925 See, RAMANI/VISALAKSI (2000), at 305.

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“This is most clearly illustrated by the following facts. Firstly, in the USA, both large and small firms are pursuing the creation of radical innovations (i.e. new products with a market value of more than $100 million). In most European countries (barring the UK) only the large firms are investing in the creation of radical innovations. Compared to this, in India, even the large firms are only pursuing independent development of existing biotechnology products that have been created by Western companies.”1926

They explain this situation by various resource constraints (funding, manpower, infrastructural facilities) and observe that the commercialization of innovations in a new science-based sector depends on the functioning of networks between a variety of institutions and agents in the economy. In this context they criticise that financial institutions are risk-adverse, university-company links are weak and that there is little networking between firms themselves to aid the creation of innovation. The authors conclude that technological policy in developing countries should also look at “how to transform scientific competence efficiently into industrial competence”. Similarly, RHOE/SHANTHARAM/BABU hold that “India has demonstrated its capacity to perform basic biotechnology research”, but that “India has had difficulty in turning biotechnology research into commercialised products”.1927 Whereas RAMANI/VISALAKSHI call in more general terms for an institutional reform,1928 RHOE et al.count inter alia on IP protection “in order for private institutions and some public institutions to turn basic research into applied research”.

VERMA, scientist at the Salk Institute for Biological Studies, California, observes that “[i]n India, biotechnology research is largely restricted to academia, and scientists are generally not aware of, or interested in the commercial potential”. Like RHOE et al., he does not conclude from this that the introduction of patent protection would be premature, but to the contrary identifies the absence of patent rights as a stumbling block.1929

Other statements, however, raise doubts about the competitive level of the public sector even in basic research. K.K. NARAYANAN, Managing Director at Metahelix Life Sciences, for instance, replying to a question on the plant functional genomics and crop transformation capacity in the public, points out that there are few institutions in the public which have such capabilities.1930

1926 See id. at 307. In a personal communication, dated 21 July 2004, Dr. Visalakshi confirmed that this situation has barely changed.1927 See RHOE et al. (2002), at 275.1928 See RAMANI/VISALAKSHI (2000), at 310/311.1929 See also SHANTHARAM (2005), who emphasizes the nascent international patenting activity of Indian medical biotech companies and states that "Indian agriculture badly in need of capital investment and innovation" and advocates the advantages of patent protection. SHANTHARAM is an international consultant on biotech affairs and management based in the US.1930 Personal correspondence of 13 August 2001.

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IV. Conclusions

The available empirical evidence on the Indian biotechnology capacity in the public and the private sector is very limited and points in opposite directions. The evidence could be interpreted both ways: On the one hand, one could argue that India obviously has not yet reached the plant biotechnology competence of industrialized countries. There seem to be few public sector units or private enterprises in India which already do genuine research at the scientific level of global leaders. Those who emphasize the technical and especially financial superiority of MNCs in the competition for patents can rely on the low rate of international patents and on the financial gap that still exists between investments in India and in leading countries in biotechnology.

One the other hand, there is some evidence, confirmed by statements of experts, that the problem is not the scientific competence but the competence to transform basic biotechnological research into commercialized products. In this case, patent protection could provide an incentive to university researchers to develop their research into marketable products via start-ups that could base their funding on the IP asset. Patent protection would also facilitate partnerships between public sector research units and private companies. If one assumes that Indian public sector institutes have the capacity to perform basic biotechnology research, they would have assets to bargain against proprietary technology they may need in other research areas or for commercialization of their research results. Even if Indian firms would still have to go through a learning process and therefore would certainly have a disadvantage vis-à-vis their foreign competitors, there would be no point in waiting.

Both lines of argument, i.e. the one pro-patent protection and the one against it seem plausible. Intuitively, the author of this paper would suggest a middle path. First of all, it has to be taken into account that, according to the available evidence, only few domestic Indian breeding firms already have biotechnology capacity. This suggests that their activity should be, in principle, kept free of the constraints of keeping track of the exact genetic composition of their varieties. Consequently, patent protection for inventions that relate to plant genetic components indigenous to the claimed species seems premature (if it is considered at all, despite the opposition of breeders against such a protection). Breeders would never know if by chance the protected material is not already present in their breeding stock. With respect to transgenic plants this problem will only appear in the long run, when the transgenes will be widely distributed and massively present in advanced varieties so that the protected varieties could not be avoided any more as parents for further breeding. For some breeding companies, especially those with international cooperation, the constraints imposed by patent protection for genes indigenous to the species concerned would be bearable as they will in any case more and more use molecular markers and DNA profiling techniques. But smaller companies, according to CHOPRA some 200, would probably not be able anymore to overcome the entry barriers to the R&D activity.

Furthermore, it should be considered that funding will remain a constraint in the near future even in the second possible scenario where Indian firms and the public sector already have scientific biotechnological capacity. This could suggest that protection

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should rather be conferred on small steps innovation, leaving the possibility to imitate break-through inventions. However, this solution would only make sense where the market for plant biotechnological products in India is sufficiently interesting for firms and investors. Of those firms which are already active in biotechnology, many seem to target the international market and take constraints which arise from patents in the most important international markets already into account. K.K. NARAYANAN, Managing Director of Metahelix Life Sciences, Bangalore, explains that even in the current legal situation in India, his company has a strategy to maintain freedom to operate anywhere in the world.1931 But those firms which are not yet active in commercialising biotechnological inventions may find this kind of “petty patents”useful in a learning period of one or two decades. Further empirical research on the usefulness of such a system for Indian firms would be necessary. But it may in any case be the better option to no patents at all as it would force private and public sectors in India to start a new culture of dealing with innovations.

D. IMPLICATIONS FOR FARMERS

The most evident and immediate effect for farmers of the introduction of a seed related IPR regime is the establishment of legal restrictions on certain acts of seed distribution and production depending on the type of IPR system. The consequences of these restrictions on informal sector seed supply are at the core of the debate on the appropriate shape of a PBR regime for India. It is no accident that the extent of the farmers’ privilege is one of the few points where the PBR protection regime introduced by the PPV&FR Act departs from the UPOV 1978 Act. The impact of the aforementioned restrictions will be discussed in section I. Furthermore, all the potential effects described in part A and B ultimately have repercussions on farmers. The availability of public sector seed and the structure of the seed industry will impact seed prices, an issue which will be briefly addressed in section II. Finally section III will reiterate that the incentive provided by plant IPR should lead to the increased involvement of private firms in R&D and thus the availability of improved seed technology.

I. Restrictions on the rights of farmers to use, save, exchange, share, and sell seeds

One of the major concerns put forth by opponents to IP protection for plant varieties or plant related inventions in India is the impact that this protection could have for the current practices of farmers to use, save, exchange, share, and sell seeds among each other. Not only developing country NGOs, but interestingly also the European Commission point out that the farmers’ privilege as currently practiced in the first generation UPOV Member States “is designed for economies where farming has become a commercial and quasi-industrial activity performed by a small minority of the population and where plant breeding has become an industrial plant breeder’s activity.”1932 The situation is indeed different in India, which has a very large small

1931 Personal correspondence of 13 August 2001.1932 See EUROPEAN COMMISSION (2002), at 20/21.

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farming sector, where farming is not merely a professional activity like others but the only source of livelihood of the concerned farmers, and where the formal seed sector plays to date only a minor role in seed multiplication of major crops.

Since it is so closely linked to the food security of many farmers who do not have any economic margin to bear increased input costs, the right of farmers to save and share seeds is at the centre of a partly very emotional debate. SHIVA, for instance, states in an article entitled “Seed Saving: Our Ethical Duty, Our Human Rights”:

“Seed is the first link in the food chain. In Sanskrit, Bija, the seed, means the source of life. Saving seed is our duty, sharing seed is our culture. Patents on seeds and genetic resources rob us of our birth right to derive our livelihoods by transforming seed saving and seed sharing into ‘intellectual property crimes’. This is an assault on our culture, our human rights, our very survival.”1933

The statement of SHIVA envisages the rather unlikely scenario that a patent regime of the US type is introduced which subjects even seed saving to the authorization of the breeder.1934 As the then following passages of the article show, it is also based on two stereotypes of farmers and breeders: resource poor farmers, on the one hand, and huge MNCs, on the other. It should not be forgotten that there also exist medium sized Indian seed firms and large export oriented farmers. The aim of PVP legislation should also be to find a balanced solution for this type of relationship. Nevertheless, the constellation assumed by SHIVA will arise frequently. The following paragraphs will try to give some keypoints for understanding the indignation and concerns of activists like SHIVA. At the same time they will discuss possibilities to give a maximum incentive to private breeding firms while protecting economically vulnerable farmers. In sub-section 1, the importance and the characteristics of the informal seed sector in India will be briefly revisited. Sub-section 2 will outline which activities and which categories of varieties would be affected by different forms of IP protection for plant varieties. Sub-section 3 will analyse the option to restrict the farmers’ privilege to small farmers.

1. Importance and characteristics of the informal sector

As stated earlier in chapter 5,1935 an overwhelming majority of seed in circulation in India arises from informal sources, including on-farm seed saving and off-farm sources, such as other farmers, organizations, or non-registered traders in local markets and bazaars. Depending on the crop, up to 90% of the seed requirements are met by the informal seed market. To date, the informal seed market is the most important seed source of food crops for small farmers. It acted as an important mechanism of diffusion of improved cultivars during the Green Revolution. Experts point to the “well rehearsed facts […] that farmers’ systems of informal seed exchange are crucial

1933 See SHIVA (undated b).1934 The European approach is “softer”, as it allows farmers to save seed against the payment of a compensation which has to be considerably inferior to the price of new seed. Yet, it is true that it does prevent seed exchange and sales among farmers. 1935 See chapter 5, B.I.

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to: a) their ability to constantly introduce new material into their cropping systems, b) maintain high levels of diversity, and c) maintain relatively stable yields.”1936

There is little information on what share of informal seed supply stems from off-farm channels. These would be the most likely to be affected by the introduction of plant variety protection or (hypothetically) patent protection for plants. Information is also scarce on the share of transactions between farmers that relates to improved cultivars. There is no doubt, however, that informal seed diffusion systems include both modern formal sector cultivars as well as local varieties. The types of the transactions involved range from supply based on social obligations to barter and purchase against cash. Whereas members of the seed industry have held that seed sales of modern varieties among farmers are more often a marginal phenomenon,1937 NGO representatives have argued that “the bulk of Indian seed trade is through farmers’ exchanges at a market price.”1938

2. Activities and varieties concerned by plant variety protection

The introduction of seed related IPR raises the following questions: Which supply mechanisms would be affected and would they be replaced by others without a transition period during which small farmers would suffer terribly? And what type of seed material would be affected?

a) Legal scenarios

This will first of all depend on the shape of the legal regime introduced. A regime that would subject even seed saving to the payment of a remuneration to the breeder would evidently not have the same impact as a PVP regime that prevents farmers only from seed sales among each other, but leaves the possibility of saving seed for their own holding and to exchange seed on a non-pecuniary basis untouched.

Subjecting seed saving to the payment of remuneration or even to the authorization of the breeder would be unconceivable in India at the moment. Not only is the possibility of seed saving the assurance for farmers to be able to replant their holdings in the next season and thus at the basis of the survival of many farm households, but the introduction of legal claims into an environment of extremely uneven education and financial power should also be done very carefully. Consequently, in the following, only an IP regime with a farmers’ privilege allowing for seed saving and seed exchange but not for seed sales among farmers will be discussed. This does not necessarily mean to categorically exclude the option to introduce patent protection for certain types of plant related inventions. It would be conceivable to frame the relationship between genetic engineers and breeders according to the exclusive rights provided by the patent system, while at the same time establishing a farmers’ exemption similar to that of the UPOV 1978 regime or even broader.

1936 See HALEWOOD et al. (DISCUSSION DRAFT 2003), at 8.1937 Personal conversation with Mr. MULLICK, see above note 1455.1938 See, e.g. ROYCHOWDHURY (1994), at 16, quoting Suman SAHAI, Convenor of the NGO Gene Campaign.

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Again, it is only possible to speculate about the potential developments triggered by this type of protection. But it may not be wrong to consider worst case scenarios, as the livelihood of a large number of small farmers could be impacted.

b) Types of activities concerned

If the farmers’ privilege was limited to seed saving on one’s own holding and farmer-to-farmer exchange, the activities which would be impacted by this system would be seed sales among farmers and seed sales of unofficial dealers to farmers. The restrictions on seed dealers seems to be less of a concern to PVP opponents.1939 In contrast, the tremendous importance of farmer to farmer seed sale to ensure access of farmers to fresh seed lots and rapid diffusion of new seed technologies is often highlighted.1940

If the large part of the farmer-to-farmer seed supply which is taking place on a pecuniary basis, at least according to many commentators, was banned, seed saving and formal sector seed sources might not be a satisfactory alternative to these practices. Seed saving alone is not sufficient, as farmers have various reasons for the need to replace seed:1941 Their own stock may be exhausted or have changed by natural selection and contamination into a less desirable variety. Farmers may wish to experiment with unknown materials and select better varieties. They may know of a better landrace or cultivar. And, importantly, replacing home-grown seed by seed from off-farm channels is considered crucial for obtaining good yields by many farmers. This consideration is often based on long-standing experience in traditional seed systems that own seed degenerates and foreign fresh seed yields better.1942

Consequently, small resource poor farmers need access to seed from off-farm sources not only in order to take part in the technological development, but also to be able to continue traditional practices of seed replacement by fresh seed lots. Moreover, seed supply from formal sector seed sources may not be able to replace the supply by informal sources. Admittedly, in an optimistic scenario, the gap left by informal off-farm channels could be filled by formal sector seed dealers being associated with and remunerating the breeding firm which has bred the variety. Such a seed market structure seems to have developed in Argentina. But in a more pessimistic scenario, the formal sector extension network would only concentrate on certain economically interesting areas/markets and would neglect backward areas, while at the same time farmers so far providing seed of new varieties to other farmers might stop this activity. Or else, the market structure would permit a rise in seed prices going beyond the surplus value of the new variety. A compromise would perhaps be to allow farmers to

1939 Suman SAHAI, in a personal conversation of 29 August 2001, stated that, by and large, it would not be a loss if non-registered traders were pushed out of the market.1940 See, e.g. SAHAI (2001), at 2 of 9; SHARMA (2002). See also MATHUR (2001), at 345, wo emphasizes the importance of a broad farmers’ privilege without specifying the reasons. The “Statement on Dunkle’s Draft” adopted in an “All Party Meeting held on 29.01.1992”, feared that extending IP to seeds, plants and biogenetic substances would retard diffusion of new varieties. See NATIONAL WORKING GROUP ON PATENT LAWS (1993), at 40. 1941 On the following, see ZEVEN (1999), at 182/183.1942 See ZEVEN (1999), esp. at 188.

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sell seed of a protected variety without the authorization, but to give breeders a claim to remuneration if the new variety is sold at a higher price than those in the public domain. This would be the most equitable solution from the author’s point of view. Yet admittedly, the discussion under c) will raise some doubts as to its practicability, as farmers often do not know the origin of the variety they are planting.

When discussing the impact of the introduction of a UPOV type PVP system, it cannot be ignored that, legally speaking, the PVP would impact only part of the seed in circulation, as local varieties and existing formal sector varieties would not be covered.1943 But as will be seen in the next paragraphs, the effects of PVP may disturb the informal system beyond newly introduced protected varieties.

c) Types of germplasm concerned

From a legal point of view, the PBRs system would not concern the varieties that farmers already use. Neither would it concern public sector varieties, if the relevant public sector institution chooses not to enforce its rights against farmers or not to apply for PVP for a certain variety. At first sight, it could be concluded from this that the introduction of a PVP system is a win-win scenario, as it gives farmers additional options. It gives them access to new plant varieties of self- and open-pollinated crops that would, for lack of incentives to private breeders, not exist without PVP protection. It could be argued that farmers have free choice between the advantages of the new variety, however combined with constraints on seed selling, on the one hand, and keeping the economically less attractive varieties in place, on the other hand. Yet, in practice the impact will be more complex for three reasons:

Firstly, in traditional agricultural systems the distinction between local and improved varieties is not clear-cut. This phenomenon is well described by ALMEKINDERS et al.:

“Newly introduced material becomes part of the local genepool, either through mechanical admixture of lines, population or clones, or through cross fertilization. Because of this absorption of new material into the local genepool, the distinction between ‘local’ and ‘improved’ varieties is eventually blurred.”1944

The outcome of such a process of integration of a new variety into the local gene pool would mostly be plant populations that are not covered anymore by the varietal description of the protected variety. But it may be assumed that a farmer selling seed would often not know whether the degree of admixture with foreign seed or the degree of foreign contamination already makes a different variety out of the population that was initially a protected variety. He may therefore hesitate to sell seed of such a mixed

1943 The protection of “extant varieties”, i.e. inter alia of public and private sector varieties which are already in the public domain, as provided for by the Indian PPV&FR Act is a new, and controversial concept, which is different from the “classical” PBR approach. See below, chapter 8, C.IV.1944 See ALMEKINDERS (1994), at 208.

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population even if it is finally closer in its characteristics to a local variety than to the initial improved cultivar.

Secondly, even if farmers keep improved varieties and local varieties separate, they do not necessarily make a distinction between modern varieties from different sources and it would be an illusion to expect them to know which one is in the public domain and which one is proprietary. Of course general assertions on this issue are difficult to make. TRIPP reports that rice farmers in Andhra Pradesh are generally well informed about the latest varieties and are often ahead of the public and private seed companies in multiplying and diffusing recent releases.1945 On the other hand, studies on wheat farmers in Punjab and on pearl millet farmers in Rajasthan report that out of these groups of farmers 5-20% and 59-89% respectively could not name the modern varieties they were growing. In Rajasthan, only an average of some 16% of the farmers knew the company and the hybrid name of the pearl millet hybrids they planted. Most farmers knew the company, but still roughly one tenth knew only that they were planting a hybrid.1946 TRIPP suggests that this difficulty of farmers to provide the name or the breeding company of a variety is not an isolated problem.1947

Consequently, the introduction of restriction on seed sales of protected varieties might lead to a considerable uncertainty of all actors of the informal sector as to their rights. Against this background, it seems likely that a PVP system prohibiting seed sales among farmers would affect sales not only of protected varieties of private sector firms during the period of their protection, but of all improved cultivars. Consequently, the diffusion of public sector varieties adapted to the needs of resource poor farmers might be hampered indirectly by a PVP regime even if the relevant breeding institution decides not to take proprietary rights.

A third argument speaks against a “win-win scenario” for individual farmers. Those farmers, who most rely on the informal market and would rather prefer unprotected, perhaps less performing, but freely marketable varieties, are not those who decide on which varieties will be newly introduced into the system. Farmers have expressed the concern that the introduction of plant related IPR would result in market structures which would reduce the number of varieties in circulation and in a replacement of freely available varieties by proprietary germplasm.1948 It is against this background that the fear that farmers would “lose control over seed production and become dependent on multinationals” as a consequence of the introduction of UPOV 1978 type PVP1949 has to be taken seriously even if the undifferentiated formulation is exaggerated. Several factors would need to come together to lead to such a development, including the disengagement of public sector breeding institutions, the

1945 See TRIPP (2002), at 241.1946 See id., at 246/247.1947 See id., at 241.1948 On the second point, see e.g. SRIDHAR (2000), reporting on a public hearing on the PPV&FR Act. See also PANDEY (1994), at 10, on the “farmers’ movement against hybrids”, which raises similar issues as legally protected germplasm.1949 See DASARI, N.R., Member of the Joint Committee on the Protection of Plant Varieties and Framers’ Rights Bill, 1999, “Minutes of Dissent”, in: LOK SABHA (2000), at xv.

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preference of bigger farmers for new protected varieties and the gradual replacement of traditional varieties and unprotected cultivars.

3. Would exempting merely small farmers be a solution?

The European Commission has taken the view that in order to adapt the PVP regime to agricultural situations, “where all or part of the farming activity is performed on very small farms at subsistence level or where commercial activities of farmers are of limited geographical scope”,

“a [TRIPS] Member may well create, in its national law, a broader farmers’ exemption for the benefit of subsistence farmers, or of small farmers who customarily reuse seed because they lack access to or financial resources for new seed every growing season. This allows them to save, replant, exchange,share and resell seed (to other small farmers), provided they do not use the denomination of the variety or the related trade mark.”1950

Yet, as will be seen below, the Indian solution goes beyond this exemption, as no distinction is made between different categories of farmers. According to Dr. Dolly CHACRABARTY, the approach of limiting this large farmers’ privilege to small-scale farmers was indeed discussed during the drafting process, but was discarded as making the system too complicated.1951

Another argument against the limitation to small farmers is put forth by SAHAI.1952

She points out that precisely the bigger farmers are in terms of financial resources in the position to purchase newly bred varieties from formal sources and then multiply these varieties and supply them to smaller farmers. This key-role of richer farmers for the introduction of new technology to the poorer farms is also stressed by MENON/SADANADA:1953

“It is precisely the richer farmers who in our agrarian structure are in a position to undertake the risks involved in any innovation. They become the conduits for the introduction of new technology into the poorer farms. In case the technology to be used by the two groups gets further segmented, then the majority of our farms would continue to remain technically backward, even if the national laboratories are able to develop appropriate new technologies.”

Consequently, the problem is not only whether a small farmer can save seed or obtain seed from another small farmer, but also whether new technologies will reach them if big farmers are constrained in their possibility to sell seed to smaller farmers. The issue is how small farmers get access to seed of improved varieties. If more and more big farmers relied on protected varieties and if seed selling by big farmers was

1950 See EUROPEAN COMMISSION (2002), at 21, para. 88.1951 Personal conversation with Dr. Dolly CHAKRABARTY on 7 September 2001. At the time of the interview Dr. CHAKRABARTY was Director (Seeds), Department of Agriculture and Cooperation, Ministry of Agriculture.1952 Personal conversation on December, 12, 1996.1953 See MENON/SANADANA (1989), at 36.

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prohibited, the small farmers would indeed be restricted in their choice of seed sources. On the other hand, it may be recalled that the new seed technologies which would, as a result, not reach small farmers might not have come into being without PVP protection.

4. Conclusion

The dilemma should be clear. The broader the farmers’ exemption, the more reduced are the possibilities of breeders to appropriate part of the social benefit provided by their new varieties, the lesser the incentive of the private sector to invest in breeding, the slower the access of farmers to elite germplasm, at least in the situation assumed here that the public sector is unable to satisfy the needs for new seed technology. This was the point made by the Seed Association of India (SAI), an association of domestic and multinational seed companies in India, which opposed the extension of the farmers’ privilege to the selling of seeds as soon as it was introduced in a first draft legislation in 1993. In the view of the SAI, “the very purpose of plant variety protection would be defeated if farmers start selling seed of a protected variety. […] If not amended, this provision will be a serious disincentive to invest in research and development.”1954

India therefore has to find a middle path between two unsatisfactory situations: Providing insufficient incentives for the private sector to take up the role which it is hoped to satisfy, on the one hand, and introducing too radical changes which might lead to the break-down of the informal seed supply system with possibly dramatic consequences for small farmers, on the other. In this context it needs to be emphasized again that the impact of the introduction of PVP on the informal seed supply system will in all likelihood not be limited to new varieties.

As will be seen in detail in chapter 8, the Indian PPV&FR Act allows farmers to sell seed of protected varieties unless they sell it in labelled containers or packages. The limitation to brown-bag sales certainly does limit the radius of sales and will make it difficult for a farmer to make seed multiplication and marketing his primary occupation. These sales may nevertheless represent a serious competition to the firm’s own marketing network and occupy interesting markets that breeders would have hoped to serve themselves in order to recoup their investments.

Limiting a broad farmers’ privilege to small farmers does not solve the problem of their access to seed from off-farm sources, as one of the most important sources are precisely bigger farmers. Another solution might be to limit the farmers’ privilege to sales to small farmers. This approach to the author’s knowledge has not been discussed during the drafting process and might be worth considering. The information effort necessary to make sure that this restriction is well understood and does not paralyse the informal seed supply due to remaining uncertainties should not be underestimated. It also raises the same definition and practicability problems as a general limitation of the farmers’ privilege to small farmers. Still another approach, which could be a

1954 See SAI (1994), at 6.

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compromise between maintaining informal channels of supply and at the same time giving breeders a possibility to share in the benefits provided by their new variety, has already been mentioned above: Farmers would not need the authorization of the breeder to sell a protected variety, but they would have to pay him a remuneration if the seed price reflects the surplus value of the new variety, i.e. if the price is higher than that of varieties in the public domain. This remuneration obligation could possibly be limited to bigger farmers. Admittedly, the implementation of this concept would be rather complicated, especially the mechanism of establishing the seed price of comparison would need further reflection.

An overly rapid evolution leading to a break-down of the informal system of seed supply could affect resource-poor farmers in a dramatic way. It is therefore understandable that the Indian government takes only small steps. Yet, the current degree of appropriation will probably not be sufficient to provide an incentive for substantial investment of the private sector in open- and self-pollinating crops. A more matter-of-fact discussion and a continued search for solutions combined with field research in different regions with different socio-economic and agricultural structures is urgently needed.

II. Rise of seed prices

Another concern expressed by patent and PBR opponents and closely linked to the impact of plant IPR on alternative seed supply sources is that the adoption of an IP protection system might result in a rise in seed prices.1955

1. Plant breeders’ rights

As outlined in chapter 4, neither the available evidence from the US in the decade following the introduction of the PVP system, nor the early evidence from Argentina seem to confirm these concerns.

While price increases are undeniable, representatives of the Indian seed industry highlight that the actual issue is whether the introduction of plant IPR leads to unreasonable prices which are not based on an improved input-output ratio of the new variety.1956 MULLICK points out that Indian farmers are carefully reflectingconsumers. “[They buy] only the product that gives [them] a good economic return.”1957 BUTLER/MARION rightly observe that the actual issue is whether or not PVP trigger structural changes in the seed market which could create sustained unjustifiably high prices. What is observed in the US context by these authors as well as FUGLIE et al. likewise applies to the Indian situation: Competition, especially by

1955 See, e.g. SINGH/ASOKAN (1995a), at 8 et seq.; SAHAI (1995b), at 1573.1956 See ARORA (1995), at 11.1957 Statement of Deepak MULLICK in the expert discussion at Madras, see SWAMINATHAN (1995a), at 55.

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farmer-saved seed or public varieties, will have a decisive impact on seed price development.1958

The validity of the concern that seed prices might rise without compensation in terms of produce,1959 will therefore depend on the existence of market forces that counterbalance the possible monopolization by a few companies. There are several checks on the pricing of privately bred varieties that will not be impacted directly by PBR, at least if the UPOV 1978 model is followed. The first alternative for farmers to purchasing private varieties is on-farm seed saving. Secondly, there is no direct correlation between PBR and the reduction of public R&D. The public sector may continue to produce commercial seeds. Public research institutions could also continue to supply publicly developed plant material to smaller private firms in order to make them competitive. A further check on prices of private varieties would be the inter-farmer seed sale of non-protected varieties, i.e. old public and private sector varieties and landraces.1960 Likewise seed firms are in principle free to multiply and market these types of varieties.

2. Patents

The above considerations in principle also apply to patents. Yet, as opposed to PVP, which gives exclusive rights only for one variety, patents may cover an entire technological field, making the provision of alternative products more difficult for competitors. This may hamper the above price checks if the patentee has made a break-through invention. But patent legislation could be framed in a way to provide, in the area of agricultural technology, for a farmers’ privilege similar to that under the PVP regime.

III. Access to elite material

In sections I and II disadvantages for farmers were at the forefront. But it should be recalled that the very idea of PBRs and patents protection is to provide new improved technologies to farmers.

If a PBR regime properly balances the necessity to provide an incentive for breeders and the need to maintain a system of informal seed supply the benefits for farmers can be immense, as they will have access to new technological solutions more rapidly than in a system based mainly on public sector R&D.

The evaluation of patent protection in this respect is more complex as it could hamper efforts of the public sector to develop certain technologies which fall within the ambit of a patent. In a situation where the public sector has no proprietary technologies to cross-license or other incentives for cooperation with the private sector to offer, patent

1958 See FUGLIE et al. (1996), at 43; BUTLER/MARION (1985), at 52 et seq., esp. 60.1959 See QUASIM et al. (1994), at 131.1960 The possibility to register these varieties, as provided in the Indian Protection of Plant Varieties and Farmers’ Rights Act, is a very uncommon feature of a plant variety protection legislation. The impact that such a provision could have on seed prices is therefore not discussed here.

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protection could mean giving access more quickly to updated technology to an elite of farmers, while slowing down its availability to marginal farmers, who would have benefited from public sector non-profit research programmes.

E. EROSION OF GENETIC RESOURCES

Many Indian authors express the concern that the introduction of plant IPR will lead to the erosion of crop genetic diversity.1961 The available empirical evidence from industrialized countries presented in chapter 4 does not lend any support to the hypothesis that the DUS requirements or an alleged reduced flow of germplasm among breeders would lead to an erosion of in-field crop genetic diversity.

But evidently, PBRs are part of an agricultural policy which aims at the replacement of landraces by arguably better performing newly developed varieties. PBRs give a biased incentive for a certain kind of variety development. They are destined to promote modern agricultural research that requires large investments. To recover these investments, private companies will seek to introduce their new varieties on a large scale, leading to a reduction of genetic diversity if compared with a situation where location-specific highly heterogeneous landraces are used.

However, it needs to be emphasized that the promotion of the development and spread of HYVs is a political decision, not an undesired side effect of PBRs. During the Green Revolution the spread of HYV led to vast areas of monoculture and to a reduction of the plant diversity in the regions where this new seed technology was successful.1962 The key question of whether or not there is an inherent contradiction between filed genetic diversity and food security is therefore independent of the PVP issue. If this question has to be answered in the affirmative, the loss of genetic diversity would have to be qualified as a necessary evil associated with the desired spread of modern agricultural technology that offers farmers a higher yield potential and better living conditions. As outlined in chapter 5, the Indian government clearly sees a significant role for modern input intensive agriculture in increasing agricultural productivity.1963 At the same time, it is widely recognized that there is a need for conservation of traditional varieties and agricultural techniques to overcome the limits of high input technology.1964 Yet rather than maintaining the status quo and forcing farmers to use outdated HYVs or landraces for lack of alternatives, a third option should be explored: Leaving farmers the choice by creating economic incentives for the maintaining genetic diversity, i.e. organising a redistribution of benefits from the use of this genetic diversity in formal sector crop improvement.

F. CONCLUSIONS

With respect to PBRs it seems clear that its introduction would have beneficial effects in the relationship between breeders. PBRs would provide an important incentive to

1961 See, e.g. SAHAI (1994b), at 208; BHUTANI (2004); SHIVA (1997), at 87 et seq.1962 See JOSEKUTTY/MATHEW (1994), at 218.1963 See above, chapter 5, C.II.1964 See above, chapter 5, C.IV.

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undertake R&D as protected varieties could not be “copied” anymore by competitor firms. Concerns pertaining to a negative impact on firm concentration seem exaggerated in the light of the structure of the seed sector in European countries where most breeding firms are still small and medium enterprises. Furthermore, domestic firms would not be hindered to gain market shares by developing excellent varieties using the elite material sold by foreign firms or domestic firms with foreign partnerships. The public sector is likely to benefit from PBRs protection.

However, regarding the relationship between breeders and farmers, the Indian legislature faces a dilemma. On the one hand, private sector engagement in plant breeding clearly depends on the level of appropriability of the benefits of an improved variety. On the other hand, introducing too radical changes might lead to the break-down of the informal seed supply system with possibly dramatic consequences for small farmers. The reason for this possible break-down is that the restriction on seed sales of protected varieties may be misunderstood (or abused) and paralyse also the circulation of other improved varieties. The importance of traditional practices of seed management, including seed supply, not only in terms of volume has been explained earlier in this paper. Experimentation with improved material, local adaptation and enhancement, the possibility to redistribute this material, to choose good quality material in the fields of fellow farmers and to purchase this material, cannot be considered as outdated practices which need to be replaced by increased formal sectorseed supply, but in some areas they are necessary parts of the strategy for meeting future food production targets. But, again, the “competition” from farmers in seed supply may reduce the volume of sales of new varieties, especially in self-pollinated crops (and here in particular in pulses), to such a point that they are not economically interesting anymore for formal sector breeders. The Indian legislature should therefore continue to search for solutions to this dilemma. A compromise could be to obligebigger farmers to remunerate breeders if they sell seed of their varieties. But the implementation of this obligation might be too complicated.1965 Alternatively a limitation of the broad farmers’ privilege (which includes seed sales) to sales to small farmers should at least be considered.

Regarding patent protection, a restriction of traditional seed supply practices raises evidently the same issues. Additionally, the argument of many Indian authors that patent protection would not help building up domestic capacity but rather lead to a long term dependence on foreign technology is difficult to refute against the scant available evidence. Economic science does not provide sufficient findings on the way how the development of innovative capacity in developing countries occurs. Therefore it can neither be excluded that the presence of MNCs could have beneficial effects on this development. However, the scenario of dominance of foreign firms due to their financial and technological superiority leaving no space for domestic firms to catch up cannot be excluded. A push towards domestic innovative capacity can be expected with some degree of certainty only where the domestic industry has already reached a competitive technological level.

1965 For instance, how would the quantity of the seed sold be determined?

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The evidence on the Indian biotechnology capacity is very limited, to a large extent anecdotal, and mixed. Two interpretations of the available evidence are possible: On the one hand, it could be argued that there are many indicia for a considerable gap, in terms of research input and output, between India and leading industrialized countries. On the other hand, there are some elements which suggest that the scientific competence is there, but that the competence to transform basic biotechnological research into commercialized products is lacking. If this is the case, patent protection could provide a necessary incentive for this transformation.

A middle path is suggested here. India could consider providing patent protection only for transgenic plants and their relevant genetic components, and imposing a purpose-bound claim format on applicants claiming DNA molecules. India could further explore the possibility of protecting small step innovations by linking the enabling disclosure requirement closer to the working examples in the patent. This would mean for instance, that the inventor who first succeeds in developing a drought-resistant rice plant would not be able to claim wheat and barley plants containing his technology if he has not demonstrated that his invention is applicable to these species. Break-through inventors would thus be clearly disadvantaged, but at the same time in those cases in which several researcher teams work towards the same technological opportunity each one might get a share of the benefits of this invention.

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CHAPTER 7: IP PROTECTION FOR FARMERS' VARIETIES ANDRELATED TRADITIONAL KNOWLEDGE1966

In recent years, there has been an increasing interest in international organisations and the IP community in possibilities for protecting grassroot knowledge and innovations by some form of IP. A term which is widely used to designate this new area of IP subject matter is “traditional knowledge” or “TK”.1967 The working definition used by the WIPO Secretariat for its fact-finding mission in 1998-1999 may illustrate the widerange of innovations, which are now in the IP policy focus:

“‘[T]raditional knowledge’ […] refer[s] to tradition-based literary, artistic or scientific works; performances; inventions; scientific discoveries; designs; marks, names and symbols; undisclosed information; and all other tradition-based innovations and creations resulting from intellectual activity in the industrial, scientific, literary or artistic fields. ‘Tradition-based’ refers to knowledge systems, creations, innovations and cultural expressions which: have generally been transmitted from generation to generation; are generally regarded as pertaining to a particular people or its territory; and, are constantly evolving in response to a changing environment. […]”1968

The following chapter will examine only one aspect of this large spectrum of grassroot knowledge and innovations. The focus will be on the question of whether and how the effort of farmers in preserving and enhancing local crop germplasm could be promoted using IP protection. In anticipation of the need to define the protected subject matter in relation to which certain acts of third persons would be subject to the authorisation of the right-holder, one can broadly distinguish three different aspects of crop TK:1969

- The germplasm itself, i.e. the breeding products;- The knowledge about the characteristics of this germplasm, e.g. drought-

tolerance;- Breeding practices in a large sense, e.g. selection and crossing strategies. This

aspect of crop TK may overlap with the last category. A farmer might, for instance, plant a lower yielding but pest resistant variety of an outcrossing crop

1966 I would like to express my gratitude to Dr. Sudhir KOCHHAR, Dr. Shashank MAURIA, and Dr. Michael HALEWOOD, who have all have made important contributions to the genesis of this chapter, although my conclusions do not necessarily reflect their views generously shared with me. Dr. MAURIA and Dr. KOCHHAR helped me in a long E-mail exchange with their expertise. Dr. HALEWOOD kindly allowed me to quote the Draft Paper, which he presented at the World Trade Institute in Bern in April 2003. This excellent paper of several authors with various backgrounds is one of the few statements on the technical difficulties of IPR protection of landraces. It should be noted, however, that it is only a DISCUSSION DRAFT and does not come to definite conclusions.1967 See, e.g. WIPO (2001); for a summary of the variety of terms used in legal instruments and the literature to designate similar or overlapping objects, see WIPO/GRTKF/IC/3/9.1968 WIPO (2001), at 25; also reproduced in WIPO/GRTKF/IC/3/9, at 11, para. 25.1969 The concepts and terminology in this area are still evolving. Some authors distinguish between protection of biological diversity, on the one hand, and related knowledge on the other. See LEWINSKI (2004). Others discuss issues of protection of plant germplasm under the overall concept of TK. See, e.g. WIPO (2001).

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in a corner of a field where he grows another landrace to favour introgression of this characteristic.

The aim of the following chapter is to examine ways of adapting IPRs systems to the above types of subject matter. Part A of this chapter will shortly address the general problematic of IP protection in the context of traditional knowledge systems. Part B seeks to identify the policy objectives of an IP legislation for farmers’ varieties and related TK. These objectives have to be based on the needs and expectations of farmers, on the one hand, and the demand for theses types of subject matter, on the other. Part C will then analyse in detail the characteristics of the traditional subjectmatter which differs in several ways from formal sector breeding methods and results. Part D will explore the – limited – possibility to protect farmers’ varieties and related TK by existing IPR systems. And finally part E seeks to respond to the short-comings of existing systems by exploring the option to develop an IP system sui generis.

A. THE GENERAL PROBLEMATIC OF INTELLECTUAL PROPERTY PROTECTION FOR TRADITIONAL KNOWLEDGE

While IP protection for TK is requested with vehemence by some commentators and stakeholders others warn against the negative impacts that such a development could have for the knowledge system in question. A few observations on these concerns in the context of farmers’ varieties and seed related TK seems therefore indispensable.

The transformation of TK into a commodity, which raises concerns in other areas,1970

seems to be widely accepted and even desired for traditional crop genetic resources and related knowledge.1971 But, the necessarily static definition of the protected subject matter and the isolation from its cultural context may contradict the nature of crop related grassroot innovations as they form an integral part of a holistic dynamic knowledge system. Concerns have been voiced that complex and interconnected knowledge systems may be disaggregated to suit the IP system.1972 Indeed, a particular landrace and the knowledge about its characteristics may only be one small aspect of a farming system that includes knowledge about intercropping, pest management, soil fertility management, and seed selection, to name only a few aspects. An IP system that protects only one component, e.g. the germplasm, risks promoting and diffusing only this aspect, leaving behind crucial elements of the system. The same is true for the relationship between one individual farmers’ variety and the metapopulation it may be part of.1973 LOUETTE observes in the context of in situ conservation of crop

1970 See, e.g. NIJAR (1996), at 91. The Doc. WIPO/GRTKF/IC/4/8, at 6, para. 15 et seq., mentions these concerns, but also emphasizes that “IP protection does not ‘commodify’ TK per se: to the contrary, one immediate consequence can be to empower TK holders against the distorting use of elements of their identity, or against unauthorized commodification of their TK.” Id., at 7, para. 18.1971 See below in this chapter.1972 See WIPO/GRTKF/IC/3/9, at 12, para. 27, quoting the Crucible Group, Seeding Solutions, (Draft), 2001, p. 94: “Once you have done to indigenous and local knowledge whatever is necessary to make it fit into then IP mould, it would not be recognizable as indigenous and local knowledge anymore.”1973 A metapopulation is defined as a group of subpopulations interconnected by geneflow and submitted to local colonisation and replacement by new populations. See LOUETTE (2000), at 136.

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genetic diversity that “we must focus on the mechanisms that influence the metapopulation formed by all exotic and local varieties. What is important to preserve is not the genetic material in and of itself, but the processes that create and preserve genetic diversity.”1974

The WIPO Secretariat, with respect to TK in general, suggests including in the protectable subject matter “all TK, without any restriction or limitation as to subject matter, thus including cultural expressions, […], technical creations, inventions, designs, etc.”1975 But decomposition of knowledge systems into different elements is unavoidable if different protection requirements or scopes of protection are necessary to realise the specific policy objectives. These may be very different for sacred medicinal knowledge and freely exchanged crop genetic resources, for instance. A certain disintegrating effect would also have to be expected where the policy objective of TK protection goes beyond preventing misappropriation and culturally offensive misuse. Where the aim is to obtain compensation for local creativity, the market demand will isolate certain elements. Especially users from the formal sector, i.e. plant breeders, will mainly be interested in specific traits and their underlying genetic components.

As an isolated measure, such a reward system will certainly not be sufficient to assure the survival of the relevant traditional agricultural system. Other measures, such as participatory research, credit facilities, equitable management of resources, will be important, but cannot be explored here.1976 An IP system can be a positive element in a larger strategy, if one considers developing markets for the innovations of the concerned community as beneficial, and many commentators, including the author, do.1977 But the statement of LOUETTE certainly has to be kept in mind. It is problematic, especially in the context of landraces, that defining a subject matter means making a momentary picture of a usually dynamic object. IP rights might thus provide an incentive to slow down or even stop this dynamic.1978

B. POLICY OBJECTIVES

I. Needs and expectations of farmer-breeders

In describing the needs and expectations of farmers, the author should first point out the limitations of the observations to be found in this paper. The needs and expectations of farmers highlighted here are to a large part those perceived by NGOs and scientists working with them. Even the available statements of farmers may not be representative. More systematic field research on these issues would be necessary to integrate the rather isolated evidence available on farmers’ views into a complete

1974 Id. at 138.1975 See WIPO/GRTKF/IC/4/8, at 23.1976 On educational or promotional campaign and farmer participation in crop improvement see, e.g., BRUSH (2000), at 20. On the importance of self-determination of indigenous and local communities, see, e.g., HEATH/WEIDLICH (2003), at 75.1977 See, e.g. BRUSH (2000), at 17 et seq.1978 See below, at E.I.1.d).

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picture, taking their socio-economic background into account.1979 Nevertheless, the material used here is an important starting point for the discussion on IP protection for germplasm enhancement by farmers.

1. Recognition

Recognition the value of TK is a key demand of many stakeholders and commentators.1980 Indeed, the decisive role of farmers in shaping the genetic structure of landraces has only gradually been acknowledged.1981 In the private seed industry, landraces are partly seen as raw material, as “words”, as opposed to the “creative text” to which modern varieties are compared.1982 Likewise, the importance of farmers’ perceptions of their agro-technical needs was only recognised in the 1970s. Frameworks for allowing farmers to participate in technology trials were only developed in the 1980s. First steps beyond involving farmers into testing of formal sector technology towards developing research programmes concerned with the technologies of farmers have been made around the same time,1983 but this remains a rather marginal research area. VARMA highlights the issue of recognition as follows:

“In spite of the innovations I made and the positive results I obtained, I hardly got any recognition or appreciation for it. Most regretfully, my innovations did not diffuse as much as these should have (despite the fact these were more efficient and profitable). This may be because modern institutions do not realise the potential of farmer-driven research on conservation and creative utilisation of in situ agro-biodiversity.”1984

Stakeholders and commentators calling for recognition do not always specify in what form, by what means this should be done. The activities of SRISTI give an idea of the wide spectrum of possibilities.1985 But in the present context of IP it is noteworthy that the call for recognition is often linked to demands for preventing misappropriation, for benefit sharing and for granting exclusive rights.

1979 GUPTA (1994), at 14, for instance, points to the heterogeneity of interests and views: “It has also to be remembered that while farm leaders are opposing the IPR regime for farmers and scientists, they have no locus standii on the matter. The biodiversity is least in green revolution regions from which most of leaders come.”1980 See VARMA (1999), at 10, NIJAR (1996), at 91; SHIVA (1997), at 8/9; See also Art. 1 of the Draft “Plant Variety Recognition and Rights Act”, which was shaped according to the recommendations of the participants of the Dialogue on “Methodologies for Recognising and Rewarding Informal Innovation in the Conservation and Utilisation of Plant Genetic Resources” held at Madras from January 28-31, 1994, reproduced in SWAMINATHAN (1994b), at 199 et seq. 1981 See HALEWOOD et al. (DISCUSSION DRAFT), at 3 et seq.1982 Personal conversation with Mr. R.S. ARORA, Secretary General of the Seed Association of India, on August 31, 2001. As background to this statement, it is important to note that the public debate in India is sometimes in the danger of going to the other extreme and denying recognition to formal sector breeders.1983 See AMANOR et al. (1993), at 5 et seq.1984 See VARMA (1999), at 5.1985 See VARMA (1999), at 6 et seq.

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2. Protection against misappropriation of germplasm or TK in the public domain

The misappropriation by a private company of germplasm or knowledge, which is already in the public domain, is another issue of concern to many Indian authors. DAS, for instance, states that “[t]here is a growing public outrage that multinational corporations (MNCs) are being granted patents for genetic materials, plants and other biological resources that have long been identified, developed and used by Indian farmers and other Indian indigenous communities.”1986 In some cases, this position is motivated by the fear that such IP rights if granted also in India could interfere with the traditional uses of this knowledge or germplasm. It is important to emphasize that, legally speaking, this should not be possible, neither in patent law nor in PBRs law. A patent or PBR covering existing uses or germplasm would have to be refused for lack of novelty or distinctness.1987 In practice, of course, cases might occur where farmers are confronted with abusive claims.1988

But the concerns related to misappropriation often go beyond the impact on the traditional users of the knowledge or resources. Criticism of “biopiracy” is often directed generally against any privatisation of innovations using freely available knowledge and genetic resources.1989 Two types of “biopiracy” have to be clearly distinguished, when balancing the interests involved. The first case is that a formal sector organisation directly claims TK or farmers’ varieties without modifications. The second case is that a formal sector entity builds on TK or farmers’ varieties and claims the novel R&D result. Some of the indignation against “biopiracy” in India is caused by reductionist presentation of information mixing both cases. In the public

1986 See DAS (2000), at 577.1987 The "neem patent" (EP 436257), for instance, has been revoked by the Opposition Division for lack of novelty. This decision was confirmed on appeal by the Technical Board of Appeal in T 416/01. On the neem-case see also GUPTA (undated), at 2 of 5. Taking traditional knowledge into account during patent examination will hopefully be facilitated in the future by an agreement between the EPO and the Indian Union Minitsry of Science and Technology giving the EPO access to a digital database of Indian traditional medicine. See PRASAD (2005a and b).1988 PBR applications to germplasm which is not distinct from existing farmers’ varieties, and patent claims that cover existing traditional germplasm, have already occurred in industrialized countries. The literature on “biopiracy” often jumps to the conclusion that a pattern of abuse exists when only individual cases have occurred. See point a) below for a case occuring in Australia. Another interesting case is the US Patent 5,663,484 issued on 2 September 1997 relating to novel rice lines obtained by crossing selected basmati rice lines with a semi-dwarf variety of long-grain American rice. Some of the claims were so general that existing basmati rice varieties were covered. Rice Tec Inc. withdrew part of its claims, others cancelled on appeal by the Indian Government. The surviving claims are narrow and only related to the lines actually bred by Rice Tec. See RAMACHANDRAN (2000) and RESEARCH FOUNDATION (2001).1989 See, e.g. NIJAR (1996), at 91 and SHIVA (1997), at 7, opposes “patents on life” as “[t]hey […] enclose the free spaces of intellectual creativity by transforming publicly generated knowledge into private property.” For a contrary view, see GUPTA (1993), at 39. At the same time he states that India should insist on compensation and “apply IPP to all wild and domesticated plant and animal resources”.

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perception, a patent claiming, e.g., a neem extract with a precise degree of purity or in a stable storage form simply becomes a right to own neem.1990

a) Misappropriation by claiming unmodified TK and farmers’ varieties

The evidence on the existence and extent of this kind of biopiracy globally with respect to farmers’ varieties is rather confusing. In a communiqué of January 1998, the NGO RAFI suggests that there are numerous cases where breeders applied for IP protection over farmers’ varieties.1991 They denounce a “predatory pattern of biopiracy” exposed by the study of 118 PBRs claims in Australia. Yet, the conclusion of the detailed report by RAFI and HSCA published some months later is more cautious and speaks of “several proven examples of abuse and the clear possibility of a large number of other abuses”.1992 A table providing some details on the examined cases shows that RAFI and HCSA include cases where the applied for variety is a population selected from a farmers’ variety.1993 Selection can very well be regarded as breeding and may lead to a distinct population. Only if it is correct that the Australian Plant Breeders’ Rights Office often failed to require that the applicants provide passport data and test the variety against the germplasm source, the fulfilment of the distinctness criterion becomes indeed doubtful.1994 RAFI and HCSA also include cases of polycrosses and controlled pollination of different varieties.1995 Further it is noteworthy that RAFI and HSCA state that “[w]ith only a few exceptions, the plant kinds in question fall outside the realm of conventional commercial agricultural research.” Forage grasses, legumes, clovers, and ornamental and flower varieties make up a large part of the cases.1996

It also needs to be mentioned that the Australian Plant Breeders Rights’ Office has a totally different version of the affair. Mr. WATERHOUSE, Registrar at the Office,stated in a personal communication that none of the allegations made by RAFI and HSCA had been substantiated. 1997 He especially pointed out that, contrary to the RAFI communiqué, which alleged that some claims on lentil material from IARCs had been accepted by the Office,1998 Australian PBRs were never issued in regard to the lentil varieties in question. Further, he emphasized that the application form does inquire about the origin and breeding of the new varieties and asks applicants to describe the

1990 This is illustrated by the following passage in a newspaper article: “[…] basmati, neem and haldi have never been too far from an Indian’s life, and the idea that Someone Else may acquire the right to own, trade and market it, is more than a bit jolting.” See JAIN (2001).1991 See RAFI (1998). RAFI stands for “Rural Advancement Foundation International”. 1992 See RAFI/HSCA (1998), at 8. HSCA stands for “Heritage Seed Curators Australia”.1993 See, Id., at 32 et seq., e.g., HSCA/RAFI-1/2, HSCA/RAFI-11/12, HSCA/RAFI-15/16, HSCA/RAFI-24, HSCA/RAFI-31, HSCA/RAFI-35, HSCA/RAFI-37, HSCA/RAFI-41, HSCA/RAFI-42, etc.1994 See id., at 21.1995 See id., at 32 et seq., e.g., HSCA/RAFI-34, HSCA/RAFI-82/83/84/85, HSCA/RAFI-130, HSCA/RAFI-132/133, HSCA/RAFI-135, HSCA/RAFI-136/137/138. 1996 See id., at 11 and at 32 et seq.1997 Personal E-mail from Mr. Douglas WATERHOUSE on 02.04.2003.1998 See RAFI (1998).

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differences between the subject of their application and its source either by comparison or by growing trial.

Interesting in the present context is also the statement by FOWLER, Senior Adviser to the Director General of IPGRI. He observes with respect to designated material held in trust by the IARCs that “[t]he FAO-CGIAR Agreement does not address the issue of derivatives and the FAO Commission on Genetic Resources has never been able to come to any consensus regarding the extent to which received germplasm must be altered before it can become eligible for protection in a manner consistent with the MTA used by the Centres”.1999 Yet, he concludes that, “in practice, few obvious cases of abuse have occurred in the more than 700,000 accessions that have been distributed since 1994.”2000

The available evidence suggests that cases where breeders apply for IPRs on an unmodified farmers’ variety are rather rare. But there seem to be a considerable number of instances in certain minor crop species where breeders have selected the applied for variety from a farmers’ variety. To distinguish these two cases does not mean to preclude claims of farmer-breeders, but the application for PBRs may nevertheless appear in a different light.

Cases where a breeder would claim a right over an unmodified method for selection or introgression of new characters developed by farmers are difficult to imagine. First for technical reasons: The approach of breeders who seek maximum control over the genetic constitution of the plant or population and that of farmers are very different. Secondly for legal reasons: As outlined above, essentially biological breeding processes are excluded from patentability and there is absolutely no doubt that this rule would apply to the traditional practices at issue here.

b) "Misappropriation" by claiming innovations based on TK and farmers’varieties

In the second case, which is also referred to as “biopiracy” by some authors,2001 the formal sector claims innovations that have been developed by building on traditional germplasm or knowledge. Evidently this covers a wide range of situations and raises totally different issues of equity. Authors denouncing “biopiracy” often do not make the effort to differentiate between an innovation which is very close to the starting point and an innovation to which traditional knowledge or germplasm has made only a small contribution.2002

1999 See FOWLER (2003), at 2.2000 See FOWLER (2003), at 2.2001 See, e.g. KRISHNAKUMAR (2002) with respect to the aborted collaboration between the Indira Gandhi Agricultural University Raipur, Chattisgarh, India (IGAU) and the Syngenta Corporation, which will be addressed briefly below. See also RAFI/BERNE DECLARATION/GENE CAMPAIGN (2000); PRABHAKARAN NAIR (2000), at 3 of 4.2002 In cases of medicinal or pesticidal inventions, one could take the view that this distinction is not necessary, as the basis of the invention, i.e. the active ingredients, have been identified by the use of the TK holders. Their contribution is therefore always crucial. In the area of plant breeding the

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The reproach that traditional germplasm is “misappropriated” by formal sector breeders seems to be the most warranted in cases of mass selection or pure line selection from landraces. In this case, the work of the breeder is limited to the identification of the best strains in the landrace population. Still, the question of whether selections of superior lines conferring an agronomic advantage over the landrace population should not obtain some form of protection against the marketing of the variety by competitor firms needs to be discussed. At the same time, the breeder could be obliged to share his benefits with the providing farmers.

Yet, in most cases of use of a landrace in a breeding programme, especially in crops where a lot of breeding activity has already occurred, the landrace will only be one ancestor in a complex pedigree. If one accepts the premise that IP protection for plant varieties may exist, then the claim that the breeding result should remain in the public domain because it is partly based on traditional germplasm is difficult to defend in such cases.

There is little evidence on how Indian farmers would consider these different constellations. An interesting case illustrating concerns of misappropriation is the failure of the collaboration between the Indira Gandhi Agricultural University Raipur, Chattisgarh, India (IGAU) and the Syngenta Corporation, which had led to massive protests from farmers. But as often, it is not entirely clear against what exactly the movement that brought the collaboration to a halt was directed. According to press statements, the collaboration agreement provided that the repository of 22,972 varieties of rice germplasm would be physically handed over to Syngenta India Limited.2003 The President of the Seed Division of Syngenta India pointed out that the collaboration was totally in conformity with the FAO International Treaty.2004 This apparently means that the accessions in question would have remained in the Multilateral System of Facilitated Access for all natural and legal persons that have included their germplasm in this system.2005 Syngenta would not have been permitted to claim any IPRs that limit the facilitated access to the germplasm concerned, or their genetic parts or components, “in the form received from the Multilateral System”. IGAU vice-chancellor V.K. PATIL is quoted with a statement saying that at no stage had the University intended to compromise on the issue of IP rights for the parental lines.2006 Only the possibility to patent DNA molecules isolated from accessions in the Multilateral System is controversial.2007 The memorandum of understanding (MoU) to be signed stipulated that the parties would conduct collaborative research and develop

question of how to draw the line between contributions by farmers that are so important that breeding results should be freely available and others needs to be specifically addressed.2003 See KRISHNAKUMAR (2002), at 2 of 4. As a general background the following statement of GUPTA (1994), at 9 of 17, might be interesting: “Personal inquiries have revealed that in most crops, the decline in the collection of germ plasm in the last few years has been very rapid. Major reason reported for such a situation was shortage of funds with agricultural universities for maintaining germ plasm through regular grow out.”2004 See KRISHNAKUMAR (2002), at 2 of 4.2005 See above, chapter 2, B.III.2.2006 See KRISHNAKUMAR (2002) at 2 of 4.2007 See above, chapter 2, B.III.2.

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hybrid and drought-resistant varieties. The new varieties were to be marketed by Syngenta after paying a fixed royalty to IGAU.2008 Yet, no information was given in the press whether the agreement provided for the possibility of Syngenta to obtain patents on isolated genetic components. “[A] massive movement involving thousands of farmers, peasants, women and youth, against the MoU” was launched.2009 It is difficult to know whether the reaction of farmers would have been different if the continued free access to the germplasm collection would have been more emphasized,2010 or whether their protest was directed against eventual proprietary rights to the breeding results, or else against the failure to include farming communities in the deal.2011

Equally complex are cases where traditional selection and hybridisation techniques are at stake. Suppose, for example, that a formal sector researcher in the course of discussions with farmers has learned of their practice of planting landrace X in a corner of a field planted with landrace Y.2012 Let’s say both landraces are widely used in an entire region, available on countless local markets and difficult to attribute to a particular community. If the breeder concludes from the traditional practice that the crossing of both landraces results in desired epistatic effects and uses both landraces in his breeding programme, should he be obliged to pay compensation to the farmers?2013

He may have spared costs for research by using their knowledge. But should his new variety remain in the public domain?

3. Benefit sharing

The requirement that informal innovators should receive a share of commercial gains obtained by a formal sector organisation using their knowledge or germplasm seems to be the most consensual one in the Indian discussion on the protection of farmers’ varieties.2014 In contrast to the concept of international law where benefit sharing rather

2008 See KRISHNAKUMAR (2002), at 1 of 4.2009 See KRISHNAKUMAR (2002), at 1 of 4.2010 In the press, the terms of collaboration were, to the contrary, resumed by the following terms: “The collaboration would have given the company commercial rights to over 19,000 strains of local rice cultivars held by the university.” See PRESS TRUST OF INDIA NEWS (2002)2011 This point is highlighted in an article in TIMES OF INDIA (2002).2012 ZEVEN (2000a), at 70, reports that in several regions of America, “special plant types are selected to be grown in the four corners of the field as ‘guardians’ to protect the crop. The Western Apache and Navajo select the tallest stalks with two or three ears. If such plants produce red kernels, they are considered sacred as they ‘fertilize’ the other plants and protect the crop against disease, storms and drought [reference omitted]. Such ‘fertilization’ can be explained by the occurrence of metaxenia and epistasis in the main landrace.”2013 The term “epistasis” describes interactions between alleles of different loci, i.e. phenomena whereby the effects of alleles of one locus may change in various ways with the presence or absence of alleles at other loci. See ALLARD (1999), at 86.2014 Not only NGO representatives, such as SHIVA (undated a), at 11, and SAHAI (1994c), at 87/88,support this view, but also academics, such as DAS (2000), at 578, GUPTA (1994), at 3 of 17, GADGIL et al. (1996), at 6 et seq., and RANGNEKAR (2000c), at 12, and even members of the seed industry. Mr. Deepak MULLICK,an eminent breeder, stated in a personal conversation, as above note 1455, that he was prepared to share benefits with a community, if it could prove its ownership. He

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aims at providing compensation to the states of origin, many commentators advocate that rewards should flow directly to the farmers concerned.2015 Others have doubts about the feasibility of the individual allocation of funds to farmer-breeders and consequently suggest solutions where payments would go to a special fund, which would disburse them through grants and awards.2016 Yet, Sri VARMA, who does not develop his varieties in an accredential, collective way and could therefore be identified as their developer, clearly envisages individual entitlements to benefit sharing.2017

Again, a distinction needs to be made between benefits derived from commercialisation of unmodified innovations of farmer-breeders, on the one hand, and of new innovations building on farmers’ varieties and TK, on the other. In the area of plant breeding, the formal sector takes an interest in landraces as breeding material rather than as ready marketable products. Consequently, according to SWAMINATHAN the aim of a sui generis legislation is to “[reward] rural and tribal communities within India for their contributions to successful plant breeding.”2018 Sri VARMA, expressing the view of a farmer-breeder, likewise expects to share in the returns the formal sector obtains by building on his innovations.2019

However, the specific context of plant breeding has to be taken into account. DUTFIELD rightly observes that “[u]nlike a new pharmaceutical product derived or modelled on a single natural compound, a new plant variety is often the product of generations of breeding and cross breeding […].”2020 As explained above, the use of a landraces among dozens of other ancestors and pure line selection from an inbreeding farmers’ variety do not raise the same issues. Moreover, not every landrace used in the pedigree may have the same importance for the final agro-economical value of the new variety. How should these differences be dealt with and should every single contribution be rewarded? The very pertinent arguments of GUPTA in favour of benefit sharing, which follow the classical IP reasoning of providing economic incentives,2021 give little guidance in this respect. He points out that informal

explained that if, for instance, a village community had over years saved and selected some variety of rust-free wheat and was able to prove this, he was prepared to pay royalties.2015 See SHIVA (undated a), at 11; GUPTA (1994), at 3 of 17. 2016 See, e.g. KARNATAKA PLANNING BOARD (1996), at 89-90. The complex issue of attribution of rights in a sui generis legislation will be discussed in detail below, at point E.II.2017 See VARMA (1999), at 9/10.2018 See SWAMINATHAN (1994a), at 181.2019 See, e.g. VARMA (1999), at 9, posing inter alia the following query to his audience of the WIPO Roundtable on Intellectual Property and Traditional Knowledge: “Is there no way in which the revenue earned by the products based on our knowledge can be utilised for furthering our research?”2020 See DUTFIELD (2000a), at 108.2021 See, e.g. GUPTA (1994), at 2 and 15 of 17; see also LESSER (1994), at 14/15. Another line of argument is less convincing in the Indian context. The arguments of equity, reacting to the increasing privatisation of genetic resources by the formal sector, are often built on the legal situation prevailing in Europe or the US. (See, e.g. MGBEOJI (2001), at 164/165; SHIVA/HOLLA-BHAR (1993), at 73) Yet, given the present shape of the Indian PPVFR Act with its strong farmer privilege, this reasoninghas to be relied on with caution.

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innovations also necessitate investments.2022 Without incentives, many farmers may not be willing to continue their conservation and breeding efforts. Moreover, the formal sector inventor/breeder has reduced costs as he can build on already existing knowledge or germplasm which has brought him closer to his research target.2023

Therefore ideally every use of a landrace in the formal sector should be rewarded. But the incentive which could be expected from compensating all farmer-breeders will have to be weighed against the constraints imposed on breeders and their willingness to use landrace material under these circumstances.2024

4. Control over use of traditional knowledge and germplasm

Some authors, referring generally to TK, require in addition to compensation a right to control its use.2025 As for benefit sharing, they go beyond the international concept of state sovereignty and claim individual rights of farmers and farming communities.2026

Different possible degrees of control should be distinguished: The first issue is the control of farmers over the tangible genetic resources in their fields. Participants of a “Technical Consultation on an Implementation Framework for Farmers’ Rights” at the M.S. Swaminathan Research Foundation in 1996 recommended that farming communities should have the ability “to control access to agrobiodiversity under their custodianship.”2027 They suggested that legislation should be introduced to control the collection of germplasm, and specifically subject collection to the prior informed consent of farming communities.2028 Yet, the conferred rights (over tangible resources) would not extend to similar germplasm obtained from other sources and would be difficult to enforce where the precise geographic origin of landraces cannot be established. The second degree of control is the possibility to prevent the marketing of seed of an unmodified farmers’ variety defined by its phenotypic and genotypic constitution (similar to PBRs protection). Finally, the strongest form of control would be conferred if the use of a farmers’ variety in commercial breeding or the marketing of the breeding result were subject to the authorisation of the farmer-breeder (similar to patent protection).

Sri VARMA, one of the few farmers whose direct statement is available, expresses the wish to be recognised as a breeder and benefit from some form of IP protection for

2022 Considerable time may have been allocated to cautious selection and experimentation. Or the informal innovator may have resisted the temptation to switch over to input intensive and often more remunerative agriculture. See GUPTA (1993), at 39 and 48. See also VARMA (1999), at 9.2023 See GUPTA (undated), at 3 of 5, in the context of neem.2024 DUTFIELD points out that “compensating many countries and/or communities will involve high transaction costs and the share of benefits to each recipient is likely to be correspondingly modest.” See DUTFIELD (2000a), at 108.2025 See, e.g. NIJAR (1996), at 91. See also SHIVA (undated a), at 11 et seq.2026 See, e.g. SHIVA (undated a), at 12.2027 See M.S. SWAMINATHAN FOUNDATION (1996), at 13. The consultation was organised with support from the Ministry of Agriculture, Government of India, and co-sponsored by FAO and the Swedish International Development Authority. The suggestions presented in the cited publication are not consensual, but reflect rather a majority view. See id., at 5. 2028 See id., at 13.

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farmers’ varieties.2029 From the effects he expects from a protection system, it becomes clear that he speaks of exclusive rights, not merely of entitlements to benefit sharing. He pleads for a registry system that would be able to achieve among other results the “[i]ncrease of opportunities for small scale innovators by linking them with large-scale investors.”2030

“A Knowledge Network for sustainable technological solutions enables innovations in one part of the world, to attract […] investments from another part, and possibly, to generate enterprises in a third place. […] Several innovative experiments have been started to explore this Golden Triangle for rewarding Creativity. It acknowledges that not all innovators may have the resources to become entrepreneurs or have access to investible capital.”2031

But the formal sector investor will want a certain guarantee to recoup his investments. He will certainly be more confident in this respect if the grassroot innovator can provide him an exclusive licence to use his technology. The statement of VARMA does not specifically deal with traditional germplasm, but with grassroot innovations in general. He therefore does not address the above question, whether control should be limited to the multiplication of propagating material or whether it should extend to the production of a new variety which is built on the protected germplasm.

According to SHIVA, farmers rallying on Independence Day in 1993 affirmed that “any company using their local knowledge or local resources without the permission of local communities is engaging in intellectual piracy, as in the case of the patents on ‘neem’”.2032 Again, it is difficult to say whether this protest is borne out of the feeling that breeders receive monopoly rights to seed after “trivial modifications”,2033 or if they definitely mean any use including in a complex cross-breeding programme.

There is also little information available on the views of innovative farmers on the preferred scope of rights over traditional crop breeding techniques. As mentioned above, formal sector breeders will rarely use “one to one” a traditional breeding technique. Referring back to the above example of variety X and Y, one could question whether the farmers should have a right to prohibit their crossing in a breeding programme, even though the varieties as such cannot be allocated to a farmer or community. Should this exclusive right cover every cross between strains selected from the populations X and Y even if they are used in a larger breeding programme?

5. Relationship between farmer-innovators and their fellow farmers

In the specialised literature, benefit sharing is mostly discussed in the relationship informal sector innovator – formal sector user. But the statement of Sri VARMA casts

2029 See, e.g., VARMA (1999), at 2 and 8 et seq.2030 See VARMA (1999), at 10.2031 See id.2032 See SHIVA (undated a), at 8.2033 See SHIVA (undated a), at 27, in the general context of TK.

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some doubts on whether this limitation corresponds to the expectations of informal innovators:

“The hybrid chili seeds produced in the market are exorbitantly priced, say about 1300$ per kg. I have been able to select certain other chillies from local traditional varieties, which have an equal or often greater yield. My chillivariety is not so highly priced. But if it is performing at par with the hybrids produced by a multi national company incorporated in India, should it not have a similar price and identity? How will it get that identity and protection? India does not have as yet a law for protection of farmers’ varieties but I learn from SRISTI that, in India, we are going to have such a law very soon.”2034

The statement suggests that VARMA would be in favour of a compensation flowing to him from farmers who use his germplasm in the form of higher seed prices. There is evidently no express statement on the scope of the farmer’s privilege. Possibly he expects the possibility to charge higher seed prices from the recognition expressed in the official registration of his variety, which might increase its value in the eyes of fellow farmers. But to reach the price level of hybrids, an exclusive right to produce propagating material of the variety would probably be necessary. VARMA also expresses a certain frustration about the fact that people who visit his farm and received seed samples “[did not care] to think about [his] welfare and rights”.2035

Among those who did not think about paying him a compensation, he mentions commercial farms selling his variety under a specific brand name.2036 On the other hand, he explains that it would be contrary to his custom to refuse seed to anybody.2037

An exclusive right to produce propagating material of his variety is therefore probably not what he has in mind. But his statement suggests that he might be in favour of a compensation mechanism that would oblige commercial farmers to return a share of the benefits obtained by selling seeds of a farmers’ variety or even the crop produce.2038 In any case, one cannot automatically assume that farmers-breeders expect returns solely from formal sector users. On the other hand, it should be kept in mind that in the “prajateerpu” traditional farmers from Andhra Pradesh have expressed their attachment to agricultural systems that require low investments and to indigenous agricultural practices, including access to traditional seed and improved seed. An exclusive right might restrict this access and make seed of farmers’ varieties more expensive.

2034 See VARMA (1999), at 2.2035 See VARMA (1999), at 9.2036 See id.2037 See id.2038 Interestingly, the Research Foundation for Science, Technology and Natural Resource Policy, that strictly opposes any IP rights of formal sector breeders, suggests a model provision that would exclude commercial use of landraces by other communities from the principle of free access otherwise stipulated: “There shall be free access to, and the local community/ies shall make available its variety, innovation and practices in relation thereof to other communities wherever situate[d] without any payment or reward provided always that such innovation is not acquired for commercial utilisation.” See clause 9 (iv) of the amendments proposed to the government draft Plant Varieties Act, 1993, SHIVA/HOLA-BHAR (1993), at 46.

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II. Current “market” for landrace germplasm in the formal sector

In chapter 5, it has been pointed out that in situ and ex situ germplasm conservation is a crucial source for solutions to future challenges to plant breeding. Also mentioned was the fact that a too narrow germplasm base for plant breeding makes crops more vulnerable to pest and disease attacks. And yet, it might be an illusion to think that there is a great demand for landraces as a source of variation in formal sector breeding programmes.2039 The available evidence suggests that there is an amazing gap between the widely accepted necessity to broaden the genetic basis of modern cultivars and the current practice in plant breeding.

WRIGHT observed in 1996 that efforts to expand genebanks over the last three decades did not go hand in hand with the use of these resources.2040 DUTFIELD points out that “as a rule [breeders] tend to use varieties held in their own collections and those bred in public institutions.” To avoid misunderstanding: the historical dependence is immense,2041 “[b]ut, breeders of major crops are not greatly dependent on continued access to Southern germplasm.”2042 “Moreover, increased adoption of genetic engineering and other biotechnological techniques including transgenics is expected to further reduce dependency on exotic plant germplasm […].”2043

As observed above, there is some evidence from industrialized countries that the cases where breeding is limited to selection of advantageous lines form a landrace population occur nowadays mostly in minor crops.2044 It also seems that the exploration of the potential of landraces to produce high yielding crosses is rather an exception.2045 Landrace germplasm of wheat and maize has predominantly been exploited, in recent times via screening for single-gene pest and disease resistance and

2039 On a related issue, i.e. the weak bargaining positions of individual biodiversity-rich developing countries with respect to plant genetic resources for the seed industry, see also DUTFIELD (2000a), at 107 et seq., who observes that “[a] great deal of germplasm is held in ex situ collections”, that “[c]rop breeders tend not to use exotic landraces and wild varieties in their breeding programs” and that “[t]emperate countries may lack the species richness of tropical countries yet still be well-endowed in terms of crop genetic diversity”. 2040 See WRIGHT (1996), at 16 et seq.; see also BLAKENEY (2001), at 32.2041 For a good overview of the “Global genetic resource interdependence in food crop production”, see WRIGHT (1996), table 5, at 36.2042 See WRIGHT (1996), at 35.2043 See DUTFIELD (2000a), at 109.2044 See above B.I.2.a).2045 SMOLDERS, former Global Head of Intellectual Property - Seeds and New Technology at Syngenta and chairman of the International Seed Federation's Intellectual Property Committee, observes in his report for the CGRFA acting as Interim Committee for the International Treaty on Plant Genetic Resources for Food and Agriculture that "seed companies are increasingly doing less or no basic research. Exotic germplasm or landraces are perceived as little practical value for a seed company, and their introgression into breeding lines is time-consuming and risky". See SMOLDERS (undated), at 3 and 6. See also WRIGHT (1996), at 20, who, however, refers also to a counter-example, where Pioneer Hi-Bred contributed $1.5 million to the United States Department of Agriculture to help fund the public-private Latin American Maize Project which screened over 14,000 accessions for this potential, speaks of a “dramatic exception”.

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usually constituted only a small part of the cultivar’s germplasm.2046 This use has also played an important role in rice breeding.2047 Yet, additionally rice landraces have been widely used by the National Agricultural Research Systems in crosses with germplasm of IRRI to counterbalance the genetic narrowness of the latter.2048

Concerning minor crops, WRIGHT explains that “[i]t is economically prohibitive for private companies to commit the time and expense on cultivar development incorporating exotic germplasm in such a minor crop as common beans, and there is no longer much career incentive for public scientists to perform this work.”2049

The scenario just described refers to the global level, and the situation may be different in India. Yet, the information and statements available to the author point in the same direction. A survey on wheat germplasm use, which examined the types of germplasm entered by breeders in their crossing blocks,2050 revealed that the percentage of landrace entries was low compared to other types of materials, even in South Asia.2051

Only 1.1% of the entries are wild relatives, 6.8% are landraces of local origin and 3.6% landraces of foreign origin. Confirming the observations of WRIGHT, the wheat breeders surveyed, including those in developing countries, indicated that they used wild relatives and landraces mainly in pursuit of specific breeding objectives, such as disease resistance, tolerance of abiotic stresses, and grain quality, not for yield.2052 The situation may of course be different in other crops. The use of rice landraces in public sector breeding programmes has already been mentioned. Statements from persons active in the Indian seed industry rather correspond to the general picture described by WRIGHT. CHOPRA, Director General of the ICAR, observed that “[w]hile plant genetic resources institutes have been successful in collecting part of native germplasm, effective use of such native diversity has been meagre, because of poor evaluation and enhancement.”2053 The small role of landraces in the development of modern varieties is also emphasized by formal sector breeders.2054 Yet, it can not be excluded that these statements in the context of farmers’ rights issues were biased by their political interests. The scant evidence available on this issue is difficult to interpret. While table 7.1 shows that Indian firms did not consider farmers’ fields as an important source for breeding material, their own collections may very well contain landraces. Likewise, material received from IARCs may be landraces, but as will be explained below, they might not fall under the national regime.

2046 See WRIGHT (1996), at 20/21 and 28/29.2047 See id., at 16/17 and 55. 2048 See id., at 17.2049 See id., at 22.2050 Crossing blocks are nurseries that contain the active parental stocks plant breeders use in their crossing programmes. See See REJESUS et al., at 131.2051 See REJESUS et al., at 131 et seq.2052 See id., at 136 et seq. Even in developing countries, only 4,7% of the used material in crossing to attain the breeding goal “yield” were landraces or wild relatives. Id., at 137, table 6. 2053 CHOPRA (1994), at 226.2054 See SRINIVASAN (2001), at 401/402. SRINIVASAN reports that the surveyed domestic companies regarded benefit sharing or compensation as “a non issue” or “based on misconceptions regarding the contribution of farmers to the development of modern varieties”. One MNC remarked, “Where are the land races that everyone is talking about? Farmers are being given the wrong impression that a lot of money will flow to them – but that is unlikely to happen”.

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Table 7.1: Sources of germplasm/breeding material for private sector companies2055

Source of material Importance of different sources of breeding materials (percentage of firms for which said source was very important) ¹

Sources of germplasm used in private sector maize breedingprogrammes (%)²

Sorghum Pearl millet

Sunflower Cotton Maize

Domestic companies

Multinational companies

IARCs/Public institutions outside India

65 80 n.a. n.a. 24 11

ICAR/SAUs 29 34 0 66 34 23Parent/Joint venture 23 9 33 3 0 33Foreign company 0 3 11 0 13 1Other Indian company 10 0 22 66 2 2Own collection/development

53 49 63 10 23 28

Farmers’ fields and other sources

5 3

1. Adapted from Pray and Kelley (1997)2. Adapted from Singh et al. (1995)The figures on maize should not be compared with the figures for other crops. The question asked in the survey by Pray and Kelley (1997) was about the relative importance of different sources of breeding material attributed by firms. In the survey on maize by Singh et al. (1995) the share of different sources of germplasm in private maize breeding programmes was estimated.

Further research would be necessary on the germplasm use pattern of public and private sector in India. But the general tendency in formal sector plant breeding cannot be ignored. It should be noted that the following reflections on the appropriate shape of a sui generis protection for landraces is based on the assumption that India does not form an exception to the general trend described by WRIGHT.

Although there are many examples of resistances with significant economic value found in farmers’ varieties and incorporated into high yielding varieties,2056 even in this area where landraces are of immense interest to breeders, there may only be a modest interest in in situ germplasm. This is because in situ conserved farmers’varieties compete with ex situ collections. DUTFIELD observes that

2055 Source: Table 12.17 in SRINIVASAN (2001), at 377. SRINIVASAN refers to PRAY, C., KELLEY, Tim (1997), “Impact of Liberalization and Deregulation on Technology Supply by Indian Seed Industry”, ICRISAT Working Paper, ICRISAT, Hyderabad, India, and SINGH, R.P., PAL, Suresh, MORRIS, Michael (1995), “Maize Research, Development and Seed Production in India: Contributions of the Public and Private Sectors”, CIMMYT Economic Working Paper 95-03, CIMMYT, Mexico, D.F. 2056 See, e.g. CHRISPEELS/SADAVA (1994), at 313 and 337.

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“[…] it is to the professional breeder’s advantage to acquire genetic material from these sources. This is not only because the collections are so extensive and are freely available, but also because information (also usually quite basic) is usually available about individual accessions. Moreover, CGIAR breeding programs have already selected some of the material for its desirable characteristics.”2057

With respect to in situ collections, Member States of the PGRFA Treaty are not free to demand on a national level that companies using accessions originating from India pay to a national fund or the concerned community. Access to material in the Multilateral System, i.e. the accessions in the IARC germplasm banks as well as all material of the listed genera “under management and control of the Contracting Parties and in the public domain”, is merely subject to the benefit sharing mechanism of the PGRFA Treaty.2058 Level, form and manner of the payment of compensation will be fixed by the Governing Body and the payment will flow into an International Fund.2059 In order to conceive an operational sui generis system, it has to be kept in mind that landraces attributed to communities and farmers will compete with the access conditions under the PGRFA Treaty. Additionally, it should be taken into account that a breeder who does not use characterised accessions from IARC genebanks, but develops, for instance, a resistant variety based on local knowledge and germplasm provides valuable material which can be freely used by everyone for breeding under the PBR rights regime. A benefit sharing mechanism would need to ensure that every breeder building on this variety participates in the compensation for farmer-breeders.

Given this situation, and assuming that Indian breeders are rather reluctant to use landraces to select pure-line cultivars or to produce high yielding crosses, legislation which does not take the interests of formal sector plant breeders into account would risk rendering itself obsolete. Breeders are, of course, rather apprehensive of any additional cost that may be imposed on them by sui generis legislation for germplasm protection.2060 But what seems to be even more of a concern for breeders is the legal uncertainty that might be caused by a complex prior informed consent and benefit sharing procedure.2061 Only a benefit sharing procedure which would make the

2057 See DUTFIELD (2000a), at 108; ARORA, Secretary General of the Seed Association of India, in a personal conversation of 31/08/01 suggested that the focus of crop genetic resource conservation should be on ex situ conservation, an advantage of this latter approach being that many institutions conduct trials of varieties and that passport data allow seed firms to look for useful trials. See also above, chapter 5, C.IV.3c). For the number of samples disseminated from CGIAR genebanks, 1994-2000, see KOO et al. (2002), at 15.2058 Whether or not the allocation of ex situ stored material to individual farmers and communities could remove this State managed material from the Multilateral System is an open question. The author favours an interpretation where “control” means legal control and therefore excludes allocated landraces even if they are conserved ex situ. But many accessions would nevertheless remain in the public domain, as they cannot be traced back to specific communities. 2059 See above chapter 2, B.III.2.2060 See SRINIVASAN (2001), at 402, on the results of a survey carried out among 24 seed companies. 2061 Mr. ARORA, Secretary General of the Seed Association of India, in a personal conversation of 31/08/03, stated, in the context of Sec. 41 PPVFR Act, that the invitation of claims by farmers would

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financial burden to be faced by the company predictable will not be a definite disincentive to use such germplasm. Exclusive rights will be acceptable to formal sector breeding institutions only where the contribution that the landrace will provide to the breeding result is clear in a very early stage. Only then can negotiations fix the terms of benefit sharing before the company engages in a time and cost intensive long-term crossing programme. This would be the case mainly for valuable qualitative traits2062 controlled by few genes and easy to integrate into a high yielding variety, such as single-gene pest and disease resistances.

III. Conclusions of part B

When framing a sui generis system, the following policy objectives should be pursued:

- The system should set out rules for access to tangible plant resources.

- It should favour dissemination of grassroot innovations among farmers.

- It should prevent the misappropriation of unmodified farmers’ varieties by IPR of formal sector organisations. This aim could be reached by a thorough implementation of the distinctness requirement of UPOV type PBRs combined with the establishment of databases of landraces. Single-line or multiple-line varieties selected from a farmers’ variety may be distinct from the initial variety and represent an agronomic advantage. They should therefore not be excluded from PBRs protection. But the farmer-breeders providing the landrace should at least be entitled to compensation if not to an exclusive right to the initial variety. The development of new varieties based on crosses including landraces is desirable and PBRs in such a variety should not be regarded as misappropriation.

- Where feasible, the system should grant entitlements to individual farmers or farming communities to sharing in the commercial benefits derived from the use of their germplasm. Yet, the following points need to be kept in mind: Only limited commercial benefits can be expected from a protection that extends merely to the production of propagating material of the unmodified farmers’variety or essentially derived varieties. A significant transfer of funds from the formal sector to the informal sector could rather be expected if the right to benefit sharing extends to the use of farmers’ varieties in a breeding programme. On the other hand, in order to encourage breeders to use a broad germplasm base and to test landraces for valuable characteristics, a practicable, clear system is needed, which does not unduly burden the breeding activity. The considerations at the basis of the breeders’ exemption need to be kept in mind.

lead to futile confrontations, as the individual farmer would not be able to prove his claim. But seed firms would be in danger of protracted litigation if they registered, even if in the end the farmer would not be able to prove his contribution. SRINIVASAN (2001), at 402, quotes an observation by a seed company on the same issues: “We cannot see any workable mechanism emerging – it may have the effect of tying down PVP applications in endless objections and objections from all sorts of quarters.” 2062 See above, note 1648.

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It should also be taken into account that farmers’ varieties conserved in situ are in competition with national and international seed collections subject to the FAO International Treaty regime.

- Where feasible, individual farmers and farming communities should obtain an exclusive right to multiply propagation material of the varieties they have developed. Yet, an extensive farmers’ privilege would be necessary to avoid restrictions on germplasm flow to resource-poor farmers. In view of fundamental necessity to give breeders access to a wide range of germplasm material and the apparent reluctance of breeders to use landraces even in the current situation, exclusive rights to the use of a farmers’ variety in a breeding programme seem problematic. It needs to be kept in mind that the use of certain valuable qualitative characteristics governed only by a single gene or a few genes is currently the economically most interesting form of exploiting the potential of landraces in formal sector breeding.

The following sections will focus on the IP aspects of such a system. The access regime will only play a marginal role, even though both are closely linked. When a collector searches for new landrace germplasm he should need the consent of the custodian of the tangible resource, as well as of the farmer-breeder.

C. PRINCIPAL FEATURES OF FARMERS’ VARIETIES AND CROP MANAGEMENT PRACTICES

It is important at this point to characterise more precisely the involvement of farmers in informal crop enhancement, as the traditional cultures and cropping systems are fundamental aspects of the habitats to which landrace populations are adapted and shape their genetic structure.2063 This will be done in section I. Against this back-ground section II will then describe the principal features of farmers’ varieties.

I. Crop development practices

1. Selection and hybridisation strategies

The strong interest in farmers’ seed improvement practices is a relatively new.2064 As far as the author is aware, no systematic study on crop enhancement strategies of farmers specifically in India has been undertaken so far. The case studies cited in the literature on on-farm conservation of diversity and on farmers’ experimentation and crop research come from all regions of crop diversity. But this patchwork of available information is likely to reflect the diversity of practices present in the Indian subcontinent, at least in the general features that are concerned here.

2063 See BROWN (2000), at 29; see also AMANOR et al. (1993), at 2.2064 See LONGLEY/RICHARDS (1993), at 51; ZEVEN (2000), at 65 et seq. ZEVEN concludes from his research in the available specialised literature on traditional maintenance breeding that only few examples are sufficiently described.

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a) Maintenance

Farmers have developed sophisticated techniques of seed selection, which allow them to maintain desirable phenotypic characteristics and improve the performance of a population.2065 For instance, a case study on maize farmers in Cuzalapa, Mexico, compared populations grown from farmer selected seed lots with the characteristics of populations grown from random samples. LOUETTE learned that farmers’ selection favours the more productive and/or adapted genotypes and strengthens the characteristics that distinguish the varieties according to their growing cycle length.2066

Moreover, selection maintained the phenotype of those ear characteristics which are important to farmers when selecting seed, whereas the contamination with other varieties would have led to modifications in the populations if grown from random samples.2067 Selection for maintenance of phenotypic characters is also applied to mixtures of several heterogeneous lines. HALEWOOD et al. refer to practices in Malawi where, just as in many other countries, common beans are cultivated in heterogeneous mixtures of genotypes.2068

“[The genotypes] differ in seed colour and canopy characteristics among several other traits. Farmers consciously adjust the mixtures to preserve heterogeneity and maintain the landrace […]. One benefit of mixtures is a kind of within-population buffering that allows the crop better to withstand pressures from pests and diseases and to compete for resources including moisture and light. The response of the population as a whole to all these pressures will affect the frequencies of each (in-bred) genotype from year to year, but if the alterations in population structure are not in line with farmers’ requirements, they actively intervene. For example Adams and Martin (1988) reported that beans with a white seed coat were more susceptible to disease than other forms but farmers consciously added them to the sowing mixture when their numbers dropped below a certain level.”2069

While it seems that most maintenance breeding is done by seed selection or, more generally, the composition of the seed lot for the next season, there are also examples where farmers take measures to prevent contamination with foreign pollen. The maintenance of farmers’ varieties of cross-pollinated crops is more difficult than for self-pollinating crops, as there is a high risk of contamination with pollen of foreign genotypes. FRIIS-HANSEN reports, that farmers in Tanzania have developed maize breeding techniques based on the isolation of landraces in space and time.2070

2065 See AMANOR et al. (1993), at 3.2066 See LOUETTE (2000), at 130 et seq.2067 See id., at 131 and 135.2068 See HALEWOOD et al. (DISCUSSION DRAFT), at 11.2069 See id., at 11/12.2070 See FRIIS-HANSEN, E. “Conceptualizing in situ conservation of landraces: the role of IBPGR,” Paper presented at the workshop on the Human, Socio-economic and Cultural Aspects of Plant Genetic Resource Conservation, IBPGR, Rome, 29 April – 1 May 1993, as quoted by AMANOR et al.(1993), at 3; see also ZEVEN (2000), at 69.

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b) Hybridisation

Farmers have also developed techniques to favour hybridisation.2071 The aim is again to promote diversity, which is considered beneficial as a buffer against temporal and spatial variations in biotic and abiotic stress factors.2072 It has been observed in many regions of the world that farmers encourage introgression of genes from other varieties and from wild relatives of crops.2073 The above mixture of bean genotypes could also be cited as an example here, as beans, even though one of the most predominant inbreeding crops, can cross-pollinate to a limited extent under such conducive conditions.2074 In Pahang, Malaysia, the Pesagi swamp farmers cultivate vitreous rice and glutinous rice together.2075 Even though rice is an inbreeder, a small amount of introgression occurs and is an important source of novel genes. The farmers harvest their crop ear by ear allowing them to select the desired types as seed for the next season. They also experiment with newly introduced varieties and with off-types.2076

Similar practices have been observed in Ethiopia and Sudan with respect to sorghum and its wild relative.2077 Ethiopian farmers interplant (or tolerate) sorghum together with its wild progenitor. The Nuba people in Sudan sow mixtures of sesame and sorghum landraces and several wild and weedy relatives of both species. The above-mentioned farmers from Cuzalapa grow several kinds of maize, i.e. of a predominantly outbreeding crop, in contiguous areas.2078 Since the planting dates do not lead to a sufficient difference in flowering time to permit reproductive isolation, gene flow between the populations occurs. Additionally, it is noteworthy that one tenth of the used seed lots are introduced from other regions, and 20 % of the area is planted by farmers with what they consider exotic varieties.2079 There is thus a constant influx of new genetic material. At the same time, farmers maintain the phenotypic characteristics of their varieties, i.e. of seed lots of the same maize type that bear the same name and are considered to form a homogenous set,2080 by selecting ears at harvest to use for seed. Interestingly, seed selection does not exclude ears produced in

2071 See AMANOR, et al. (1993), at 3, with further references.2072 See HARDON/DE BOEF (1993), at 67; ZEVEN (2000), at 71; MEHRA (1995), at 19: “Intra-specific diversity is food security.” 2073 See, e.g. BROWN (2000), at 42, with a reference to Worede, M., Ethiopian in situ conservation. In: Plant Genetic Conservation: The in situ Approach. N. Maxted, B.V. Ford-Lloyd, and J.G. Hawkes (eds.), London: Chapman&Hall 1997.2074 See HALEWOOD et al. (DISCUSSION DRAFT), at 11.2075 See LAMBERT, D.H. (1985) “Swamp rice farming: the indigenous Pahang Malay agriculture system”, Westview Press, Boulder, as quoted by HALEWOOD et al. (DISCUSSION DRAFT), at 10.2076 See id. 2077 See HALEWOOD et al. (DISCUSSION DRAFT), at 11, with references.2078 See LOUETTE (2000), at 125.2079 See id., at 114/5. Exotic variety means that it has either been introduced only recently or has been planted only episodically in the valley of the community. Exotic varieties may include landraces from other regions and commercial improved varieties recently or repeatedly reproduced by farmers using traditional methods. See Id., at 112. 2080 See id., at 112.

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the outside rows of the field, even though there is a greater probability of contamination.2081

2. Individual and community knowledge, new and traditional practices

Seed development may be an individual or a community activity. Thus, selection strategies and methods of maintaining or modifying the genetic structure of landrace populations can be individual or collective knowledge. They may range from widely applied practices to individual innovations. BERG illustrates collective seed selection activity by an example from Ethiopia, which may also give an idea of practices in India: Selection is based on observation during the entire growing season from germination on and all farmers may be involved in discussing and assessing the performance of the crops. Performance of seeds is discussed in the family and in the neighbourhood and by the time of harvest the women responsible for seed selection have already identified the best ears, which are gathered before the harvest begins. Farmers also observe the plants of their neighbours and may request the seeds they are interested in planting.2082 On the other end of the spectrum is the case of Sri VARMA who develops new varieties individually using formal science and traditional approaches.2083

Farmers’ seed related knowledge includes both ancient practices which have been handed down from generation to generation, and new methods which have been developed by individuals or the community. Evidently there are many situations that fit into neither of these categories but somewhere inbetween. For the most part the new practices will evolve through continuous experimentation having their bases in traditional approaches. Frequently they will build on the knowledge passed on over generations. But there are also cases where grassroot innovators blend traditional knowledge and modern scientific knowledge.2084

Thus TK is not by definition the result of a collective process or a long-lived customary practice. But since new research findings are often freely shared, the typical case of the formal sector where an individual innovator or group of innovators achieves a considerable step away from prior art before the public learns about it, will be rather rare. TK creation can therefore often be described as “accredential” and “collective”.2085 Any IPR system to protect seed related grassroot innovations would need to take this into account.

2081 See id., at 129.2082 See BERG (1993) at 75/76. 2083 See VARMA (1999), at 3: “While I have always been in touch with the latest scientific methodologies [Sri VARMA is science graduate], I have not been overawed by this knowledge. I have broken out of this formal knowledge base and developed my own innovations whenever the situation of my family and village so warranted. I have always been associated with scientific departments and agricultural universities. I have always tried to form a bridge between traditional knowledge and modern scientific technology.”2084 See id.2085 See NIJAR (1996), at 90. See also MEHRA (1995), at 19: “Very often the informal innovations represent the work of several generations”.

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II. Characteristics of farmers’ varieties

1. Genetic and phenotypic constitution and evolution of populations used by farmers

The need to precisely define the protected subject matter in relation to which certain acts of third persons will be prohibited has been mentioned above.2086 The description of the phenotypic and genetic constitution of populations used by farmers is therefore a crucial step in the development of an IPR system for this specific subject matter. It should be mentioned that the available literature was written in the context of in situconservation of plant genetic resources, not in the context of possible IPR protection for these resources.2087 Some questions are therefore not as explicitly addressed as would have been desirable. Further research by multidisciplinary teams would be necessary to go beyond the provisional conclusions drawn in this paper.

a) Genetic structure of these populations

The genetic structure of landrace populations is impacted by several interlinked factors: by environmental factors, such as the selection pressure created by a variable climate,2088 by the above seed management practices of farmers, and by the mating system.2089 The impact of the mating system on the genetic constitution and evolution of landrace populations is a key to assessing the feasibility of IP protection for these populations.

aa) Outcrossing species

A landrace of an outcrossing crop would tend to be composed of different heterozygous multilocus genotypes intercrossing in each generation and resulting in ongoing extensive recombination of alleles. An isolated outcrossing population, still in the absence of selection pressure, theoretically would reach an equilibrium in its genetic composition.2090 Yet under in-field conditions, populations will be subject to drift and contamination by foreign pollen. Populations of outcrossing crops will therefore change more rapidly than those of inbreeding crops.

This may be illustrated by an example.2091 With respect to the genetic structure of the maize populations managed by the farmers in Cuzalapa, LOUETTE observes that the

2086 See chapter 3, A.II.1.2087 The draft paper of HALEWOOD et al. is an exception, but the authors themselves draw on literature on in situ conservation.2088 See HALEWOOD et al. (DISCUSSION DRAFT), at 10. Other factors would be for instance altitude and topography. The same authors explain that “crops growing in isolated environments, such as high deep valleys and dense tropical forests, are likely to change less than those growing in open environments, windswept plains and areas well-served by road networks.”2089 See also HALEWOOD et al. (DISCUSSION DRAFT), at 9 et seq. The following analysis will only discuss inbreeders and outbreeders, as the major crops in India belong to these two categories. Clones would rather follow the scheme of inbreeders.2090 See BECKER (1993), at 97/98.2091 On the following, see LOUETTE (2000), at 126 et seq. with further references for rice, millet and sorghum.

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reproduction of the varieties, in each cycle under conditions conducive to introgression, can lead to important modifications in their allelic frequencies. A further reason for the genetic instability of the described farmers’ varieties was genetic drift, i.e. the fluctuation of diversity with loss of rare alleles, a result of using too few ears to reproduce a population. This loss of diversity, which would otherwise increase consanguinity and might lead to a loss of the production potential, at least in the case of outcrossers, was compensated by farmers’ seed management practices allowing for geneflow between different populations.

The seed management practices of farmers are a decisive factor impacting the amount of lost and newly introgressed alleles. As mentioned above, there are cases of outbreeding farmers’ varieties, where farmers apply strategies of isolating them in space and time from other populations. Combined with selection eliminating off-types, this could permit maintaining a stable population, at least in its heterogeneity. Yet, generally, to avoid an inbreeding depression, farmers will be constrained to maintain a certain genetic diversity.

bb) Inbreeding species

A landrace of an inbreeding species tends to be composed of several different homozygous or nearly homozygous lines which are consequently true-breeding.2092

Schematically speaking, in the absence of natural or human selection pressure, the self-pollinating farmers’ variety will reproduce itself identically. Yet, as mentioned above, even in predominant inbreeding crops a certain amount of cross-pollination can occur under conducive conditions, which are often promoted by farmers.

For instance, changes in the genetic structure are likely to occur in cases such as the heterogeneous mixtures of bean genotypes mentioned above. Some consider such a heterogeneous mixture as a landrace, others say that the farmer is planting a mixture of several landraces.2093 As these mixtures in their specific composition developed by farmers may confer considerable advantages, it would be desirable to protect precisely this mixture rather than only the types composing it. But, while the heterogeneity and the major phenotypic traits of each line are maintained by farmers’ selection, even the limited cross-pollination occurring in inbreeding populations may lead to genetic modifications. Possibly these new genotypes are phenotypically similar to existing genotypes in the characteristics of interest of farmers and will not be discarded by selection. Thus over time the genetic composition of the mixed variety may change.

b) The farmers’ concept of variety based on the phenotype

The continuous changes in the genetic structure of outcrossing populations and to a lesser degree of inbreeding populations, does not mean that the planted populations

2092 See ALLARD (1999), at 65 et seq. and HALEWOOD et al. (DISCUSSION DRAFT), at 11, note 7.2093 See HALEWOOD (DISCUSSION DRAFT), at 9.

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constantly change their phenotypic constitution.2094 It is possible to speak of “varieties”, because farmers designate populations with certain specific characteristics of interest to them by the same name. LOUETTE reports from her research in Cuzalapa that the structure of phenotypic diversity was studied, both across varieties, i.e. among sets of seed lots designated by the same name by the farmers, and within such a varieties.2095 The results of this study supported the hypothesis that the farmers’ concept of a variety corresponds closely to that of a phenotype. Other authors with respect to other communities have confirmed this finding.2096 Based on her findings, LOUETTE defines a “farmers’ variety” or “farmer variety”, as she terms it, as a “set of seed lots having the same name; these seed lots produce maize with similar plant, tassel, and ear characteristics.”2097

It is important to note in the IP context that the phenotypic definition given by farmers to a variety is broad enough to include populations with different genetic structures and even of different origin. LOUETTE explains, that

“[a] seed lot that resembles seed of a ‘local’ landrace is classified as such by the farmer, even though its origin may be exotic or unknown. As a consequence, some seed lots of ‘local’ landraces are in fact introduced from other regions.”2098

“For example, all introduced seed of maize with short, thick stalks is named Enano (‘dwarf’) after the first exotic variety that had such a stalk. Farmers do not use different names for these different varieties as the characteristic used for classification refers to the height and diameter of stalk, which are very similar among the different varieties. Farmers appear to use different names only for seed lots with particular characteristics of interest to them.”2099

The same situation has been observed for pearl millet, another outbreeder, in Nigeria.2100 BUSSO et al. established that due to gene flow there was a “greater level

2094 See also ZEVEN (2000), at 69, with respect to selection strategies in maize: “Such often rigorously applied selection criteria may result in a quite uniform landrace.”2095 For details on the Factorial Discriminant Analysis and the Hierarchical Cluster Analysis carried out, see LOUETTE (2000), at 119 et seq. The measured vegetative and ear descriptors included plant height, ear height, stalk diameter, length of the leaf of the superior ear node, width of the leaf of the superior ear node, number of leaves above the superior ear, including the leaf of the superior ear node, tassel length, peduncule length, length of branched part of the tassel, total number of branches, ear length, ear weight, ear diameter, cob weight, cob diameter, number of rows of grain, grain height, grain sidth, grain thickness, 1-grain weight, sum of degree days from sowing to tasseling.2096 SADIKI et al. demonstrated that the varieties that farmers distinguish for faba beans correspond clearly to units identified by statistical analysis of standard morphological measurements. See Sadiki, M., Belqadi, L., Mahdi, M. and Jarvis, D. “Diversity of farmer-named faba bean (Vicia faba L.) varieties in Morocco: a scientific basis for in situ conservation on-farm in local ecosystems”, presented to International Symposium on Managing Biodiversity in Agricultural Ecosystems, Montreal, Canada, Nov. 2001, as quoted by HALEWOOD et al. (DISCUSSION DRAFT), at 6.2097 See LOUETTE (2000), at 120.2098 See LOUETTE (2000), at 121.2099 See LOUETTE (2000), at 124.2100 See BUSSO, C.S., Devos, K.M., Ross, G., Mortimore, M., Adams, W.M., Ambrose, M.J., Aldrick, S. and Gale, M.D., Genetic diversity within and among landraces of pearl millet (Pennisetum

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of [genetic] similarity between landraces grown on the same farm than between identically named landraces grown by different farmers in the same village.”2101

Interestingly, cases of considerable genetic differences between seed lots of the same “variety” as phenotypically defined by farmers have also been observed for rice, i.e. an inbreeder. In connection with rice cultivated in Pahang by the Pegasi swamp farmers LAMBERT reports that the seeds of different households, though designated by the same name, are genetically very different.2102 As in the case of the Cuzalapa maize, the genetic differences between populations of the same variety may either be the result of the different origins of the seed lots or the genetic differentiation of originally genetically similar populations. Changes may occur due to natural and human selection as well as a small amount of introgression from wild relatives or other varieties growing nearby, which can represent an important source of novel genes that adds an element of dynamic change to the population’s genome.2103

2. Individual and community development of varieties

As outlined above, selection and seed development activities may be carried out individually or collectively by all members of the community. Consequently one could conclude that the results of collective seed cultivation and selection are community germplasm and the results of individual seed management germplasm belong to the concerned individual. Interesting in this context, however, is the view of LOUETTE on individual and collective contributions to the maintenance of diversity in the seed management system:

“The seed exchange between farmers and the gene flow between seed lots implies that varieties evolve within the entire set of genetic material planted in the region. A seed lot does not evolve as a specific farmer line. […] The diversity found in this region is the fruit of collective management of local and exotic varieties. Although individual farmers cultivate several varieties, they cannot maintain the processes that support regional diversity in isolation from other farmers.”2104

Of course, it has to be taken into account that the statement of LOUETTE is only true in communities where there is a permanent exchange of seed between the members.2105

Further, in the community LOUETTE describes, all farmers seem to apply roughly the same selection criteria, leading to phenotypically similar and genetically interconnected varieties. The situation is different where the farmers of a community select seed almost exclusively from their own harvest and do not consider regular seed

glaucum) under farmer management in West Africa, Genetic Resources and Crop Evolution 47:561-569 (2000), as quoted by HALEWOOD (DISCUSSION DRAFT), at 12.2101 See id.2102 See LAMBERT, D.H. (1985), Swamp rice farming: the indigenous Pahang Malay culture system, Westview Press, Boulder, as quoted by HALEWOOD (DISCUSSION DRAFT), at 10.2103 On the latter aspect, see HALEWOOD (DISCUSSION DRAFT), at 10.2104 See LOUETTE (2000), at 138.2105 See LOUETTE (2000), at 116 et seq.

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replacement necessary. Adaptation to local agro-ecological production conditions or special household needs may lead to a particular genetic and phenotypic character of the populations grown by individual farmers. The differences to other germplasm grown in the same community will be even more marked if an individual farmer departs from traditional selection criteria and, by an individual hybridisation and selection strategy, develops performance traits unattained by existing traditional germplasm.2106 Nevertheless, it is generally emphasized in the specialised literature that “local varieties evolve as community germplasm through collective effort of a network of people”.2107

III. Conclusions of part C

Farmers’ collective or individual seed improvement practices comprise sophisticated selection and hybridisation strategies. The aim of their crop enhancement practices is to promote diversity and maintain specific useful characteristics, rather than to obtain overall homogenous and stable populations.

The term “farmers’ varieties” is based on the phenotypic variety concept of farmers. Populations that farmers designate by the same name can be described by specific characteristics which are important to the selecting and planting farmers. Consequently the phenotype of farmers’ varieties is more or less precisely defined depending on the needs of farmers. The definition is frequently broad enough to encompass populations with different genetic structures and of different origin.

Consequently, the potential IP subject matter “farmers’ varieties” covers populationswith divers genetic constitutions and therefore very different characteristics concerning uniformity and stability. Farmers’ varieties of outbreeding species, cultivated under conditions which favour introgression of new characters, will be at the one end of the spectrum of farmers’ varieties to be protected by IPR. This will be the most difficult case to deal with. The characteristics of such populations are well resumed by LOUETTE:2108

“[S]eed lots are submitted to fluctuations in their levels of diversity due to the changing amount of seed from which they are reproduced and continuous geneflow from other seed lots. A farmer variety is, therefore, mutable in terms of the number, origin and genetic composition of the seed lots of which it is composed. Contrary to the modern concept of variety, traditional cultivars are not genetically stable populations that can be well defined for conservation purposes. Rather, local varieties constitute systems that are genetically open.”2109

2106 See VARMA (1999), at 2 et seq.2107 See, e.g. BERG (1993), at 76.2108 See also the general statement of BROWN (2000), at 37, on the dynamics of in situ conservation: “While the particular attributes, characters, or adaptations of a population may persist over generations, the underlying genotypes will change. New alleles or combinations are expected to arise and increase the frequency at the expense of other alleles that may disappear.”2109 See LOUETTE (2000), at 135.

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This description mainly applies to outcrossing species but may be true also, albeit to a minor degree, for inbreeders under certain crop management conditions. An exception may further be certain isolated outcrossing populations where farmer put an emphasis on maintenance. On the other end of the spectrum are populations of self-pollinating crops composed of homozygous lines with similar features and which are not subjected to selection pressures. These populations will be more or less true breeding over time.

Both the policy objectives and the features of traditional varieties and seed management practices outlined will determine the feasibility of protection of farmers’varieties and related knowledge by IP mechanisms as well as the shape that the system should take. Parts D and E will explore these issues.

D. PROTECTION OF FARMERS’ VARIETIES AND GRASSROOT BREEDING PRACTICES BY EXISTING IP PROTECTION SYSTEMS

As will be seen below, the two systems that serve to protect plant innovations in the formal sector are not adapted to the subject matter described in part C.2110

Nevertheless, it is useful to start from existing IPR models, as they provide a helpful check-list of issues to be solved when framing a sui generis system. Section I will discuss the possibility to protect farmers’ varieties by PBRs, section II will analyse the same issue with respect to patents.

I. Protection of farmers’ varieties by PBRs

1. Requirements for protection

a) Variety

It may be recalled that variety means a plant grouping within a single botanical taxon of the lowest rank that “can be

- defined by the expression of the characteristics resulting from a given genotype or combination of genotypes

- distinguished from any other plant grouping by the expression of at least one of the said characteristics and

- considered as unit with regard to its suitability for being propagated unchanged.”2111

At two points, in the first and in the third requirement, this definition emphasizes the link that has to exist between the phenotype of the variety and its genotype or combination of genotypes. The above-described genetic fluctuations in many landrace populations evidently raise a problem in this context.

2110 On the following see also LESSER (1994), at 4 et seq.2111 Even though this is the definition of the 1991 Act, it is widely accepted now that the above criteria are indispensable to establish the identity of a variety, while at the same time it is not necessary that the conditions for the grant of a breeder’s right are fully met.

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As mentioned in chapter 3, the above elements of the variety definition correspond to the DUS criteria, but – in the present UPOV practice – set these requirements at a lower level than that demanded in DUS-testing. If we try to relax the DUS criteria as far as possible in order to accommodate less homogeneous and stable plant groupings, the issues to solve in the context of the variety definition and the DUS requirements are exactly the same.

b) DUS testing

The general definitions of distinctness, uniformity and stability have been outlined in chapter 3, but in order to discuss the possibility of applying these criteria to landraces, some more information about DUS testing will be necessary. The following will first describe the UPOV rules and then explore possibilities to modify these standards to adapt them to landraces.

aa) UPOV standards

The UPOV Test Guidelines for individual species provide tables of characteristics that should be used to assess distinctness, uniformity and stability. The Test Guidelines for wheat, for example, contains a list of 26 characteristics.2112 The states of expression of these characteristics are described by notes indicated in these tables.2113 Test Guidelines are not necessarily exhaustive and may be supplemented with additional characteristics if these meet certain general conditions.2114 The characters to be taken into account are not limited to morphological traits. Characteristics based on the response to external factors, such as disease or pest resistance, may be used provided they are well defined and an appropriate method is established that will ensure consistency in the examination.2115 Likewise characteristics based on chemical constituents may be accepted provided they meet the aforementioned general conditions.2116

Natural variations within a population are accepted to a certain extent depending on the reproduction features of the species concerned.2117 Where all plants of a variety are very similar, as is the case for vegetatively propagated and self-pollinated varieties, uniformity is assessed by the number of obviously different plants, so-called “off-types”, that occur.2118 The Test Guidelines for individual species recommend a

2112 See e.g. TG/3/11 + Corr., at 9 et seq.2113 E.g. for plant growth habit the states are: erect (1), semi-erect (3), intermediate (5), semi-prostrate (7) and prostrate (9). See e.g. TG/3/11 + Corr., at 9. For an example of a qualitative characteristic, see TG/1/3, at 10, 4.4.1.2114 See TG/1/3, at 9, 4.2.3. These general conditions include that the expression of the characteristic (a) results from a given genotype or combination of genotypes; (b) is sufficiently consistent and repeatable in a particular environment; (c) exhibits sufficient variation between varieties to be able to establish distinctness; (d) is capable of precise recognition and definition. See TG/1/3, at 9, 4.2.1. 2115 See TG/1/3, at 11, 4.6.1.2116 See TG/1/3, at 11, 4.6.2.2117 See TG/1/3, at 19, 6.3.2118 See TG/1/3, at 20, 6.4.

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maximum number of off-types that should not be exceeded in a given sample size.2119

In contrast, the range of variation within a cross-pollinated variety is larger, because of the features of its propagation. The plants are not all very similar and it is more difficult to determine which plants should be considered as atypical or “off-types”. Therefore, uniformity is assessed by considering the overall range of variation, observed across all the individual plants, and the relative tolerance limits for this range of variation are set by comparison with comparable varieties.2120

The natural fluctuations of characteristic expression found within one variety must logically be less significant than the differences exhibited between two different varieties.2121 The standards for uniformity and distinctness are linked. A more generous application of the uniformity and stability criteria also means increasing the distances between varieties.

bb) Application to farmers’ varieties of self-pollinated crops

The application of the above standards should be less of a problem for self-pollinating crops. Introgression of new characters is rare and the population quickly becomes homozygous, making all alleles visible and allowing for the undesired ones to be discarded. Being homozygous, the lines are true-breeding. Once a population is homogene for all characteristics to be described according to the UPOV test guidelines, inbreeding landraces are relatively easy to maintain. Yet, in practice, difficulties in protecting farmers’ varieties may nevertheless arise from the following sources:

In contrast to modern high yielding varieties, which are often made up only of a few genotypes or even only a single genotype, farmers’ varieties will be often composed of many homozygous lines. Farmers do not necessarily select for uniformity. The best examples are those farmers’ varieties which are mixtures of phenotypically very different lines of crops like rice and beans.2122 Such mixtures clearly would not meet the uniformity criterion. Even if farmers select for homogeneity, they will only maintain the uniformity of phenotypic characters they are interested in. For these characters the population will thus correspond to the UPOV requirements. But with respect to other characters on the UPOV list the population may exhibit variations. A conceivable solution might be to allow for a certain range of heterogeneity for certain characteristics and take an approach to description similar to that of cross-pollinated crops. Yet, it should be noted that the fewer characteristics are defined, the more difficult it will be to establish distinctness; however, once granted, the broader the rights. The other solution would be to describe the individual lines of which the variety is composed. Yet, the number of lines may make this approach too labour and cost intensive.

2119 See TG/3/11, at 3, IV. 2. and 3. For mainly self-pollinated varieties and inbred lines of hybrid varieties a higher tolerance of off-types is accepted than for vegetatively propagated and truly self-pollinated varieties. See TG/1/3, at 20, 6.4.1.3.2.2120 See TG/1/3, at 20, 6.4.22121 See BUNDESSORTENAMT (undated), at 17. See also TG/1/3, at 19, 6.4.1.1.2122 See the example above at C.I.1.a).

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What seems even more problematic is variation over time which, if it departs from the initial description of the population, makes the identification of the variety impossible. It is also noteworthy in this context that the holder of a PBR is usually obliged to maintain his variety during the entire lifetime of his right.2123 Natural selection pressure, genetic drift, gene flow especially in crop mixtures may lead to genetic modifications and changes in the phenotype if the traits concerned are not selected for uniformity by farmers. These evolutionary forces may be more or less active in a specific population, depending on the geographical location, the stability of the agro-environmental conditions, the seed management practices of farmers, the size of the population, etc. Yet, it would seem that situations where the population’s genetic structure and certain phenotypic aspects change over time, would not only be a marginal phenomenon.

cc) Application to farmers’ varieties of cross-pollinated crops

The principal issue, however, is whether PBRs could protect farmers’ varieties of outbreeding species. While inbreeding landraces are naturally largely homozygous, in the case of cross-pollinated crops, the mixture of different genotypes leads to continuous segregation and recombination of alleles. The individuals of a population will exhibit a range of different states of expression for divers characteristics. As seen above, to a certain extent this is the case also for modern cross-pollinated varieties. But landraces are even more heterogeneous. Limiting the inherent diversity within the variety is part of the breeding effort of professional breeders, and a lot of sophisticated testing is involved in order to arrive at a combination of alleles in the population where the increased homozygosity does not lead to inbreeding depression. The varieties of comparison currently used to establish the range of permitted variance within a population set therefore standards that are impossible to meet by a landrace.

Of course, a possible solution would be to lower these standards, to allow for a wider range of variation or define the variety using only those characteristics that are uniformly and stably displayed. But the margin left for this kind of adaptation is limited. The first problem is that the less stringent and detailed the description of a plant population is, the more plant groupings with genetic different make-ups will fall under this description and be identified with this “variety”. This has been observed by different authors cited earlier for the concept of variety used by the farmers in the communities under study.2124 Some populations introduced from a different region, from a different origin, were regarded as “local” varieties. The consequence for PVP would be that many populations described in these broad parameters, for lack of distinctness, would not be eligible for protection. In other cases a population may have some unique characteristic or a unique combination of characteristics which distinguishes it from other known farmers’ varieties, and a plant variety right could be granted. But the variety being defined by broader parameters, the probability that another farmer could arrive at the same result without using the protected variety or

2123 See Art. 22(b)(i) UPOV 1991 Act. For national law, see e.g. § 31(4) No. 2 of the German Sortenschutzgesetz [Variety Protection Act].2124 See above, C.II.1.b).

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using it only as one parent among others is much greater. This might ultimately restrict the breeder’s privilege considerably and would change the character of PBRs. LOUWAARS sees a “real danger of introducing heterogeneous varieties in the IPR system” in the fact that “also large breeding companies can register strategically combined mixtures and claim that any selection from those mixtures is essentially derived. This opens the way for strategic monopolization of gene pools.”2125 This could only be avoided by defining the applicant as farmer and thus creating an independent sui generis system.

The second interlinked problem in protecting cross-pollinating farmers’ varieties is again variation over time. Suppose that a definition of uniformity is chosen which accommodates a certain with-in-population diversity and that a population can indeed be described in a way that distinguishes it from other varieties. According to the equilibrium law of population genetics, theoretically, the proportion of alleles and genotypes present in a population remains stable if the plants within this population mate at random with each other.2126 Thus in its diversity, the population would be stable. Yet, in situ many factors will counteract this theoretical model. Many communities have developed breeding strategies that favour introgression and promote diversity. Even if farmers assure a continuity of important phenotypic characteristics by their seed selection, the underlying genotypes will change over time. The original population and the population resulting after repeated application of these introgression techniques can definitely not be regarded as belonging to the same variety in the sense of the UPOV definition. One of the conclusions of LOUETTE, which cannot be overlooked in the present context, is that “[t]he traditional management of maize in Cuzalapa contributes more to the conservation of a general level of diversity than to the conservation of genetically stable and distinct maize populations. A landrace is far from a stable, distinct, and uniform unit.”2127 On the other hand, it may be recalled that there are also communities or individuals who have developed techniques of maintenance breeding for cross-pollinating farmers’ varieties. Some of these varieties might possibly be eligible for protection if DUS standards were adapted. This can be assumed for example for the millet varieties of Sri VARMA.2128

In sum, on the basis of the literature on population dynamics in the context of in situconservation used above, one has to draw the following provisional conclusion: After adapting DUS standards within limits which would not fundamentally modify the character of PVP, it might be feasible to provide protection for some farmers’varieties, especially self-pollinating ones. Yet, many, if not most, farmers’ varieties

2125 See LOUWAARS (1998), at 3 of 6.2126 So-called Hardy-Weinberg-Rule; See BECKER (1993), at 96 et seq.; ALLARD (1999), at 51 et seq. The outcrossing rate of many cross-pollinating crops comes close to this hypothetical scheme of random mating. 2127 See LOUETTE (2000), at 137.2128 See VARMA (1999), at 8. With his scientific background (see Id. at 3), he will be able to engage in maintenance breeding.

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would not be eligible for protection. Possibilities to move away from the DUS concept will be explored below.2129

c) Commercial novelty

Generally speaking, “[l]andraces are the outcome of a continuous and dynamic development process. They are not stable products which have existed for time immemorial or which have remained static after coming into being.”2130 The literature on in situ conservation of landraces suggests that the idea of traditional varieties having been preserved over a long period does not reflect the reality for most or at least many of them if their genetic identity is considered, as prescribed by PVP.2131

Still, especially in inbreeding crops which are easier to maintain, there will be cases where a variety, phenotypically and genetically defined, has existed for many years. These varieties might have difficulty to meet the requirement of commercial novelty, which demands that the variety has not been sold (or otherwise disposed of) to others with the consent of the breeder earlier than one year before the date of application.2132

Even if the dissemination and use within a community is not regarded as novelty-destroying, many of these traditional varieties will have been traded on a local market or disposed of to neighbouring communities.

2. Right-holder

According to the definition of Art. 1(iv) of the UPOV 1991 Act, breeder means “the person who bred, or discovered and developed, a variety” or his employer, if the national law of the member State provides so, or the respective successor. This definition is broad enough to cover the seed development activity of farmers.2133 The PBR regime should have no difficulty accommodating the application of a group of persons, or a local or indigenous community, as long as national law endows this entity with a legal personality.2134

The breeder of a variety is certainly more difficult to establish in the case of traditional seed development, where information and germplasm are often freely exchanged. In many cases, there is actually no starting point and finished variety, but a continuous adaptation and improvement of crop germplasm. Given the requirements of distinctness and commercial novelty, the actual controversial issues would probablynot arise with respect to ownership, but with respect to the definition of “variety”, as a distinct plant grouping. Breeders applying for PBRs have to fill in a technical

2129 See point E.I.1.2130 See AMANOR et al. (1993), at 2.2131 See also LESKIEN/FLITNER (1997), at 50, stating that many landraces may qualify as novel.2132 The idea behind this “no prior marketing” rule is not to exclude farmers’ varieties from protection, but to leave a variety in the public domain once it has been put there by its breeder or at least with his consent.2133 This was also observed by Dr. JÖRDENS, Vice-Secretary General of UPOV, in a personal conversation of November 14, 2002.2134 On the issue of communities as legal persons, see also MGBEOJI (2001), at 183. The idea of “community rights” is not an approach totally foreign to “Northern” law, as this is suggested by some Indian commentators. See, e.g. SHIVA (undated a), at 26, quoting Justice Krishna IYER.

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questionnaire, which contains among others a question on “similar varieties and differences on these varieties”.2135 In the case of landraces, it will often be difficult for a farmer (and later for the granting authority) to decide whether the phenotypic differences existing between the populations of a largely similar phenotypic constitution in his fields and in his neighbours fields are sufficient to consider them different varieties in the legal sense. If they are, both farmers could be considered individual breeders; if they are not, the families or the communities cultivating this population type could possibly apply together for PVP. Only if they are not applying together, could an issue of ownership arise. If germplasm has already spread to other communities, the variety has lost its commercial novelty and there will be usually no point in establishing who the initial breeder was.

3. Scope of rights conferred

The exclusive right to produce for purposes of commercial marketing, to offer for sale and to market reproductive material of the variety is subjected to the breeders’ exemption and the farmers’ privilege.2136 With the above policy objectives in mind, doubts arise whether the rights conferred and their limitations are suitable for the protection of farmers’ varieties.

a) In relation to formal sector breeders

With respect to the breeder’s exemption, it can be clearly stated that the scope of the rights conferred does not fulfil these objectives. Of course, in some cases of pure-line selection or mass selection from an inbreeding farmers’ variety, the landrace population and the resulting variety may still correspond to the same variety description. It may be recalled that “a difference only in the level of uniformity of a characteristic, without any resultant change in the overall expression of the characteristic of the variety, is not a basis for establishing distinctness”.2137 If the legislation contains some form of essentially derived variety provision, probably all forms of mass or pure line selection from a landrace population would fall under this provision and require the authorisation of the farmer-breeder. But PVP would certainly not protect farmers against the use of their varieties in a crossing programme. As there is no principle of dependence, any breeder is not only free to “[utilise] the variety as an initial source of variation for the purpose of creating other varieties”, but also to market these “other varieties” without paying any compensation to the providers of the initial material.2138 In a majority of cases, where farmers’ varieties are used in a breeding programme, farmers would neither be able to prevent this use nor even to receive any compensation.2139

2135 See, e.g. UPOV, TG/3/11+Corr., at 33, question 6.2136 See above chapter 3, A.IV.2137 See TG/1/3, at 15, 5.3.3.4.2138 See Art. 5(3) of the 1978 Act. See also above chapter 3, A.IV.2.2139 This point is also made by LESSER (1994), at 8.

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b) In relation to fellow farmers

As regards the farmers’ exemption, whether or not the scope of PBR protection is too broad needs to be considered. Even if the UPOV Convention leaves some scope for interpretation, the standard PBR protection system prevents farmers from selling farm saved seed of a protected variety to fellow farmers. It has been mentioned above that it should not be a priori excluded that creative farmers should desire to receive some form of compensation from commercial farmers producing seed of their variety. On the other hand, considering the present situation in the Indian seed sector, there are very good arguments against any restriction.2140

4. Duration of protection

In the area of TK, it is often argued that a limited protection period would contradict the nature of the subject matter, which has evolved over time and is an inalienable part of the cultural heritage of a community over which it should have exclusive control.2141 Yet this argument may be less pertinent in the area of farmers’ germplasm. First, the genetic structure of most landrace populations changes over time.2142

“[Landraces] are not stable products which have existed for time immemorial or which have remained static after coming into being.” Second, as evidenced by the widespread practices of germplasm exchange, the relevant traditions and beliefs do not restrict the use of landraces to certain persons or groups or communities.2143 It is, of course, conceivable, that certain varieties have spiritual significance and may only be cultivated for specific purposes by specific persons. In these cases special rules might be necessary, but they should be limited to these specific situations.

However, if one takes a utilitarian approach to IPR for farmers’ varieties, there are arguments in favour of a longer protection period. Schematically speaking, the situation of informal innovators and formal innovators is very different. A formal sector innovator will from the beginning orient his R&D towards a market and take measures to commercially exploit his variety during the limited period of protection. If his variety is successful, at the end of the protection period he will have received a compensation for his investments. By contrast, informal knowledge, or a farmers’variety, is conceived in the first place to respond to the needs of the local community. It may take years before a formal sector breeder takes an interest in this population and decides to evaluate its suitability for pure line selection and commercial exploitation. The fifteen year term of PVP would create an incentive for breeders to wait until the end of this term, while the incentive for farmers to conserve landrace populations would be reduced. In many cases, at the end of the protection period, the local community would be as poor as before and the only consequence of registering

2140 These arguments will be discussed in detail below in the context of the Indian discussion on PBR.2141 This idea emerges, for example, from a statement of NIJAR (1996), at 95/96, on an IP framework for TK: See also SHIVA (undated a), at 30.2142 AMANOR et al. (1993), at 2.2143 On traditional seed exchange, see above chapter 5, B.I.2. See also VARMA (1999), at 8, pointing out that it is “beyond our custom to refuse seeds to anybody.”

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traditional germplasm would be to make it more accessible to the formal sector after the term of the right.

5. Procedural issues, enforcement

Many farmers would need help in filling in the application forms, to understanding the administrative language, or describing the population in standardised terms. A centralised registration office would therefore exclude these farmers from protection. At least, there would be a need to train local contact persons who would take on the function of a link between the farmers of a certain community or region and the plant variety registrar.

Needless to say that the fees, even though considerably lower in PBRs law than in patent law, would be a serious obstacle to registration for most farmers. Usually, farmers registering a variety will have no concrete plan for commercial exploitation and no possibility to recoup this investment.

Concerning enforcement, LOUWAARS rightly observes that

“an IPR is only valuable when it can be defended. […] Granting rights to farmer-breeders is the easy part. However, having the right is useless when there is no mechanism to detect if other farmers in different regions or countries are illegally multiplying the variety, and as long as the farmer-breeder has no lawyers for court cases.”2144

Unless infringement happens in the region of origin of the farmer-breeder, it is indeed improbable that the holder would learn about it. To make protection more effective some monitoring body might be considered, which would also take charge of the costs of legal challenges, which are prohibitive for most farmers.

6. Conclusions

There are serious doubts whether PBRs could be used for efficient protection of landraces, mainly for two reasons:

- The requirements of protection focus on the entire phenotypic and genetic constitution of the landrace and require that it remains true to the initial description during the period of protection. It would be technically difficult to define protection criteria that do not exclude a majority of cross-pollinated landrace populations.

- If the breeders’ exemption were maintained, the principle eligibility of landraces for PVP would rather be of symbolical value, except for some cases of mass selection from a farmers’ variety. Giving up this fundamental feature of PVP would mean creating a totally new system.

2144 See LOUWAARS (1998), at 3 of 6.

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II. Protection of plants and of grassroot breeding methods by patents

The question of whether patent law would be a suitable tool for attaining the aims of protection outlined in part C, will be discussed with respect to three different possible types of subject matter: - plant groupings or single plants, defined by a combination of traits or one unique

characteristic;- farmers’ knowledge on characteristics of existing plants and populations;- farmers’ breeding or cultivation methods.

1. Patenting requirements

a) Invention

As explained in chapter 3, an invention is a technical teaching, i.e. it should constitute an (industrially applicable) technical solution to a technical problem, and must be reproducibly obtainable without undue burden.2145 This rather inventor-friendly European approach may serve as point of orientation for the capacity of a patent system to accommodate subject matter in the sphere of animate nature.

How would this interpretation of invention deal with plant populations developed or conserved by farmers?2146 Breeding and providing a well-performing plant population exhibiting a resistance, for instance, constitutes a technical solution to the problem of providing a crop type that is resistant against a certain pest attack. In contrast to PVP the subject matter does not need to be identified by its entire phenotype and genetic constitution. This technical solution must be reproducibly obtainable. This requirement would raise problems in many cases of farmer breeding, if it were understood to mean that the process for arriving at the resistant population must be disclosed so that a person skilled in the art would be in a position to repeat it. Yet, as seen above in chapter 3, reproducibility in this sense can be replaced by the availability of self-reproducing material of the protected plant.2147 Plants of naturally occurring wild species would have difficulty in meeting the invention criteria of the above approach. Biological material which is found in nature is only patentable if its provision has required a technical effort.

On the other hand, a special cultivation method (e.g. crop mixtures) using knowledge about the characteristics of existing plant populations could be considered an invention. Likewise, in principal, breeding processes should have no difficulty meeting the invention definition. Yet, in the area of TK, the concept of an invention as a reproducible technical solution to a specific technical problem may create problems. For a solution concerned with living matter to be technical, the German Federal Supreme Court, for instance, requires “a teaching to methodically utilise controllable

2145 See decision of the EPO Opposition Division V 8/94, point 5.4.2146 Always provided plants or plant varieties are not excluded from patentability.2147 See chapter 3, A.I.1.c).

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natural forces to achieve a causal, perceivable result”.2148 Farmers who grow mixed populations composed of farmers’ varieties and of wild relatives may not be aware that it is precisely the wild population X that permits the introgression of a specific resistance. They may take different measures knowing that this provides them with overall satisfying stable crop yields, but without being able to discern which cause had which effect on the performance of plant populations. Even conventional plant breeders have difficulty reproducing the process which leads to a precise phenotypic and genetic constitution of a population. Farmers’ breeding processes are even less controlled and more dependent on chance. This point does not apply to all farmer-breeders. Farmers with a background like Sri VARMA’s will have less difficulty presenting their invention in terms of causal links.

b) Industrial applicability

The following statement of SHIVA illustrates a frequent misunderstanding about the meaning of industrial application:

“The second restriction of intellectual property rights is that they are recognised only when knowledge and innovation generate profits, not when they meet social needs. According to Article 27.1 [of the TRIPS Agreement], to be considered an IPR, innovation has to be capable of industrial application. This immediately excludes all sectors that produce and innovate outside the industrial mode of organization. Profits and capital accumulation are not the only end of creativity; the social good is no longer recognized.”2149

Several assumptions in this text do not correspond to the reality of patent law in industrialized countries. It may be recalled, that Art. 57 EPC clarifies that an invention is considered to be susceptible of industrial application if it can be made or used in any kind of industry, including agriculture. The possibility is sufficient. According to the EPO Guidelines “industry” includes any activity that belongs to the useful or practical arts as distinct of the aesthetic arts.2150 Agriculture remains such a practical art even if it is exercised by a small-scale farmer and even if the technical problem he solves is not encountered in industrial farming methods.

c) Novelty

Farmers’ breeding processes include practices that have been handed down over generations, or at least used for a long period and which have had time to spread to other communities and regions. Likewise, a valuable characteristic may have been integrated into a population by introgression techniques years or decades ago and the progeny of this population may have been widely disseminated. Knowledge about

2148 See decision of the Bundesgerichtshof [German Federal Supreme Court] of March 27, 1969 –“Rote Taube” [Red Dove]. 2149 See SHIVA (1997), at 10. For a legal person who is aware that legal terms cannot be appreciated without knowing the interpretation given by regulations and case law, the perseverance of this kind of “misunderstanding” is amazing. In 1998, SHIVA had worked on the issue of patents and IPR for several years.2150 See EUROPEAN PATENT OFFICE (2003a), C.IV.4.6.

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such characteristics of populations may have been freely shared with other farmers even outside the community. And finally, even though landraces generally undergo permanent genetic modification, they may have kept their specific identifying parameters for decades and spread beyond the boundaries of the community where they were originally bred.

These cases evidently raise problems with respect to the novelty criterion, which requires that an invention has not been made available to the public by prior publication or use.2151 It has been rightly observed in the legal literature that knowledge and germplasm, which remains within a village or tribal community, can be regarded as unavailable to the public. MGBEOJI compares villages or local communities to huge laboratory complexes in developed nations. “Information on innovations, valuable discoveries and applicable technology are generally passed around informally by people in both systems.”2152 There will indeed be cases where all members, at least by debating and advising, will have been involved in the collective development of the invention. In other cases, only a group of the community will have participated in the invention. Even then, disclosure of the information to other members of the community would not necessarily hinder its novelty. European patent law, for instance, considers that information shared with a clearly defined circle of persons is not part of the state of the art if these persons were subject to a confidentiality agreement.2153 This could apply in cases of tribal knowledge, which is known only to a small defined group and often may not be revealed to outsiders.2154

Yet, in other instances, there will be no rules of secrecy imposed on the members of a community.2155 Therefore, in many cases where germplasm and knowledge have spread beyond the boundaries of the community they will have clearly lost their novelty. GOPALAKRISHNAN concludes that “a majority of existing products and processes based on traditional knowledge will not satisfy the test of novelty.”2156

d) Inventive step

The EPA considers an invention obvious, i.e. not inventive, if there was a reasonable expectation of success in solving the problem by proceeding the way disclosed in the application.2157 In chapter 3 it has been mentioned that legal commentators had doubts on the inventive character of plant varieties produced by conventional breeding techniques.2158 On the other hand, court rulings held that, even if varieties are bred by these methods, inventiveness might nevertheless result from a surprisingly high level of the metabolic products characterising the invention, from the combination of all

2151 See GOPALAKRISHNAN (1998), at 225.2152 See MGBEOJI (2001), at 179. 2153 See SPANGENBERG in STAUDER/SINGER (2000), at 133, para. 18.2154 See GOPALAKRISHNAN (1998), at 221.2155 See VARMA (1999), at 8, pointing out to the contrary that it is “beyond our custom to refuse seeds to anybody.”2156 See GOPALAKRISHNAN (1998), at 226.2157 See above chapter 3, B.IV.3.a).2158 See above chapter 3, A.I.1.b).

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characteristics, or from the complexity and duration of the breeding process.2159 The experience with new fields of formal sector inventions has also demonstrated that the inventive step requirement can be adapted if a need is felt to provide patent protection in this new technology area.2160 If necessary, the legislator could impose his view on patent authorities and courts. It should be kept in mind, however, that a low threshold would not necessarily be to the advantage of farmers. Patent rights confer exclusive rights not only in relation to formal sector players but also in relation to other farmers, who would then need to seek authorisation to use the patented technology even though they might have found this solution easily themselves. Moreover, patent law treats every inventor equally. Formal sector breeders might, for example, systematically screen wild relatives for resistances, breed these into related crops and claim these plants. This could only be avoided by creating an independent sui generis system.

e) Sufficient description and enabling disclosure

The requirements of sufficient description and enabling disclosure are closely linked to the reproducibility element of the invention definition already addressed above. In industrialized countries, in the area of living material, the disclosure of a reproducible process to arrive at the claimed product can be replaced by the deposit of a sample of the product with a recognised deposit organism. Additionally the applicant has to disclose in the patent application the available information about the characteristics of the biological material. LESSER rightly points out that “identifying and characterising such traits at the level required by patent offices is a significant task, certainly beyond the means of local communities […].”2161

As mentioned above, in the case of process claims, the reproducibility criterion and thus the enabling disclosure requirement are more difficult to fulfil for a traditional breeding strategy than for conventional breeding processes. Often the introgression of a certain characteristic will be dependent on chance.

2. Right-holders

Neither TK nor farmers’ varieties are necessarily created collectively. Nevertheless, as outlined above, information and germplasm being more freely shared, innovation will often be the result of joint efforts of the entire community, or even members of different communities.

As explained in the context of plant variety protection, IP regimes should have no difficulty accommodating applications filed by a large number of inventors or by a community or even jointly by several communities. If the invention has become freely available within or outside a community, the actual hurdle is the novelty requirement.

2159 See German Federal Supreme Court, decision of 30.03.1993 – “Tetraploide Kamille”.2160 See also MGBEOJI (2001), at 181, who observes that “the test of inventiveness is subjective, since there is always a continuum between inventions and improvements”, and that the necessary value judgement “often reflect[s] the rising influence and power of certain industries at particular stages of a state’s industrial progress or the development of its economic interests.” 2161 See LESSER (1994), at 7.

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Only if the knowledge has not been recently created, will it become difficult to identify the original creators, be they individuals or a community. But this point will be discussed in the context of sui generis protection, as the novelty requirement of patent law should guarantee the necessary traceability.

3. Scope of patent protection and of rights conferred

a) In relation to fellow farmers

The scope of patent protection and of patent rights being broader than that of PBRs, the question of whether the application of patent type rights in relationship to other farmers would be appropriate is even more urgent than in the context of PVP. There are good arguments against restrictions on traditional practices of Indian farmers to save, exchange and sell seed and on the use of traditional breeding strategies.2162

b) In relation to formal sector breeders

As explained in chapter 3, the majority view in Europe considers that the scope of patent rights and the rights conferred are not adapted to the area of conventional breeding. These considerations should all the more be taken into account in the present context as the use of landraces in breeding is highly desirable and breeders are rather hesitant to explore their potential to produce high yielding crosses. The situation is different however, where a farmer-breeder has identified an economically interesting and easily transferable trait. The protection of farmers’ varieties having a specific valuable characteristic (e.g. salt tolerance or a high content in a desirable nutrient) by a patent claiming any plant containing the relevant genetic components could be an option. Yet, again, patent law does not restrict the right to apply for protection to certain groups.

4. Duration of patent protection

As mentioned in the context of PVP, sacred varieties or sacred breeding practices, the use of which is customarily restricted to a community or even only certain members thereof, seem to be rather the exception than the rule. But the above observations on the difficulties of farmers to commercially exploit their inventions have to be taken into account. It would be more probable than in the formal sector that a patent expires before a formal sector player capable of using and marketing the technique has taken interest in the invention. The current protection period might therefore often be too short.

5. Procedural issues and enforcement

Besides the issues raised above in the context of PVP, the costs of preparing an application which usually requires the assistance of a patent lawyer could be an

2162 See above, chapter 6, D.I.

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obstacle to protection of farmers' plant innovations.2163 Most farmers would need assistance to meet these expenses as well as the patent fees.

6. Conclusions

With respect to the protection of germplasm by patents the following conclusions can be drawn:

- The possibility under patent law to describe the protected germplasm not by its entire genetic constitution, but by a few or one outstanding characteristic seems more adapted to the unstable nature of many farmers’ varieties. Yet, not all farmers’ varieties which are distinct will necessarily have such an outstanding trait.

- Many inventions would not meet the requirement of novelty.

- Patent law is closer to the expectations of farmers and commentators than PBRs. But granting patent rights on germplasm defined by its entire genotype seems problematic, as it would considerably restrict the access of breeders to new germplasm and confirm breeders' tendency to base their breeding programmes on the relatively narrow germplasm base of already evaluated cultivars and landraces.

- Patent rights to specific valuable characteristics and their (narrow) genetic base bred into a crop by individual farmers or communities could be considered. Yet, only a sui generis system would permit restricting the circle of applicants to farmer-breeders.

- Moreover, the scope of patent protection in relation to other farmers goes too far. Unless they are subsistence farmers, they would be neither allowed to save, exchange or sell propagating material, nor to use the protected plants in crosses.

The two last points are also true with respect to grassroot breeding methods, which may further have difficulties meeting the inventive step requirement which necessarily would have to take all available TK in the country as reference point in order to avoid that too broad rights are given to one community. Difficulties might be encountered in many cases in meeting the reproducibility and the disclosure requirement.

E. SUI GENERIS SYSTEM OF IP PROTECTION FOR FARMERS’GERMPLASM AND RELATED TK

The following sections will explore only IP options. IPRs in a strict sense are individual rights to intangible assets which can be “affirmed against third parties: in essence, they entitle the owner to prohibit trespassing.”2164 Yet, in the area of

2163 See also VARMA (1999), at 9: “The high costs of hiring patent attorneys makes the present patent system out of reach for grassroot innovators.”2164 See WIPO/GRTKF/IC/4/8, at 7. Property rights do not, as suggested by SHIVA (undated a), at 29, necessarily “connot[e] commodisation and ownership in private hands, primarily for commercial exchange.” The “community intellectual rights” claimed by SHIVA “to prevent piracy of genetic

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agriculture and plant breeding, IP instruments have recourse to a wider range of concepts, including exemptions combined with compensation requirements.2165

Benefit-sharing mechanisms, which confer only an entitlement to compensation for the use of the protected innovation, could be an important element of a sui generislegislation of IPR protection. Further, since this point is one of the key issues of the Indian debate on sui generis protection, the option to vest exclusive rights in the State is also discussed, even though this leads away from the IP approach.

It is important to emphasize that legal mechanisms which relate to the access to the tangible crop resources of farmers are not discussed in detail here. But they will be a crucial instrument to fill in gaps which will exist in IP protection for farmers’ varieties for the reason that their identification over time and space may raise insurmountable problems in some cases.

I. Possible types of subject matter and requirements of protection

A fundamental issue is whether protection should be conferred for varieties, i.e. plant groupings defined by their entire phenotype and genotype or combination of genotypes, or for a particular trait and its underlying genetic components, or both. This choice is closely linked to other decisions that lawmakers need to address, especially with respect to the scope of sui generis rights. The protection of plant characteristics would better meet the expectations of farmer-breeders to share in the commercial success of a modern variety to which they have contributed by their landrace. On the other hand, it creates more constraints for breeders.2166 As concerns the protection for the other possible types of subject matter, i.e. “grassroot breeding processes” and “knowledge about plant characteristics”, their workability and the question of whether the effort of two additional systems would be worthwhile will be discussed.

1. Subject matter “variety”

The problems of applying the DUS criteria to farmers’ varieties have been discussed above. The conclusion has been that outcrossing farmers’ varieties would be eligible only in special circumstances and that it may raise false hopes to state that PBRs can protect farmers’ varieties. Even self-pollinating varieties may not be stable if the crop management strategies of farmers favour the crossing of different lines.

a) Observations on the criterion “identifiability”

This result raises the question of whether the DUS requirements could be replaced. LESKIEN/FLINTER suggest as criteria “distinctness” and “identifiability”.2167 Yet, they are still confronted with the same problems as those who try to adapt the DUS standards. As the UPOV definition of variety shows, one principal aim of the DUS

material […] and to ensure just returns for allowing access to genetic material” are IPRs in the above sense. 2165 See above, chapter 3, A.IV.1.c) on Art. 14 of the EC Council Regulation No. 2100/94.2166 These issues will be addressed in point III.2167 See LESKIEN/FLITNER (1997), at 53.

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criteria is to define the subject matter of protection.2168 In order to afford IP protection to a variety, the identity of the protected plant population must be established. It has to be distinguishable from other plant groupings of the same species by a particular combination of characteristics that must be displayed by most of its individual components and these characteristics must also be retained from one generation to the next.2169

Evidently, the current uniformity standards put the bar very high as to the number of off-types or the ranges of states of expression permitted in order to meet the agro-technical needs of modern mechanised large-scale agriculture. More flexibility would be possible in this respect.2170

b) More stringent description versus broader rights

But again, the adaptability of the DUS requirements to heterogeneous populations has limits: The link between the distinctness, the uniformity and the stability criterion has to be taken into account. The smaller the number of characteristics to be included in the description of the variety and the more stages of expression are accepted, the greater the difficulty to establish distinctness and the broader the granted plant variety rights (PVRs). This problem is also addressed by LESKIEN/FLITNER, who conclude that “[a] property right tailored to protect highly heterogeneous populations should not confer on its holder the same right as provided for by the UPOV Acts”.2171 Indeed the assignment of exclusive rights over populations characterised by few parameters would be problematic in many cases. The observations of LOUETTE may be recalled.2172 Farmers in Cuzalapa defined their varieties morphologically, but so broadly that even populations from outside the community fell under this description. LOUWAARS from the Centre for Plant Breeding and Reproduction Research Wageningen, the Netherlands, points out that:

“[i]n order to support diversity, rights have to be granted on heterogeneous varieties. This is technically possible when the levels of diversity can be described. As a result, only a limited number of varieties can be registered because different local varieties in a particular area will overlap.”2173

c) Protecting a moving target

A second problem is that future variations in the population may not be predictable and thus not describable. Replacing DUS by the criterion of “identifiability” does not solve the fundamental problem of protecting farmers’ varieties, which undergo

2168 This was also pointed out by Dr. JÖRDENS, Vice-Secretary General of UPOV, in a personal conversation on November 14, 2002.2169 See above, chapter 3, A.II.1.2170 See also LESKIEN/FLITNER (1997), at 53.2171 See id., at 54. See also LESSER (1994), at 16: “Exclusionary systems (like UPOV) are workable only when the protected products are described at a high level of detail. That is infeasible for many landraces, the efforts and cost required being to high.”2172 See above, at C.II.1b).2173 See LOUWAARS (1998), at 3.

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continuous genetic modifications due to introgression. This point is highlighted by LOUWAARS:

“[…], a valuable feature of landraces is that they are unstable. This allows them to respond to changing conditions. If a deposit system is used for protection it is clear that no claims can ever be honoured because at the time of a court case the materials ‘stolen’ are likely to be different from those deposited.”2174

“Different” does not necessarily mean “morphologically different” in its main characteristics. A vigorous selection carried out by farmers every season does ensure a certain phenotypic stability. But as in the case described by LOUETTE, the underlying genetic components are modified by the crop management practices.2175

This morphological stability and genetic instability raises the question of whether plant variety type protection could not move away from the genetic definition of a variety. But this approach would come close to protecting selection techniques rather than the provision of valuable germplasm. Again, this would mean to give extremely broad exclusive rights, which would go far beyond the contribution made to the conservation and enhancement of genetic resources.

d) Necessity of more input from specialists

It is important to emphasize that the above does not apply to the same extent to all crop species, all environmental situations and all crop management practices.2176 Self-pollinated varieties might be generally protectable. Some communities isolate outcrossing populations in order to reduce contamination with foreign pollen to a minimum. The process of losing the described identity by introgression of new characters may be slow. Further, the problem of identifying instable landrace populations after several generations does not arise where the state of the population is literally frozen. If a sample of the protected population has been stored in ex situfacilities at the time of application, or if a formerly collected accession can be attributed to an individual community or farmer, the problem of identifiability over time does not arise. Extensive collections of local germplasm, which put an emphasis on precise registration of the origin and the owner of the germplasm, might therefore facilitate the implementation of a PBRs type system of protection. Additionally, collection and characterising of germplasm makes it more attractive for breeders.2177

Yet, the problem of overlapping local varieties, ownership and overbroad exclusive rights still remains. And it is a paradox that the mechanism providing an incentive for

2174 See LOUWAARS (1998), at 3.2175 See also HALEWOOD et al. (DISCUSSION DRAFT), at 9: “Farmers are selecting characteristics and traits not the structure of the landrace, because it is those traits and characteristics that respond to their need (yield, product harvested, etc.). They surely do not select for distinctness or uniqueness, but they select for what respond[s] to and fit[s] their needs in terms of production (security and stability of production, yield, quality).”2176 See also HALEWOOD et al. (DISCUSSION DRAFT), at 22.2177 See DUTFIELD (2000a), at 108, and above chapter 5, C.IV.3.c).

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in situ preservation of instable farmers’ varieties would finally require ex situconservation facilities.

As HALEWOOD et al. rightly point out in their discussion draft paper,

“[p]olicy makers at different levels will ultimately have to decide if, in their jurisdictions, [biological, environmental and crop management conditions which lead to sufficiently stable landraces] coincide with sufficient frequency, with promise of substantial enough gain, to dedicate the resources to create a sui generis intellectual property protection regime, and subsequently administer and enforce it.”2178

Yet there has been little discussion so far in India on these technical issues. It is doubtful that the promotion of a PBRs type protection for landraces is the result of a thorough evaluation. A certain trial and error phase is certainly necessary. But moving forward without a finalised concept may also bear dangers. HALEWOOD et al. make a “cautionary note regarding perverse incentives”:2179

“We have demonstrated, above, that farmers’ patterns of innovative uses of landraces frequently contributes to their being in a state of flux, metamorphosing over time in response to farmers’ selection priorities, planting patterns, seed exchanges, decisions about trading priorities, etc. To create and maintain distinct, uniform and stable landraces, farmers would have to change their way of farming, trading, selecting and exchanging seeds.”2180

A too long trial and error phase might generate such alterations. Additionally it may cause disappointment and the feeling that every refused application is a proof of formal sector arrogance if the governmental communication policy does not start including issues of workability.

More input from specialists of population genetics, taxonomy, and plant breeding would be urgently needed. More research on farmers’ crop management practices in India would also be necessary before a definitive conclusion can be drawn. But the available international literature on in situ maintenance of landraces rather suggests that many of these might not be identifiable over time and thus not protectable as populations.

2178 See HALEWOOD et al. (DISCUSSION DRAFT), at 22.2179 See HALEWOOD et al. (DISCUSSION DRAFT), at 21. For the related discussion with respect to static or dynamic in situ conservation, see BROWN (2000), at 42/43. “The conservation of populations has any of several possible aims: 1. Conserving the maximum number of multilocus genotypes and maximum allelic richness; 2. Safeguarding the evolutionary processes that generate new multilocus genotypes; and 3. Improving the population performance and increasing the productivity in a defined range of local environments. […] Comparable dilemmas arise equally in the sociological aspects of on-farm conservation. Qualset et al. (1997) [quotation omitted] stress the need to conserve the agricultural system as a whole. […] The challenge is to integrate the conservation of plant genetic resources with agricultural development, and in particular to conserve as much diversity as possible and the processes that give birth to it.”2180 See HALEWOOD et al. (DISCUSSION DRAFT), at 21.

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2. Subject matter “plant characteristic”

a) Implications for the shape of the protection system

When framing a protection system for farmers’ germplasm defined by a single or several outstanding characteristics it has to be kept in mind that the focus on a few traits, or even a single one, has implications for the character of the protection system: First, the probability that populations defined by a few parameters are widely disseminated is greater than for precisely defined varieties. It may therefore be often difficult to trace back these characteristics to one community or at least a limited number of communities. Second, a definition by fewer parameters means broader rights. The defined population can be embodied in an indefinite number of variations. Pyramids of proprietary rights become possible. Therefore these rights should find no application between farmer-breeders and farmer-users. Third, since it is generally not the combination of characteristics in a landrace but single traits, which are of interest to breeders, the latter should be ideally the subject matter of protection.

b) The problem of sufficiently describing the plant characteristic

The protection of the subject matter “plant characteristic” is a serious technical challenge in the present context. Protecting the phenotypic trait would confer an overly broad protection which goes beyond the actual contribution to crop improvement made by farmer-breeders. In theory, the underlying genetic components could be precisely described. In patent applications, the DNA sequence of claimed genetic material defines the subject matter. For the present purpose, the characterisation of an allele by its precise locus (position on a chromosome) and its specific reaction to different pathogen cultures might be sufficient. In any case, farmer-breeders clearly do not possess the means to have the populations which they know to be resistant analysed or screened for resistance genes. It is also improbable that, in the near future, public research institutions will have enough funds to systematically screen all crop material filed in sui generis applications.

But some of this screening work could be done by private sector breeders. Yet, breeders will want to know before they start to invest in this activity, whether they may insert the expected characteristic into a new variety and what financial implications this will have for them. If the legislation provides only for an obligation to pay a standard compensation to the developers/conservers of the material concerned, this should not be a problem. If however, exclusive rights are attributed to farmers, the right-holders would need to be identified at this point in order to negotiate a licence. Yet, prior to the identification of the relevant genetic component the exact dissemination of the concerned genetic trait and thus its developers/conservers cannot be determined. The IP approach, where a subject matter is so precisely defined that it can be identified anywhere just on the basis of the description, is impossible to realise until there is more precise scientific information about position and structure of the relevant genetic components.

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If the aim is indeed to allocate exclusive rights to farmers,2181 the following two step solution might be considered: Unstable populations should be described and registered by the available elements cited above. The registered outstanding characteristics mayattract the interest of breeders searching for easily transferable plant traits.2182 As long as the trait is not genetically defined and therefore not attributed to individual farmers or communities, a breeder would only have to get prior informed consent from the owners of the tangible material under the access legislation and to enter into a standard contract with a central registration authority before he starts screening and using the material. The conditions of this contract could take into account what amount of information is already available on the relevant germplasm and what information the breeder is going to provide by the tests he has planned. As this testing and screening work is highly desirable, the breeder should only have to pay a low compensation. The authority would identify the communities entitled to this compensation once the subject matter has been precisely described.2183 Once this has happened, the communities concerned, where they do not exceed a manageable number, could obtain an exclusive patent type right. Yet, this right could not be opposed to the breeder who has made this protection possible, so that breeders characterising genes and alleles for the first time would not have to negotiate afterwards whether and on what conditions they may use the protected characteristic.

3. Subject matter “knowledge about crop characteristics”

In most cases, there is no need to dissociate the germplasm as such and the knowledge about its characteristics, as those farmers who use a population defined by their entire phenotypic and/or genetic constitution or by a certain outstanding characteristic will in most cases know about these characteristics and consciously use them. Only exceptionally, may there be instances where a landrace itself is widely used, but an individual farmer or a community has discovered that the landrace is resistant to a specific pest, or that it grows best in a mixture with another variety.2184 These cases seem too rare to justify an additional system, and too difficult to prove.2185

2181 See below, point III.2182 The KANRATAKA PLANNING BOARD (1996), at 2, also emphasizes the importance of pursuing “a positive promotional approach grounded in developing a good system of information on these resources, making such information easily accessible, and then charging reasonable fees for access to information, as well as biological material.”2183 Where a breeder only uses phenotypic selection techniques and does not characterise the genetic component sufficiently to allow the attribution of individual rights, the standard compensation would flow to a general fund for the conservation of agrobiodiversity, as the dissemination of this characteristic cannot be established. The community who has provided the initial tangible sample is rewarded under the access legislation.2184 For an example of such individual strategies of mixing different varieties, see e.g. LONGLEY/RICHARDS (1993), at 55.2185 Farmers cultivating a specific landrace may not always be able to isolate a specific trait from the overall performance of the population, but they are certainly aware of the stable yields provided under unfavourable conditions. It would probably be difficult to draw the boundary between awareness of good performance and knowledge about the precise environmental factor to which the population is resistant/tolerant.

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4. Subject matter “breeding method”

The causal links between methods applied and a precise predictable result are often weaker in traditional breeding than in formal sector science. At first sight, it could be possible to lower enabling disclosure standards and simply record a precise description of the method as well as of the result. The applicant could be entitled to benefit sharing where somebody uses exactly this method with the same results.

But how would this function in practice? Many selection techniques, selection criteria, introgression strategies are widely disseminated. In order to justify an exclusive right of an individual farmer or community, the description of the method would have to refer to the used farmers’ varieties and wild relatives. The difficulties defining these populations in such a way that the description does not become obsolete after a few generations has been described above. These aspects give an idea of the complexity of the system that would have to be introduced.

Applying this kind of exclusive right in the relation between farmers seems certainly not desirable. Not only for the reason that the legal insecurity about what is possible and what is precluded by exclusive rights would be too important, but also because there is no point in developing a complicated mechanism for shifting funds between farmers who are all engaged in in situ conservation and enhancement of crop genetic resources. The precise process used by farmers will rarely be of interest to a formal breeder who has his own tools to control the genetic evolution of the plant populations he works on.

5. Conclusions

In the discussion on the shape of an IP system for the protection of the genetic material developed and conserved by farmers, the technical feasibility of different solutions needs more attention. Protecting the subject matter “farmers’ variety” will be in certain cases technically very difficult. The adaptability of the DUS requirements to heterogeneous populations has limits. For IP protection the subject matter needs to be described in a way that makes it possible to identify its embodiments over time and space. The fewer characteristics are used to describe a population, and the more stages of expression of these characteristics are included, the broader will be the granted rights. Protection could thus even cover populations that are not genetically related to the population initially described. Such protection would go beyond the contribution to the “state of the art” made by the applicant.

These reservations against protection for farmers’ varieties do not apply to all crop species. Farmers’ varieties of self-pollinating species might be generally protectable even if the adopted DUS standards are quite stringent. Populations of open-pollinated crops may also remain stable under certain traditional crop management practices. Nevertheless different risks need to be kept in mind when protection is provided to farmers’ varieties of outcrossing species. If the DUS criteria are too stringent, farmers seeing most of their applications refused might be disappointed if politicians had boasted before about the achievement of protection for farmers’ varieties without

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explaining the limitations. On the other hand, if the DUS standards are too lax, the rights conferred may be overly broad. HALEWOOD et al. further point to the risks of a potential “perverse incentive” to move away from traditional practices.

These risks speak in favour of exploring more in depth the possibility of protecting plant characteristics defined by their genetic background, which are governed by one or only a few genes. This approach would from the outset focus on the genetic elements of farmers’ varieties which are actually of interest to formal sector breeders. However, in order to avoid overly broad protection a genetic definition of the subjectmatter would be necessary which makes the assistance of formal sector institutions indispensable. A possible solution could be to grant certain privileges to firms which identify and characterise the gene(s) at issue. The option to protect the subject matter “plant characteristic” would necessarily imply that a patent type right is granted which covers the use of the germplasm concerned in a breeding programme. This is at the same time the strength and the possible disadvantage of this approach. It has been explained earlier in chapter 5 that most Indian breeding firms have no biotechnology capacity. This has to be kept in mind and the burden for the breeding firms has to be balanced against the gain for farmers conserving and enhancing crop genetic resources.

II. Right-holders

Besides the protection of unstable heterogeneous populations, the definition of the right-holders is the biggest challenge in framing a sui generis system for protection of breeding innovations of farmers. The problem is not that a community rather than an individual farmer may have developed the variety. Vesting rights in collective entities is possible. Even joint applications of several villages or indigenous communities are legally conceivable.2186 The actual issue is that, in the absence of a strict commercial novelty criterion, the subject matter will include both, widely disseminated farmers’varieties and varieties where the origin can be clearly established. Experts2187 and members of the breeding community2188 emphasize the difficulty of establishing all individuals or communities involved in the development or conservation of a farmers’variety. The only association, which can be easily established, is that of tangible genetic resources accessed at a certain location and the community cultivating crops at this location.2189 Yet, this would mean to let chance decide on who receives compensation. The link between the recipients of royalties and germplasm should preferably be based on the development of the variety with its specific characteristics. The case of the farmer Sri VARMA may be recalled where compensation based

2186 See also WIPO/GRTKF/IC/4/8, at 26, para. 63.2187 See KARNATAKA PLANNING BOARD (1996), at 89; see further M.S. SWAMINATHAN FOUNDATION (1996), at 18, and SWAMINATHAN (1994a), at 185. 2188 Resuming the results of his survey among 24 domestic and international seed companies, SRINIVASAN (2001), at 402, observes that “[d]omestic companies focused mainly on the difficulties in evolving a workable mechanism for compensating farming communities. They pointed to the difficulties in identifying specific individuals or communities as developers of specific plant genetic resources and the problems in determining the quantum of compensation.”2189 Similarly, KARNATAKA PLANNING BOARD (1996), at 89.

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merely on cultivation of the concerned varieties would fail to encourage his particular research effort. On the other hand, in cases where the identification of the developers is too complex, the conservation of a landrace could be seen as a sufficient link to allocate rights.

Keeping the issue of workability in mind, the following paragraphs will present different options and suggest a middle path. Yet, it has to be acknowledged that there remain doubts whether the effort of establishing the desired association between germplasm and individuals or communities will not in the end be too costly.

1. Individuals, communities or the State?

a) Pros and cons of allocating the rights to the State

Three categories of holders of rights over traditional crop germplasm are discussed: individuals, communities, i.e. tribal communities or village communities, or the State. The State is sometimes seen as owner,2190 sometimes as custodian.2191 Alternatively the attribution to an autonomous National Trust Fund is suggested.2192 Giving the right of control over crop genetic resources to the State or a central trust would indeed solve the problem of attribution to individual farmers or communities and free resources otherwise bound for this purpose. The KARNATAKA PLANNING BOARD argues this viewpoint:

“To attempt to organize royalty payments on a wider scale would call for a great deal of highly sophisticated and expensive technical investigative work, and even then it might often be difficult to prove, for instance, that a specific gene for salt resistance, came from a particular Kagga variety in coastal Karnataka […]. Even if this is accomplished, it would be difficult to delineate a particular set of individuals who should receive the royalty payments. Given such difficulties the whole process would get bodged down in endless legal squabbles.”2193

A second advantage put forth in favour of this solution is that the State might be in a better position to negotiate with multinational companies and to enforce rights.2194

Yet the danger of this approach is that the economic and moral incentive for grassroot innovators gets partly lost. If the link between a community or a small number of

2190 SHIVA (undated a), at 31, proposes a joint ownership of the State and of communities. See also the model provisions in SHIVA/HOLA-BHAR (1993), at 46 et seq.2191 The Doc. WIPO/GRTKF/IC/4/8, at 26, para. 64, e.g., states that “[a]n alternative to the attribution of rights to communities is the designation of the State as the custodian of the interests and rights of TK holder.”2192 See, e.g. KARNATAKA PLANNING BOARD (1996), at 86 et seq.2193 KARNATAKA PLANNING BOARD (1996), at 89/90.2194 See, e.g. SHIVA (undated a), at 31; Dr. Suman SAHAI likewise stated in a personal conversation on August 29, 2001, that compensation should first go to a Fund, as local communities would not be able to monitor the payments. Additionally, Dr. SAHAI considered it preferable if the companies were not dealing directly with the communities, as these could be easily exploited.

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communities and a landrace can be established in some cases, why not give them full rights over these resources? A centralised administration of crop genetic resources is prone to misunderstand the interests of the communities concerned. This danger is pointed out for instance, by GUPTA.2195 What was initially conceived as way to recognise their scientific capacities would become a confirmation of their alleged incapacity to decide on their own on the use of their resources. The Madras draft, a model legislation developed during an interdisciplinary dialogue at the M.S. SWAMINATHAN FOUNDATION in January 1994 uniting an impressing number of Indian experts from government, seed industry and NGOs provides for the identification of the locations from where material used in breeding originated.2196

Only “[w]here it is not possible to identify the precise area from where the farmer varieties came, the royalty due to farmers will be credited to the Community Gene Fund […] for the use in promoting genetic conservation.”2197

A further argument in favour of allocating rights to individuals or individual communities is that material held by the State would fall under the regime of the FAO International Treaty. This would restrict the options to shape the sui generissystem.2198

It is therefore submitted here that wherever possible, farmers’ varieties should be at least attributed to communities. This does not exclude the possibility to establish a collecting society or centralised ex situ collections. These institutions could get a prior consent of communities to enter into standard contracts with interested seed firms.

b) Pros and cons of vesting rights in communities rather than individuals

Advocates of the solution to vest rights in communities rather than individuals invoke the incremental and collective nature of innovation in traditional societies. It may be recalled, that farmers’ varieties indeed often evolve as part of a metapopulation cultivated by many farmers in the concerned village or region. On the other hand, there

2195 See, e.g. GUPTA (1994), at 3 of 17: “It is submitted in this paper that given the past record of most governments having very weak commitments to make the machinery of government accountable to local disadvantaged communities, entrusting the task of routing compensation from national or international funds through the same machinery will be rather counter productive.” See further Id., at 6 of 17 and 9 of 17: “To us, any arrangement which does not assure improved access of biodiversity conserving communities to additional revenues to be used at their terms through their institutions is not acceptable.”2196 Art. 8 (3) reads as follows: “The identification of the donors of the genes contributing to the success of a new variety will be based on the recommendation of the National Institute for Plant Variety Testing and Evaluation which will analyse the pedigrees and other relevant details relating to the parentage of varieties submitted for release and identify to the extent possible the locations from which the useful parental material originated.”2197 Art. 8 (4) of the draft. See SWAMINATHAN (1994b), at 211. At a technical consultation two years later, likewise at the M.S. Swaminathan Foundation, the participants stressed that the complex and challenging nature of the identification of specific communities whose conservation effort have contributed to the development of new varieties “should not be a reason for not attempting to put in place arrangements which facilitate the recognition of specific contributions of individual communities”. See M.S. SWAMINATHAN RESEARCH FOUNDATION (1996), at 18.2198 See chapter 2, B.III.2.

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will be cases of creative individuals like Sri VARMA who undertake outstanding breeding efforts. In such cases, allocating right to the entire community seems problematic, in particular if not all farmers are involved in the enhancement and conservation of traditional germplasm. The WIPO Secretariat, in the more general context of TK, draws attention to a further aspect to be taken into account:

“The importance of customary law is crucial for the attribution of rights and benefits within the community. Any legal solution concerning the protection […] of TK must recognize the importance of communities’ customs and traditions involving the permission for individuals to use elements of TK, within or outside the community concerned, as well as issues concerning ownership, entitlements to benefits, etc.”2199

Yet, giving the granting authority the additional complex task to establish these rules in each individual case would bind significant resources. To avoid this difficulty, the legislation would have to either ignore the community’s customs and traditions or to grant the IP rights to the community. The second solution would simplify the allocation of rights, as the contributions to crop development within a community need not be clarified. For the sake of feasibility, it is therefore suggested here to vest the rights into the community, unless the competent community institutions, such as the panchayats, agree that the IP right is allocated to an individual farmer or household.

In sum, this paper submits a solution to the right-holders issue, which is quite similar to the graded approach proposed by GUPTA:2200

“In cases where the original providers are known and can be traced in terms of villages or households, and in cases in which the plants are grown in restricted areas (i.e. few hundred hectares or a few villages), the communities represented by panchayats, local conservation committees, cultural caste panchayats or traditional tribal councils etc., can also register land races […]. […] In cases, where many people know a specific use of a specific plant […] thus providing its distinctive characterization, the rights should be treated as trust rights belonging to communities inhabiting a region in which plants grow. […] For plants which are widespread and their uses are also widely known, the rights should belong to [a] state Biodiversity Conservation Trust fund to be set up at national level.”

2. Registration as pre-condition for the emergence of the right

a) Subject matter “plant characteristic”

Once the principle aim to vest rights into individual communities rather than the State has been determined a further issue needs to be discussed, namely when and how these right-holders are determined and whether their determination is a pre-condition for the emergence of the right. The outcome of this discussion depends on the type of rights to

2199 See WIPO/GRTKF/IC/4/8, at 25, para. 62.2200 See GUPTA (1994), at 10/11 of 17

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be allocated: If farmers obtain exclusive rights to the use of the material concerned, then registration should be a pre-condition for the emergence of the right, as breeders need to be able to negotiate a licence beforehand. If, on the other hand, farmers are only entitled to a fixed standard remuneration, it is sufficient that the developers/conservers of the genetic material at issue are identified later.

Some aspects of the first solution have already been discussed for the subject matter “plant characteristic” in the context of the problem of sufficiently describing a plant characteristic.2201 A two step solution has been suggested distinguishing between the period before and after the registration of the plant characteristic at issue. Such a distinction will also be made for the subject matter “farmers’ variety”, although for slightly different reasons and with a different shape.

b) Subject matter “farmers’ variety”

The aim is to vest rights in individual rather than the State. However, until the right-holders, which may be one community or several or a whole region, are officially established, a breeder intending to use a farmers’ variety as basis for a pure-line selection will only know from where he got the tangible crop sample,2202 not however with whom he has to negotiate a licence or the amount of compensation to be paid. Unless his obligations, when using the material, are clearly limited to paying a fixed standard remuneration (e.g. a percentage of benefits from seed sales), this would be a serious disincentive to use this kind of germplasm in a breeding programme and thus paralyse the flow of funds from the formal sector to farmer-breeders which is one of the objectives of the sui generis system. This dilemma could only be solved by allocating the rights to the State or make the State at least the trustee of the interests of the germplasm proprietors which would be established at a later stage. However, this solution should be subsidiary and only be applied where absolutely necessary.

Accordingly, farmers should be encouraged to register their stable varieties. This register would also provide the necessary information to breeders looking for breeding material. The acceptance of a compensation mechanism or even exclusive rights would also be easier to obtain from breeders where the used germplasm can be traced back to particular communities.2203 Negotiations could take place directly between the formal

2201 See above, E.I.2.b).2202 It may be recalled that the IP regime discussed here would not exclude an additional mechanism providing for compensation of the farmer or farming community from where the breeder has obtained the tangible sample.2203 See SRINIVASAN (2001), at 400 et seq., on the results of a survey among 24 companies. He quotes one major company with the statement that “[a]s long as it can be scientifically established that a particular farmer/community has conserved or developed a genotype, protection can be granted under the Act.” (Id., at 400) He reports that domestic companies pointed to the difficulties of identifying specific individuals or communities as the developers of specific plant genetic resources, which also proves that they attach importance to this identification. (Id., at 402) Mr. Deepak MULLICK, Managing Director, Advanta India Limited, Director (International Affairs) of the Association of Seed Industry, stressed in a personal conversation on September 9, 2001, that if a community could prove its ownership, he was prepared to pay royalties to this community. If, for example, a village community had over years saved and selected some variety of rust-free wheat and

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sector breeder and the right-holder without intervention of the State other than as consultant. Only where a breeder intends to use a stable farmers’ variety which has not been registered yet, he would have to refer to the State as a trustee of the right-holders for the establishment of the level of compensation.2204

c) Registration procedure

The workability of the sui generis IP protection system that allocates exclusive rights requires that the right-holder can be determined in a rapid, inexpensive procedure. The easiest way to arrive at this result would be a first-to-file system, where the applicant has to file a description of the plant characteristic or the variety and the origin of the variety, especially the breeding strategy used to arrive at the variety and a sample. On the other hand, the ambition to establish the actual developer or all those farmers or communities who have at least conserved a variety or plant characteristic over a longer period of time should not totally be abandoned.

As a basis of further discussion, the following registration procedure is suggested:

- An individual or community files an application for registration of a farmers’variety or of a population with an outstanding characteristic. As mentioned in point I.2, an application for a characteristic is only possible where it can be sufficiently, i.e. genetically, described. Instead of an application by a farmer, it would be a demand by a breeder that would start a procedure. The procedure could further be started at the initiative of a scientific institution or ex situ collection.2205

- The application is published in the local newspapers and communicated to the neighbouring Panchayat institutions and specialised NGOs in the region.

- During a kind of opposition procedure, other individuals or communities have the opportunity to file claims to the variety/characteristic. Two issues have to be verified: Do they actually cultivate the germplasm on a considerable area? And

was able to prove this, he would be prepared to pay a price for this. Conversely, as concerns other material, his firm should not be obliged to pay for it, as it belonged to him just as “it belong[ed] to Suman Sahai”. It should be noted that Mr. Mullick gave the interview in his personal capacity and did not express official positions of Advanta India or the ASI.2204 The amount of this compensation should be in line with the FAO International Treaty, as it is not yet clear at this point whether the crop material falls in the public domain or not, depending on whether or not individual communities can be established as breeders. Crop resources in the public domain are covered by this international regime.2205 HALEWOOD et al. (DISCUSSION DRAFT), at 26, examines with a focus on the “System-wide Information Network for Genetic Resources” (SINGER), which provides information on all the collections held by the CGIAR Centres, the extent to which data gathered during plant genetic resources collecting missions could be used to link accessions to originating communities: “[I]n 30% of the cases, where longitudinal and latitudinal coordinates […] are listed, it is possible to know where the accession was collected within a few kilometers. 99% has country identification. 96% of accessions provide more details within the country, for example, collected 40 kms north west of a village. […] It must further be borne in mind that there is no available data concerning where any of the collected information is not found, that is to say, whether the accession is unique in any way.”

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second, are those who claim to have been involved in the development able to describe a breeding process, which may have led to the result?

- Only in cases where the initial developers cannot be established during the opposition procedure, will the rights be attributed to those conservers of the concerned germplasm who have filed an application during the prescribed period. Even though the number of communities qualifying for sui generis rights may have been reduced by this deadline, their number may still be considerable. If the number of communities exceeds a certain prescribed maximum, the variety should be regarded as part of the public domain and its use should be subject only to the compensation rules of the PGRFA Treaty. If exclusive rights are attributed a larger number of right-holders makes the system quickly unworkable. The communities should therefore be obliged to appoint a representative whose decisions are legally binding for all right-holders.

- In the case of landraces stored in ex situ collections, it could be assumed that the community from whose fields the material originates has developed it if it is still cultivated there. It would be next to impossible to establish whether other communities have grown the landrace already at the time of collection.

Application fees can be a considerable hurdle for resource-poor farmers. Instead of these fees, farmers should be obliged to pay a fixed percentage of the royalties or benefit sharing payments they receive.

III. Scope of rights conferred

The desire to provide an effective protection for traditional crop resources has to be balanced against the arguments in favour of the farmers’ privilege and the free access of breeders to a wide range of breeding material. The most important issue to be examined here is whether and in what cases the sui generis system should confer exclusive rights rather than entitlements to benefit sharing.

1. Protection of stable farmers’ varieties

a) Relationship between farmer-breeders and their fellow farmers

As mentioned above, there is some evidence that creative farmers would expect a system to apply also in the relationship to fellow farmers, preventing, for instance, commercial farmers from producing seed of the protected variety without authorisation.2206 Yet, several reasons speak against the introduction of exclusive rights or even a compensation mechanism in this relationship.

One important reason is that the free flow of germplasm between farmers is of enormous importance for seed supply, especially of resource-poor farmers. With respect to modern varieties this paper suggests that the possibility of obliging large-scale farmers to pay a compensation to seed firms if they sell propagation material to

2206 See above at B.I.5.

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other large-scale farmers should be explored.2207 But in the case of landraces, two additional aspects have to be taken into account: First, it is much more likely, that a commercial farmer, having received the variety from informal sources, is totally unaware that the material in question falls under a special regime. In contrast to a formal sector breeder he cannot be expected to check the central register regularly and verify the identity of his material and a protected variety.

The second and more important aspect is that innovative farmers build on other farmers’ varieties which thus contribute to the breeding result. This is all the more the case since exchange of varieties used in developing and marketing the new variety will often taken place in the same local sphere. If the farmer-breeder has received landraces from other farmers for free, why should the result of his hybridisation and selection be taken out of the chain of farmers’ varieties freely building on each other? The statement of LOUETTE may be recalled, according to which “[t]he seed exchange between farmers and the gene flow between seed lots implies that varieties evolve within the entire set of genetic material planted in the region. A seed lot does not evolve as a specific farmer line.”2208 Of course, there are cases where the above observations do not apply. But the statement describes a situation which needs to be considered when a general provision has to be found. Taking the available evidence into account, it can be assumed that seed exchange is an important source of seed supply, and that the above situation is the rule rather than the exception. Since the large-scale farmer, whose exemption is in question here, has obviously not reduced his portfolio of cultivated varieties to HYV, he has probably contributed at some point to the agrobiodiversity used by creative farmers in breeding.

b) Relationship between farmers and formal sector breeders

aa) Exclusive rights to market the same variety and essentially derived varieties

In part B of this chapter it has been outlined that some farmer-breeders express the wish to be granted exclusive rights in their farmers’ varieties. Exclusive rights promote linking small scale innovators with formal sector investors, which will be more willing to invest in seed technology for which they have received an exclusive licence. A second advantage of the exclusive rights approach is that it permits leaving the assessment of the value of the germplasm to the market, rather than state authorities.

However, it has to be kept in mind that negotiating a license may involve significant transaction costs and will be considered by breeders only if they see an economic advantage in using the concerned germplasm under these conditions. As outlined above, marketing single-line or multiple-line varieties selected from farmers’ varieties may be economically interesting for breeders and does occur, even though not as often as some NGOs suggest. In these cases, it seems not only equitable but also economically appropriate to give exclusive rights to the farmer-breeders of the initial

2207 See above, at chapter 6, D.I.4.2208 See LOUETTE (2000), at 135.

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variety, if it is a protectable stable population.2209 This could be done by a PBRs-type right which extends to essentially derived varieties. In contrast, the current reluctance of breeders to explore the potential of farmers’ varieties to produce high yieldingcrosses, speaks against exclusive rights for farmers’ varieties which extend to the use as parent in a breeding programme.

bb) General maintenance of the breeders’ privilege

Moreover, the reasons for the breeders’ privilege have been exposed above and may be recalled using a short example: The famous variety IR 64 developed at the IRRI in the Philippines is based on genes from 20 landraces, coming from eight different countries.2210 Negotiating with 20 different contracting parties for licences would be economically prohibitive for plant breeders. The number of farmers’ varieties, the use of which is prevented by an exclusive right, could be reduced by introducing the requirement of a “significant” contribution to the breeding result. But even then good arguments would speak against an exclusive right of farmer-breeders to the use of protected landraces for breeding. Unless he targets the introgression of a qualitativetrait controlled by a single gene or a cluster of genes, a formal sector breeder may not know from the beginning whether and which landraces will contribute significantly to the final breeding result. Yet, if he is not able to negotiate the licence conditions beforehand, he engages in a 7 to 13-year long breeding programme without the security to be able to market the breeding result.2211 Given the described trends of landrace germplasm use, this is not a realistic assumption.

cc) Compensation for certain uses in breeding

The above economic constraints of breeding remain valid. Furthermore, at least for the moment, breeders have alternative sources of germplasm. They are rather reluctant to use landrace material other than as source for qualitative traits governed by a singlegene or a cluster of genes. It may also be recalled that the exploitation of the potential of landrace germplasm for high yielding crosses is highly desirable. Charging the breeder for such an activity seems only justified where he builds mainly on one landrace.

A conceivable solution might be a compensation mechanism based on a kind of “enlarged” essential derivation concept, which may be met, for instance, if according to the pedigree the contribution of the landrace to the total genetic heritage exceeds a certain limit, for instance 30%. The compensation should be a standardized amount of the benefits. It may be doubted, however, that this rule would apply very often.2212

2209 If it is not a stable population, still two legal mechanisms would apply: Under the access legislation, a breeder would have to pay a compensation to the owner of the tangible resource. Under the patent type protection for unique plant characteristics, the breeder would possibly have to negotiate a license with the proprietor of this genetic trait.2210 See KARNATAKA PLANNING BOARD (1996), at 41. 2211 This duration of the development of improved cultivars is, e.g. indicated by WRIGHT (1996), at 25.2212 For instance, according to a study on wheat by REJESUS et al. (1996), at 141, “[l]andraces are infrequently the direct parents of leading wheat varieties grown in farmers’ fields.”

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Possibly the effort that would have to be made for every application to establish whether or not such a “predominant derivation” has occurred could be out of all proportion to the meagre flow of royalties.

c) Duration

Some arguments for and against an indefinite period of protection have been set forth above. The need to provide an incentive to farmer-breeders speaks in favour of rights unlimited in time. The sui generis PVP rights as conceived above are quite weak and it can only be hoped over a long period of time that significant sums will flow to the relevant communities or individuals. It should also be taken into account that landraces can be stored for long periods and that the “technology” embodied in this germplasm does not lose its worth over time.

2. Protection of plant characteristics

Since the subject matter is defined only by a few characteristics, for example by the species and a resistance gene, limiting this right to the multiplication of the protected plant material would have little effect, as any breeding result containing the protected characteristic would again be covered by this right. The shape of the farmers’ privilege is therefore even more crucial than in the case of protection of stable farmers’varieties. In the relationship between farmers and formal sector breeders, again two options need to be discussed, namely exclusive rights and entitlements to benefit sharing.

a) Relationship between farmer-breeders and their fellow farmers

In the relationship to fellow farmers part of the arguments put forth in the context of stable farmers’ varieties are also pertinent here. Every restriction on the seed exchange and seed sale among farmers will disturb the informal seed supply system. This would probably result in more harm for traditional farming communities than the conferred rights could benefit them. Additionally, in the concept suggested here, the plant characteristics are phenotypically and genetically defined. Unless they receive material directly from the farmer-breeder, farmers would not be able to know whether they use the protected subject matter or a similar characteristic with a different genetic background.

b) Relationship between farmers and formal sector breeders

aa) Pros and cons of conferring exclusive rights

The demand in the seed industry for these characteristics may permit conferring strong, even patent like rights to farmer-breeders. This approach is probably the option which would lead to the most important transfer of funds between farmers and formal sector breeders. A plant characteristic could be licensed only to one party in the seed industry. This has the advantage that seed firms would have more confidence of recouping their investments and thus the marketing of these characteristics would

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become easier.2213 Furthermore, a considerable advantage of exclusive rights would be the determination of the value of the relevant characteristic by the market. There is a risk that should not be ignored that a decision by a public body on the value might be biased either against the interests of formal sector breeders or of farmer-breeders, depending on the composition of this body. An exclusive right of farmers and their freedom to negotiate a licence with interested breeders would also probably find better acceptance in part of the breeding community.2214 Another advantage could be that the contracting parties of a licence would be free to stipulate non-monetary obligations adapted to their needs. The desire of traditional farmers to experiment with new germplasm has been mentioned above. The parties could, for example, agree to provide the breeding result to the community or on a participatory research arrangement.

On the other hand, the fact needs to be discussed that a patent type sui generis system and even a compensation mechanism covering a huge number of genetic traits in farmers’ varieties, would introduce an important restriction on the free availability to plant genetic components for breeding. The technical2215 and financial burden on seed firms would be particularly important if the option of exclusive rights is chosen. In order to avoid a situation where they would depend on the authorisation of the right-holders to market their breeding result and would incur an undefined additional financial burden, breeders would be obliged to keep track of the presence of the protected genes in their breeding material. In some cases phenotypic selection may suffice to eliminate the protected gene. In others molecular marker and DNA profiling techniques would be necessary. These are increasingly used even by conventional breeders. However, the biotechnology competence of Indian breeding companies is still limited to a small number of firms. Especially small seed companies with mostly localised market coverage, which have inadequate resources to plan for application of biotech tools, will in all likelihood miss on out this development. They would find it increasingly impossible to overcome the technical and financial entry barriers even to conventional plant breeding activity and be definitely confined to seed multiplication and marketing.

Moreover, if exclusive rights are conferred, a public sector agency may not be able to obtain a licence to use a characteristic in a breeding programme designed for unfavourable growing environments. Even if it does, the public research culture “of open sharing of genetic resources, germplasm and research findings between research

2213 The statement of VARMA on the “Golden Triangle for rewarding Creativity” may be recalled. See above, at point B.I.4.2214 According to SRINIVASAN (2001), at 401, “[o]ne MNC [which has participated in the survey mentioned earlier] argued that compensation to farming communities should be based upon contractual arrangements between companies and communities based on the commercial value of the plant genetic resource accessed from the communities, and that the PVP authority should not attempt to regulate such contracts.”2215 Both sui generis solutions, exclusive rights as well as entitlements to benefit sharing, would oblige all breeders who do not wish to incur additional financial burdens to avoid the protected material.

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centres” might be affected.2216 A farmer-breeder may require that a research centre does not provide material containing a proprietary trait to another centre until a licence has been negotiated.

bb) Entitlement to benefit sharing

A mere entitlement to benefit-sharing could be a compromise. Breeding firms without biotechnology capacity could take the risk to develop a variety without knowing whether they use protected genes or not, if the amount of compensation per used gene is reasonable and standardised. Otherwise, breeding firms would in practice face a situation similar to that of exclusive rights as benefit-sharing claims could be so high that the costs for the use of the gene would have been economically prohibitive. Under the present political pressure in India it may be strongly doubted that a central authority would be able to fix ex post a fair compensation.

Stacking of benefit-sharing royalties could become a problem in the long run, when more and more genes are protected, especially if the duration of the right is not limited. There should therefore be an upper limit.

c) Duration

In the absence of a religious aspect of crop germplasm which would prohibit its free use by the general public, there is no compulsory argument pertaining to the nature of the subject matter which would require an indefinite protection. If the system chosen were to confer exclusive rights to use the genetic element in question, it would be difficult, in this interdependent relationship between farmers and breeders, to defend a solution where access to genetic elements provided by farmer-breeders is restricted for an unlimited period, whereas plant varieties may be available on the informal market after a short period and plant variety rights expire after 20 years, patents over transgenic constructs, if this legal option is considered at all, after 25 years. A longer protection period might be justified, however, where the genetic trait is exploited for the first time only after the expiration of the normal duration of the exclusive right. In these cases, a prolongation could be permitted. On the other hand, if farmers are only entitled to benefit sharing a longer or even indefinite protection period might be necessary to make germplasm conservation and enhancement economically interesting for farmers.

IV. Enforcement

The problem of lack of resources of farmer-breeders to enforce their rights has already been mentioned above. Additionally, sui generis right-holders will often have practical problems to monitor infringement. As concerns multiplication of protected stable farmers’ varieties, vigilant NGOs might continue to compare varieties sold by breeders with the registered descriptions and inform farmers. Yet, establishing “enlarged”

2216 On this issue in the international context, see EVENSON (1999), at 1630 et seq. Yet, in his scenario EVENSON assumes that legal insecurity over the legal status would bring germplasm exchange to a halt, which is not necessarily the consequence of exclusive rights.

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derivation or the use of a protected characteristic in a breeding programme is more difficult, as knowledge about the pedigree and/or the genotype(s) of the variety are necessary. Doc. WIPO/GRTKF/IC/4/8, with respect to TK in general, suggests “the possibility of administration of rights through a distinct mechanism, possibly a collective or reciprocal system of administration, or a specific role for government agencies in monitoring and pursuing infringement of rights.”2217

Opportunities for state agencies to identify infringements are offered either by the examination procedure following a PBR application or by the examination for varietal release. In both cases, there are samples at hand and information about the pedigree and varietal characteristics may be required. The Indian PVP legislation obliges breeders to provide “complete passport data of the parental lines from which the variety has been derived” for the purpose of establishing the contribution of landraces.2218 To make this obligation effective also in the case of open-pollinating varieties, where populations and not lines have to be examined, what should rather be required is “wherever possible, the pedigree of the variety and the sources from where the genes contributing to the distinctive character of the variety originated.”2219 Such a clause raises three questions: Are breeders always capable of indicating what ancestors have contributed to the new cultivar? Can breeders be reasonably expected to lay open the pedigree of their cultivars and to provide samples of their variety? And can the information given by breeders be verified?

With respect to the first question, it can be observed that a breeder should always be capable of indicating what ancestor populations he has used, as he normally registers the source populations and the crosses. Yet he may not always know the exact pedigree, especially which genotype out of a population has finally contributed to the new variety. Only if a particular trait of a landrace is interesting to a breeder, will he select for this trait, in which case the contribution is very clear. A further problem is that a breeder may not be able to provide information on the origin of the populations used in the breeding programme. If the material comes from the breeder’s nursery there often will be no record of the original source.2220

The passport data of the parental lines or the pedigree of a variety is very sensitive information.2221 Likewise, the premature availability of samples to competitor firms would facilitate free riding on the applied for technology even prior to its marketing. A survey among 24 breeding companies carried out by SRINIVASAN highlights the concerns related to disclosure of pedigree and deposit of samples:

2217 See Doc. WIPO/GRTKF/IC/4/8, at 30, para. 77.2218 Sec. 18(1)(e) PPVFR Act. 2219 As formulated by Art. 11(h) of the draft “Plant Variety Recognition and Rights Act”, developed and recommended by the participants of the Dialogue on “Methodologies for Recognising and Rewarding Informal Innovation in the Conservation and Utilisation of Plant Genetic Resources” held at the M.S. Swaminathan Foundation, Madras from January 28-31, 1994. See SWAMINATHAN (1994), at 214.2220 This problem is mentioned by ISF (2003), at 1.2221 SHIVA (undated a), at 31 raises this point, albeit sees it in a positive light: „Declaration of parent lines will also help other researchers to use these varieties to develop new and/or improved ones.”

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“19 out of 24 companies stated that they would be willing to disclose the pedigree of the variety sought to be protected and deposit seed samples of the protected variety and parental lines, if that was required under the law. However, these companies said that they would seek assurances regarding the confidentiality of the pedigrees disclosed and effective steps to prevent ‘unauthorised leakages’ of the deposited material. […] Two MNCs clarified that while they would be willing to disclose the parentage of the candidate variety and provide detailed descriptors of parental lines, deposit of samples of seeds of parental lines would be problematic and they would ‘resist’ this requirement.”2222

The fear that the authority in charge could be bribed was also expressed by Mr. MULLICK and Mr. ARORA in personal conversations with the author.2223 Mr. ARORA even stated that the fear of depositing material with the authority would prevent him from seeking protection. Yet, neither the obligation to provide samples, nor the requirement to disclose the pedigree of the new variety is totally foreign to the PBRs system. Most of them currently provide for government-conducted growing tests2224 and the reasons for this choice should not be neglected.2225 The technical questionnaires to be completed in connection with an application for PBRs demands “information on origin, maintenance and reproduction of the variety”.2226 This may include information on the breeding history or the breeding formula.2227 Yet under the UPOV system, such information may only be sought if it serves the examination of the DUS requirements.2228 In a well-managed system neither the requirement to deposit samples nor to disclose the pedigree are unreasonable. On the other hand, the concerns about corruption should be taken seriously. UPOV principally allows for a system relying on growing tests by breeders, but even in such systems, material has to be deposited together with the application.2229 Yet the sui generis regime suggested in this paper might lessen some of the concerns related to the disclosure of the pedigree. It would limit the rights of farmer-breeders to cases where the new variety has been predominately derived from their landrace or an outstanding trait of their variety has been used.

2222 See SRINIVASAN (2001), at 392.2223 Personal conversation with Mr. R.S. ARORA, Secretary General of the Seed Association of India, on August 31, 2001 and with Mr. Deepak MULLICK, Director (International Affairs) of the Association of Seed Industry, on September 9, 2001. It should be noted that Mr. MULLICK gave the interview in his personal capacity and did not express positions of his company or the ASI.2224 Personal telephone conversation with Dr. JÖRDENS, Vice-Secretary General, UPOV, on November 14, 2002.2225 See BYRNE (undated), note 25: “The perceived risk of applicants cheating (a risk not unknown to the patent system) is said to be tempering severely what enthusiasm there may be within UPOV for relying on growing tests conducted by the applicant but under scrutiny from the examining authority.”2226 See, e.g. UPOV Doc. TG/16/4, Annex, at 1, point 4. 2227 Personal telephone conversation with Dr. JÖRDENS, Vice-Secretary General, UPOV, on November 14, 2002.2228 See Art. 12 of the UPOV 1991 Act. On the compatibility of a disclosure requirement, as contained in the Indian Act, with the UPOV Convention and the TRIPS Agreement, see below, chapter 8, D.I.3.b) and D.II.1.b). 2229 See LANGE (2002), at 122, on the US system.

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Concerning the verification of the data supplied by breeders, the analysis of differences and similarities of the pattern of molecular markers allows establishing genetic similarities, parental relationships between genotypes and to check to a certain extent the validity of pedigree data.2230 Yet it would often not be possible to find out with certainty which of several closely related farmers’ varieties has been used. The establishment of the contribution of a specific outcrossing landrace population to a modern variety would be extremely difficult.2231 The problems discussed with respect to the genetic definition of an unstable, heterogeneous landrace come in again here. Even in the case of self-pollinating species, the necessary analysis would require a huge effort. The landrace would have to be broken down into its individual lines and DNA fingerprints for each line would need to be established, which would be time, labour and cost intensive.2232 The situation is different where a characteristic governed by a few genes is concerned. Once the gene sequence has been established, its breeding into a new variety could be established by using a DNA probe. Such tests could be carried out if the source of the trait indicated by the breeder seems unlikely.

F. CONCLUSIONS

Besides an access legislation which more or less accidentally rewards one community where a specific crop resource is conserved, an IP protection regime should be introduced. This paper submits that an effort should be made to allocate individual right to communities. Admittedly, the need to establish an association between a farmers’ variety and a specific community requires a huge administrative effort and funds. It is unclear so far whether there will be enough demand from the industry for stable farmers’ varieties as breeder seed or as parents for high-yielding crosses to make the first part of the protection system suggested here, i.e. the PBRs-type protection of stable farmers’ varieties, financially viable. But the IP approach is worth a try. Individual IPRs guarantee that a link between users and providers of technology can be built up independently of government bodies. A bias of public policy towards certain projects or certain communities may thus be avoided, as the quality of the provided material and the available information would determine the flow of compensation payments.

The Indian lawmakers have the choice between two types of subject matter, namely stable farmers’ varieties and qualitative plant characteristics controlled by a single or a few major genes. It is suggested here that the protection of both is combined.

Stable farmers’ varieties should be protected by a PBRs-like system combined with an additional compensation mechanism where a breeder uses large parts of the genotype of a farmers’ variety.2233 With respect to the multiplication of the stable variety the

2230 See MELCHINGER (1999), slide on “applications [of DNA markers] – pedigree”, and CHOUDHURY et al. (2001), at 250.2231 Personal telephone conversation with Professor Dr. sc.agr. E. MELCHINGER, Head of Department, Institute for Plant Breeding, Seed Science and Population Genetics, University of Hohenheim, Germany, on 14/11/2003. 2232 See id.2233 See above, point E.III.1.b).

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better arguments are in favour of exclusive rights, as this permits leaving the assessment of the value to the market and provides the possibility to give an exclusive licence. Yet, a political effort would need to be made to explain to farmers why only part of their varieties will be eligible for protection under such a system. The compensation mechanism for use of a farmers’ variety in a breeding programme seems preferable to exclusive rights as negotiating beforehand with several communities whose germplasm might contribute to the new variety would be economically prohibitive for plant breeders. The main features of the legislation suggested here can be summarized as follows:

- Registration would be a prerequisite for the emergence of exclusive rights of individual communities. Prior to registration, breeders intending to multiply a stable farmers’ variety or to use it as parent in their breeding work would have to pay a standard compensation to the State as trustee of the right-holders to be determined in the future.

- The right-holders would be established during a registration procedure which would include an opposition phase, where individuals or communities other than the applicant could file claims to the variety. If the developer can be identified, the sui generis exclusive rights are allotted to him. Otherwise it goes to the conservers, unless dissemination exceeds certain limits, in which case the material remains in the public domain and is only subject to the access legislation and the rules of the PGRFA Treaty.

- The DUS requirements would have to be adapted. There would be no criterion of commercial novelty.

- Exclusive rights would only extend to the production, marketing, etc., of propagating material of the protected variety, not to its use in breeding. Yet, a standard compensation would have to be paid to farmer-breeders if a new variety is predominantly derived from the protected farmers’ variety. The duration of these sui generis rights would be unlimited. Neither exclusive rights, nor entitlements to compensation would find application in the relationship to other farmers.

Regarding the protection of the second type of subject matter, namely qualitative plant characters defined by their genetic structure, lawmakers have two options: The first option is to provide for the allocation of exclusive rights. This requires the registration of the protected material and the identification of the right holders as a pre-condition for the emergence of the right, as otherwise breeders would not be able to negotiate a licence with the right-holders before they embark on a 10-year breeding programme using the material concerned. The advantages of the exclusive rights approach have just been mentioned in the context of stable farmers' varieties. The problem of this approach is that in order to be able to obtain the authorisation for using the breeding material at an early stage of the breeding programme, breeders would need to be able to keep track of the genetic components they are using. However, many Indian breeding companies do not have the necessary biotechnological competence yet. The risk to discover only at the end of a breeding programme that the exploitation of the result depends on the authorisation of the owner of the gene could be a strong disincentive for smaller firms to take up breeding. The second option is to provide

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only for an entitlement to benefit-sharing. Again breeders would need to know beforehand what financial obligations they incur. Since many firms are neither able to know if they are using protected genes nor to avoid this material, the compensation should not limited to a standard percentage of the benefits from seed sales.

Both solutions have their merits: The first one would permit to link creative farmers directly with investors and the flow of funds would in all likelihood be more important. Consequently, the incentive for farmers for conserving and enhancing crop genetic resources would be stronger. The second solution is simpler. There is no need for a registration of the protected material or the identification of the right-holders before a gene is actually used in a breeding programme. Further, for breeders, there is no need to keep track of the exact genetic composition of their new variety. The incentive for farmer-breeders would be weaker, but no disincentive for smaller firms would be created. The final decision, which of both solutions is preferable, would depend on the other elements of the Indian IP protection system for plant genetic resources. Only in this overall context can a balance of the involved interests be achieved.

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CHAPTER 8: ANALYSIS OF THE INDIAN PLANT RELATED IPR LEGISLATION

Having described the different arguments and options to provide an appropriate plant related IPR regime for India in chapters 6 and 7, the following chapter will present the response of the Indian legislature to the challenges raised by the needs of different actors of the seed sector. The Indian lawmakers had to face the dilemma of creating an incentive for private plant breeders by increasing appropriability of benefits from R&D investments, while at the same time leaving the system of informal seed supply largely unaffected. At least presently, this supply system is an important safeguard for small and marginal farmers, who for financial or geographical reasons may not have access to formal sources of seed supply. The Indian lawmakers further had to find a workable mechanism to compensate farmers for their efforts in germplasm conservation and enhancement. “Workable” means that breeders are not unduly burdened with legal uncertainty and costs. It also means that the protection requirements can be generally met by germplasm enhanced by creative farmers, while at the same time preventing that overly broad rights are attributed. Moreover it means that a significant part of the funds paid by users of this germplasm ultimately arrive in farming communities and do not disappear entirely in a complicated registration mechanism. Finally, the Indian lawmakers had to decide whether or not the Indian domestic breeding and biotechnology industry is ready for international competition for patent rights.

In order to provide the necessary background for analysing certain features of the current plant related IP regime, part A of this chapter will briefly describe the development of patent legislation in the last decades and the emergence of plantvariety legislation under the pressure of the international obligations created by the TRIPS Agreement. Part B will present the patent protection that is presently available for plant related inventions with a focus on patentable subject matter. Part C will analyse the salient features of the Protection of Plant Varieties and Farmers’ Rights Act (PPV&FR Act).2234 While finding the legal solutions suitable to the national needs, the Indian legislator had to take the international legal framework into consideration. Part D will therefore discuss the compliance of the Indian plant related IPR legislation with existing international obligations and with the commitments that India would make by joining the UPOV Convention.

A presentation of the Indian plant related IPR regime would not be complete without mentioning the Biological Diversity Act, 2000. This Act introduces a system of prior approval by a National Biodiversity Authority if a non-Indian or body with foreign equity “obtains any biological resource occurring in India or knowledge associated thereto for research or for commercial utilization or for bio-survey and bio-utilization”.2235 A complete analysis of this Act would go beyond the scope of this

2234 Available at http://www.agricoop.nic.in/PPV&FR%20Act,%202001.pdf, last visited 14 April 2005.2235 See Sec. 3 of the Biological Diversity Act.

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paper, but some of its provisions that have a potential overlap with the provisions of the PPV&FR Act or the Patent Act will be briefly explained.

And finally the Seeds Bill 2004 needs to be mentioned in the context of the seed related IPR regime as it could undermine the farmers’ privilege.2236

A. LEGISLATIVE HISTORY

I. Patent legislation

India’s patent policy is in the midst of a fundamental transformation.2237 Until the mid-1990s this policy was marked by the conclusions of two expert committees that were established after Independence to evaluate the patent system in place which was modelled after British law. The Patent Enquiry Committee (1948-50) stated that “the Indian patent system has failed its main purpose, namely to stimulate inventions among Indians and to encourage the development and exploitation of new inventions for industrial purposes in the country so as to secure the benefits thereof to the largest section of the public”.2238 The Ayyangar Committee (1957-59) confirmed the analysis of the first report that foreigners held 80-90% of the patents in India and that more than 90% were not worked in India. The committees concluded that foreign firms were exploiting the system to achieve monopolistic control of the market. The Indian Patent Act of 1970, which was based on the recommendations of the two Committees, consequently contained specific features to counter this imbalance between protection for (foreign) innovations and the public interest determined by the development stage of India as a technology imitating country. These features included the non-availability of product patents in the area of food, pharmaceuticals and chemicals, short patent terms of 14 years and even only 5-7 years in chemicals and drugs, and an extensive compulsory licensing and license of right regime.

The increasing pressure of industrialized countries by the end of the 1980s on the Indian Government to provide for stronger protection provoked a heated public debate and a broad opposition in the Indian civil society. It was widely felt that the “national sovereignty to adopt laws and policies best suited to [India’s] development” was at stake.2239 The contents of the “Dunkel Draft”,2240 combined with somewhat simplified and exaggerated explanations of its implications, again generated strong public reactions. Despite these protests, avoiding a detailed debate in Parliament, the Indian Government accepted the WTO package. In the following years the Government was caught between its international obligations and the broad resistance of

2236 The Bill is available at http://agricoop.nic.in/seeds/seeds_bill.htm, last visited 1 July 2005.2237 On the following see RAMANNA (2002b), at 2065/2066, and BALDIA (2003), at 438 et seq.2238 Government of India, Patent Enquiry Committee, Ministry of Industry and Supply, Interim Report, August 1949, as quoted in RAMANNA (2002), at 2065.2239 NATIONAL WORKING GROUP ON PATENT LAWS (1992), at para. 1.5. The National Working Group on Patent Laws is an NGO constituted in 1988 composed of industrial associations, scientists, legal professionals, journalists, health organisations, Members of Parliament and leaders of political parties. 2240 The draft final text embodying the results of the Uruguay Round of Multilateral Trade Negotiations tabled during the Brussels Ministerial Meeting.

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parliamentarians of both houses against the mandated changes.2241 This slow implementation process resulted in India’s default on its implementation deadlines under the TRIPS Agreement.2242

Finally, in the midst of much public debate the Indian legislature adopted two Patent Amendment Acts in 1999 and 2002 respectively aiming at bringing the Patent Act 1970 in line with the obligations under the TRIPS Agreement.2243 The Patents (First Amendment) Act 1999 introduced above all a facility (“mailbox”) to receive product patent applications in the fields of pharmaceuticals and chemicals and a system of exclusive marketing rights as required by Art. 70(8) of the TRIPS Agreement. The Patents (Second Amendment) Act 2002 brought a number of important substantive and procedural changes. These changes reflect both the endeavour to adapt Indian patent law to international standards and the need to secure public acceptance by extending safeguards against possible abuse of patent rights. Thus, to name a few examples, the patent term is now 20 years for all categories of inventions; the invention definition has been made more generic to accommodate new technologies; certain exclusions from patentability have been removed; the burden of proof in case of suits concerning infringement of process patents may be reversed by the court.2244

On the other hand, the compulsory licensing provisions permitting, in particular, the grant of compulsory licence where a patented invention is not worked in the territory of India have been confirmed. Sec. 107A of the amended Act brings in a “Bolar” provision and permits parallel importation.

In order to make the Indian legislation compliant with those TRIPS provisions that have become binding as of January 2005, in December 2004 the President promulgated a temporarily limited Patents (Amendment) Ordinance 2004 in exercise of his powers under Art. 123 of the Indian Constitution.2245 The Patents (Third Amendment) Bill 2003 had not been passed in time by Parliament. After promulgation of the Ordinance, the Government sought approval for the contained amendments which were introduced in Parliament as Patent (Amendment) Bill 2005. Finally, the Lok Sabha approved the controversial Bill on March 22, 2005, the Rajya Sabha one

2241 See, e.g. DASGUPTA (1999), at 988 et seq.2242 In 1996 and 1997 respectively, the United States and the European Community brought disputes against India before the WTO and were largely successful. See WT/DS 79/R and WT/DS50/AB/R.2243 The Patents (First Amendment) Act, 1999, Act No. 17 of 1999, effective since 26 March 1999. The Patents (Second Amendment) Act, 2002, Act No. 38 of 2002, effective since 25 June 2002.2244 See Sec. 104A.2245 The Patents (Amendment) Ordinance, 2004, No. 7 of 2004, Gazette of India No. 40, 26 December 2004, is available at www.patentoffice.nic.in/ipr/patent/ordinance_2004.pdf (last visited 4 March 2005). Although coming from the Executive, an Ordinance has the same effect as an Act of Parliament, however is limited in time. Presidential Ordinances normally expire six weeks after the reassembly of Parliament (see Art. 123(2)(b) of the Indian Constitution). According to Indian press statements, the Ordinance would have lapsed on 8 April 2005. See e.g. India Daily, "Patents Bill: Govt. takes Left on board", 19 March 2005, available at http://www.indiadaily.com/breaking_news/28564.asp, last visited 3 May 2005.

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day later.2246 The Patents (Amendment) Act 2005 received the assent of the President on April 4, 20052247 and has retroactive effect as from January 1, 2005 on.2248

The Act is in large parts similar to the Ordinance. Yet, the Government had to compromise on a number of noteworthy issues in order to secure the agreement of the left.2249 The definition for "inventive step" has been reframed2250 and "the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance" has been excluded from patentability.2251 The Indian generic industry was successful in maintaining the status quo for applications in the "mailbox". Those enterprises which have already made significant investment and were, prior to January 1, 2005, already producing the concerned pharmaceuticals waiting in the mailbox facility to be patented will be allowed to continue doing so after grant of the patent on payment of "reasonable royalty" to the patent-holder.2252 The Ordinance had only excluded infringement proceedings concerning the period prior to January 1, 2005.2253 Moreover, a clarification concerning the patentability of the technical application of software to industry or a combination of software with hardware, which had been introduced by the Ordinance, has been omitted in the Act.2254

II. Plant varieties and farmers’ rights legislation

Although discussions on PBRs protection have been initiated by the seed industry as early as 1989,2255 the decisive impetus came from Art. 27(3)(b) of the TRIPSAgreement. The inclusion of PBRs in the “Dunkel Draft”2256 provoked a broader public debate due to campaigns initiated by NGOs, especially farmer organisations, which protested against the potential impacts of the WTO obligations on the Indian agricultural sector.2257

2246 See the information on the website Patentmatics, "Patents Bill approved", New Delhi, March 23, 2005, available at http://www.patentmatics.org/news2005.htm, last visited 4 May 2005. 2247 See The Gazette of India, New Delhi, 5 April 2005, is available at www.patentoffice.nic.in/ipr/patent/patent_2005.pdf. 2248 See Sec. 1(2) of the Act. The Patents (Amendment) Act 2005, No. 15 of 2005, available at www.patentoffice.nic.in/ipr/patent/patent_2005.pdf.2249 For a good résumé see, Patentmatics, "Centre to curb evergreening of patents in amended Bill -Domestic firms may produce mailbox drugs by paying reasonable royalty", available at http://www.patentmatics.org/news2005.htm, last visited 4 May 2005.2250 See Sec. 2 of the Patents (Amendment) Act, 2005. The text will be cited below.2251 See Sec. 3 of the Patents (Amendment) Act, 2005.2252 See new Sec. 11A(7), 3rd proviso.2253 See Sec. 10(c) of the Patents (Amendment) Ordinance 2005.2254 See Sec. 3(b) of the Patents (Amendment) Ordinance 2004, as compared to Sec. 3 of the Patents (Amendment) Act 2005.2255 See the recommendations developed by the “Second Seed Seminar (1989) on Plant Variety Protection Pros and Cons” organised by the Seed Association of India. SAI (1989), at 19.2256 See above, note 2240.2257 Several protest marches mobilising hundreds of thousands of farmers took place in 1992, 1993. See, e.g. SHIVA/HOLLA-BHAR (1993), at 1; MENON (1993), at 106; RANE (1993); TELLIS (1993).

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Reflecting the international development that had taken place in the FAO, the link between proprietary rights granted to breeders on the one hand and claims of farmers conserving and enhancing crop genetic resources to a reward for their contributions to modern breeding on the other, soon emerged as principal feature of legislation that would find a consensus. The second major claim of PBR critics was to clarify the UPOV 1978 farmers’ privilege in order to allow farmers to continue their traditional practice of selling non-branded seeds.2258 The M.S. Swaminathan Foundation developed a model legislation2259 combining a reward mechanism for farmers2260 and a right of “any person” to “sell within a farm or any other place at which plants of that variety are grown, any plants or reproductive material of plants of that variety at that place”2261 with more conventional features modelled after the UPOV 1978 Convention.

The Madras Model Act left its mark on the first draft by the Ministry of Agriculture which was submitted to Parliament in 1993.2262 However, the reward mechanism proposed by the Madras Model Act was diluted. The 1993 government draft contained only a vague clause on farmers’ rights, giving a national Authority, composed mainly of ex-officio members from the administration concerned with plant genetic resources and breeding, the discretion “when deemed appropriate, [to] require the breeder seeking protection under this Act, to provide for rewards and/or compensation to such communities or clusters, integrating considerations of equity and ethics […]”.2263

Concerning seed sales by farmers, the draft introduced the distinction between branded and non-branded seed which is still the frontier line of the farmers’ privilege in the PPV&FR Act.2264 Additionally the draft introduced the concept of protection for “extant varieties”, “which have been released and/or notified by the government, […] under the Seeds Act”.2265 Given the large farmers’ exemption, unsurprisingly, the draft was criticised by the private industry as being too weak. At the same time, some NGOs argued that it did not sufficiently protect farmers. SHIVA, for instance,

2258 See e.g. SWAMINATHAN (1995a), at 379 et seq.2259 A draft law was submitted to the participants of a workshop, which included eminent representatives of the seed industry, of the government and of NGOs. Based on their recommendations a “Model Act” was finalised. Both draft laws are published in SWAMINATHAN (1995a), at 252 et seq. and at 403 et seq., respectively.2260 See Art. 8 and 9 of the Model Act. Art. 8(3) provides that “[t]he identification of the donors of the genes contributing to the success of a new variety will be based on the recommendation of the National Institute for Plant Variety Testing and Evaluation, which will analyse the pedigrees and other relevant details relating to the parentage of varieties submitted for release and identify, to the extent possible, the locations from which the useful parental material originated.” Art. 9 provides that “[f]ive per cent of the gross income from the sale of seeds of the new variety will constitute royalty. Such royalty shall be paid to the farmer-innovators, as per the procedures outlined under Article 23, or, if they cannot be identified, it shall go to the Gene Fund”.2261 See SWAMINATHAN (1995a), at 277, Art. 29(1)(d).2262 This draft was made available to the public by SHIVA/HOLLA-BHAR (1993). 2263 See Sec. 22(i) of the Draft Plant Varieties Act, 1993. On the Authority, see id., Sec. 32.2264 Sec. 27(c) of the Draft Plant Varieties Act, 1993. See also Clause 22(iii). On the present provisions, see below C.III.2.d).2265 See Sec. 9 of the Draft Plant Varieties Act, 1993.

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criticised that the classical DUS criteria prevented the protection of farmers’varieties.2266

Several revised versions not available to the wider public circulated between Ministries, ICAR, industry associations and farmers’ associations.2267 In December 1999 a new version, in its basic conception quite similar to the 1993 draft,2268 was introduced in the Lok Sabha and referred to a Joint Parliamentary Committee.2269 After considering a large number of suggestions received from various public or private agencies, associations and individuals, “the Committee felt that the Bill has very inadequate provisions for protecting the interest of farmers”.2270 The revised draft, introduced in the Lok Sabha in August 2001, contained two outstanding modifications:2271 first, the possibility of farmers to register heterogeneous local varieties and enjoy the same exclusive rights as formal sector breeders; second, a separate chapter on farmers’ rights in the largest sense, partly regrouping elements already present in the 1999 Bill, partly introducing new elements.2272 The farmers’ privilege was clarified by reintroducing the reference to brown-bag sales.

In late August 20012273 both Houses of Parliament finally passed the Protection of Plant Varieties and Farmers’ Rights Bill, 2001, thus ending the eight year long legislative process. The President has given his assent to the legislation and the Government has notified the Protection of Plant Varieties and Farmers Rights Rules, 2003,2274 but the Act is still awaiting the enactment of regulations by the Authority to

2266 See SHIVA (1993), at 9.2267 Personal conversation with Mr. Deepak MULLICK, Managing Director, Advanta India Ltd., Director (International Affairs) of the Association of Seed Industry, on 9 September 2001.2268 Like the 1993 draft, its PBR regime was principally modelled after the UPOV Convention. The farmers’ privilege however recognized the “right of a farmer to save, use, exchange, share or sell his farm produce of a variety protected under this Act”, while at the same time excluding sales “for the purpose of reproduction under a commercial marketing arrangement” (see Sec. 31 of the 1999 draft). The notion of “essential derivation” was introduced in the legislation, yet in a way different from UPOV (See Sec. 22 of the 1999 draft and below, C.III.1c). Further, like the 1993 draft, the 1999 version contained a reward mechanism for farmers who have contributed to the development of a protected variety by providing breeding material. The concept was concretised by stipulating details on procedure and by providing for a Gene Fund to which all contribution of formal sector breeders would flow before being redistributed to the farmers concerned (see Sec. 26 and 48). The 1999 draft also maintained the principle of protection of extant varieties (see Sec. 14(1)).2269 See LOK SABHA (2000), at iii/iv.2270 See LOK SABHA (2000), at vi.2271 Other amendments concerned, for instance, the composition of the Authority, to which representatives of the civil society were added. See LOK SABHA (2000), at vii.2272 For instance, a liability clause which had been omitted from the 1999 draft was reinserted, obliging breeders to disclose the expected performance under given conditions of the sold variety. See Sec. 40(9) of the Bill as redrafted by the Joint Committee. The benefit-sharing procedure under Sec. 41 of the final Act was also introduced at this point. On this procedure, see below, at C.III.2.b)aa) – cc).2273 The Lok Sabha passed the Bill on 9 August 2001, the Rajya Sabha on 28 August 2001.2274 Available at http://agricoop.nic.in/seeds/farmersact2001.htm, last visited 13/04/04.

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render it operative. The Authority is in the process of being set up by the Ministry of Agriculture.2275

In the meanwhile the struggle between seed industry and farmers over the right balance between stimulating formal sector breeding progress and safeguarding traditional practices of seed supply continues in a different “arena”. The Seeds Bill 2004 was introduced in the Rajya Sabha on December 9, 2004. The intention to repeal the current Seed Act 1966 was already set out in the National Seeds Policy 2002,2276

but at that time the intention seemed to be to exempt farmers completely from the obligations under this seed quality control regime.2277 If implemented in a strict waythe new legislation could jeopardize the farmers’ privilege to freely save, exchange and sell unbranded seed.2278

B. PATENT PROTECTION FOR PLANT RELATED INVENTIONS

After the three recent revisions outlined above the Patent Act 1970 now provides for protection of subject matter which is of interest to plant genetic engineers. At the same time it leaves important categories of inventions in the area of plant biotechnology out of the ambit of patent law.

I. The revised invention definition

Inventions are defined under Sec. 2(1)(j) of the revised Patent Act 1970 as “a new product or process involving an inventive step and capable of industrial application”. The former more restrictive definition enumerating categories has been abandoned in the Patents (Amendment) Act 2002.2279 Based on the previous definition, the Indian Patent Office had generally taken the view that claims for DNA sequences had to be refused.2280 Due to the amendment, living organisms and microbiological components thereof, including regulatory and coding DNA regions, are now able to meet the invention definition. Likewise, processes of conventional breeding and biotechno-logical plant transformation may be considered inventions in this sense. Yet, the effect of the extension of the invention definition is limited by the amendments of Chapter IIof the Patents Act enumerating the “inventions not patentable”.

2275 See BHUTANI/KOHLI (2004), at 3 of 4. The Annual Report 2004-2005 of the Department of Agriculture and Cooperation, Ministry of Agriculture only states that the Authority “is likely to be set up shortly”. See GOVERNMENT OF INDIA (2004-2005), at 41.2276 The National Seeds Policy, 2002 is available at http://agricoop.nic.in/seedpolicy.htm, last visited 22 June 2005.2277 See id., at 3.10.2278 See below, point C.II.2.d).2279 Prior to the Patents (Amendment) Act 2002, Sec. 2(1)(j) read as follows: “‘invention’ means any new and useful - (i) art, process, method or manner of manufacture; (ii) machine, apparatus or other article; (iii) substance produced by manufacture”.2280 See GABRIEL/HARIHARAN (2003), at 83; WATAL (2000a), at 55. A landmark decision of the High Court of Calcutta had already challenged this interpretation in 2002. On this decision, see e.g. TIFAC (2002); PADMANABHAN (2002).

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II. Exclusions from patentability

1. Sec. 3 of the Patents Act, 1970

The revised Sec. 32281 excludes inter alia the following types of subject matter:

“The following are not inventions within the meaning of this Act, -(b) an invention the primary or intended use or commercial exploitation of

which would be contrary to public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment;

(c) the mere discovery of a scientific principle or the formulation of an abstract theory or discovery of any living thing or non-living substance occurring in nature;

(d) the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or mere new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.Explanation.--For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy;

(e) a substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance; […]

(h) a method of agriculture or horticulture; […](j) plants and animals in whole or any part thereof other than micro-

organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals; […]

(p) an invention which, in effect, is traditional knowledge or which is an aggregation or duplication of known properties of traditionally known component or components.”

The most relevant exclusions in the field of plant breeding and plant genetic engineering will be Sub-sections (c) and (j). Cases where Sub-section (p) could apply are difficult to imagine. Plant genes, which could be considered as “traditionally known components” in the sense that the resulting plant characteristic was known by farmers, are excluded from patentability anyway.

2281 The principal modifications were made by the Patents (Second Amendment) Act 2002. The Patents (Amendment) Act 2005 brought about further minor changes.

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The interpretation of the term “discovery” may give rise to controversial issues. Whereas some commentators hold that “migroorganisms that have been isolated, characterized and at least one utility specifically set out, can be protected”,2282 others do not consider that isolation would be a sufficient human intervention to justify patent protection.2283 The same problem arises with respect to DNA isolated from a micro-organism. This DNA could fall under the terms of Sub-sec. 3(c) “non-living substance occurring in nature”. On the other hand, it would be difficult to argue that a synthesised DNA molecule that has the same gene sequence is a discovery. Nevertheless such synthesised DNA molecules would probably not be patentable as the technical contribution determining the inventive step could not be seen in the discovery of the DNA sequence. A chimeric gene construction or an otherwise modified DNA region which consequently differs from naturally occurring DNA sequences could not be qualified as discovery. Yet, again, the inventive step could be lacking if the modification of the naturally occurring gene by combining it, for instance, with a target plant compatible promoter is a mere routine operation.

Regarding Sub-sec. (j), it is clear that transgenic plants may not be claimed. The same applies without difficulty to plant DNA fragments, in particular plant genes. But if a chimeric gene construction comprising the coding sequence of a micro-organism gene is transferred into a plant, does it become a part of a plant in the above sense? The intensions of the legislature and especially the fact that the Patent Act provides for no farmers’ privilege, suggest an affirmative answer. Yet, the wording of Sub-sec. (j) would permit both interpretations.

Intentionally or unintentionally the legislature has thus delegated a few crucial questions to patent offices and courts. This raises concerns as the legal insecurity may not only increase the transaction costs for technology transfer between genetic engineers and breeders but also make farmers uncertain about their rights and thus impede informal sector seed supply.2284

2. Sec. 5 of the Patents Act, 1970

Until the 31 December 2004, Sec. 5(1) provided for the exclusion of product patent protection in the case of inventions –

“(a) claiming substances intended for use, or capable of being used, as food or as medicine or drug, or

2282 See GABRIEL/HARIHARAN (2003), at 90.2283 Mr. TRIPATHI, who is associated with the Department of Biotechnology, Government of India, for instance, took this view in a personal communication dated 9 July 2004. It should be noted that he expressed his personal views, not necessarily those of the Government. 2284 While a limitation of exchange of unbranded genetically modified seed may be desirable in certain cases (Bt-crops, for instance, require specific husbandry practices), the danger of any unclear or complex legal restriction on seed exchange is that to avoid the risk of sanctions farmers will modify their practices even in areas which are not governed by the legal provision at issue.

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(b) relating to substances prepared or produced by chemical processes (including alloys, optical glass, semi-conductors and inter-metallic compounds)”.

What made this exclusion relevant in the present context is an explanation introduced by the Patents (Amendment) Act 2002 which specified that “chemical processes” include “biochemical, biotechnological and microbiological processes”. If DNA molecules can be considered as “substance” they fall under this exception as they are indeed “prepared or produced by chemical processes” in this sense. The limits of patentability were thus not entirely clear where the claimed DNA is not of plant origin (and thus not excluded unambiguously under Sec. 3(j)), but, for instance, of bacterial origin.

The TRIPS Agreement obliges its Member States to provide for product patents in all fields of technology with the exception of animals and plants by January 2005.2285 The process for amending the Patent Act by removing the exceptions under Sec. 5 hadbeen initiated as early as 2003.2286 But in an endeavour to secure maximum acceptance among stakeholders, a consultation process with industry organisations, NGOs and individuals had been launched.2287 The legislative process still not being completed by the end of December, the Indian Government promulgated the Patents (Amendment) Ordinance 2004.2288 Just as the Patents (Amendment) Ordinance 2004, the Patents (Amendment) Act 2005 now omits Sec. 5.2289 The effect of this provision is retroactive as of January 1, 2005.2290

3. Sec. 48(b) of the Patents Act, 1970

Under Sec. 3(j) only “essentially biological processes for production or propagation of plants” are excluded from patentability. Consequently, plant transformation processes using recombinant DNA technology are without doubt patentable. Whether molecular marker assisted breeding falls under this exception is an open question which will have to be decided by patent authorities and courts.

The Patents (Amendment) Act, 2002 introduced the extension of rights conferred by a process patent to the “product obtained directly by that process” as this was mandatory under Art. 28(1)(b) of the TRIPS Agreement. Yet, a proviso at the end of Sec. 48(b) dramatically reduced the effect of this clause in the area of plant genetic engineering

2285 For the intervening period, the Patent (Amendments) Act, 1999 had put in place a “mailbox” mechanism for accepting such product patent applications, with effect retroactively from 1 January 1995. These applications are examined since 1 January 2005. For the intermediate period exclusive marketing rights (EMR) were granted if certain conditions were met. This mechanism was geared to pharmaceutical inventions. 2286 The Bill was introduced in the Lok Sabha on the 22 December 2003 and referred to the Department Related Parliamentary Standing Committee on Commerce for examination and report. See PARLIAMENT OF INDIA (2004).2287 See id.2288 See above note 2245.2289 See Sec. 4 of the Patents (Amendment) Act, 2005.2290 See Sec. 1(2) of the Patents (Amendment) Act, 2005.

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until recently: Exclusive rights with respect to the product directly obtained are only conferred under the condition “that the product obtained is not a product in respect of which no patent shall be granted under [the Patent] Act.”2291 This proviso has now been omitted by the Patents (Amendment) Act 2005.2292

Nevertheless, the meaning of “product obtained directly by [the patented] process” not being specified, courts might come to the conclusion that the use of the result of this process by breeders to develop a new variety using conventional breeding techniques is not be subject to the authorisation of the patent holder.

III. Disclosure of origin requirement

To balance the interests of life science industry and of communities conserving biodiversity, an obligation to “disclose the source and geographical origin of the biological material in the specification, when used in an invention” has been introduced.2293 However, according to the wording of Sec. 10(4)(d)(ii)(D) this obligation only applies where the applicant refers to biological material in his specification which cannot be sufficiently described to enable the skilled person to perform the invention and therefore has to be deposited with an authorised depository institution.2294 It may be recalled that plant related biotechnological inventions generally do not necessitate depositing biological material in order to fulfil the enabling disclosure requirement.2295

It is further interesting to note that the Patent Act does not link this obligation to the requirements under the Biodiversity Act. The Indian Patent Act does not contain a prior informed consent requirement, which is often claimed by commentators. While the Biological Diversity Act, 2000 stipulates that “no person shall apply for any intellectual property right […] in or outside India for any invention based on any research or information on a biological resource obtained from India without obtaining previous approval of the National Biodiversity Authority […]”,2296 the omission of this obligation does not seem to have any impact on the validity of the patent. This solution avoids potential conflicts with the TRIPS Agreement.

The exact area of application of the Biodiversity Act, especially in the field of plant breeding, is not clear. Prior approval by the National Biodiversity Authority is necessary where a foreigner or company with foreign participation “obtains any biological resource occurring in India or knowledge associated thereto”.2297 This suggests that not any use of this material or knowledge is covered, but only the transfer of tangible subject matter or knowledge, which is not already in the possession of the

2291 On the TRIPS conformity of this clause, see below at D.II.2.b).2292 See Sec. 36 of the Patents (Amendment) Act, 2005.2293 Sec. 10(4)(d)(ii)(D) of the Patents Act, as amended by Sec. 8 of the Patents (Amendment) Act, 2002.2294 See Sec. 10(4)(d)(ii).2295 See above, chapter 3, B.IV.4.e).2296 Sec. 6 (1) of the Biological Diversity Act.2297 Sec. 3 of the Biological Diversity Act (emphasis added).

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foreign firm. It would seem that breeding firms which have their own germplasm collections containing farmers’ varieties may continue to use them for breeding and biotechnological R&D. On the other hand, since the “genetic material” of plants occurring in India is covered by the definition of “biological resources”,2298 apparently even obtaining a HYV from another foreign company, an international germplasm bank or an Indian public sector institution will fall under the approval regime, if genetic components occurring in Indian landraces are contained. This raises the question of the relationship between the regime under the Biodiversity Act and the Multilateral System of Access and Benefit Sharing established by the FAO International Treaty. Apparently the Indian legislature was not aware of the constraints created by this Treaty.2299

IV. Compulsory licensing and revocation

The Indian Patent Act contains detailed provisions on compulsory licensing. These provisions have always played an important role in the framing of patent legislation, but a rather secondary role in practice.2300

A key provision is Sec. 84, pursuant to which the Controller may grant compulsory licences on the grounds “that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or that the invention is not available to the public of India at a reasonably affordable price, or that the patented invention is not worked in the territory of India”.2301 Any interested person may make an application for a compulsory licence any time after the expiration of three years after the grant of a patent.2302 Sec. 92 permits the Central Government “in circumstance of national emergency or circumstances of extreme urgency or in case of public non-commercial use” to declare any time after the grant of a patent that it is necessary to grant a compulsory license.

The concept of “reasonable requirements of the public” as defined in Sec. 84(7) is very broad. The reasonable requirements of the public are not satisfied, for instance, where due to the refusal of the patentee to grant a licence “the trade or industry of any person or class of persons trading or manufacturing in India is prejudiced”,2303 or “a market for export of the patented article manufactured in India is not being supplied or developed”,2304 or “the patented invention is not being worked in the territory of India

2298 According to Sec. 2(c) “‘biological resources’ means plants, animals and micro organisms or parts thereof, their genetic material and by-products with actual and potential use or value […]”.2299 See below D.III.2300 According to BALDIA(2003), at 443, the compulsory licensing provisions have only been applied 10 to 15 times in the last two decades.2301 See Sec. 84(1)(a) – (c) of the Patents Act. Furthermore, to secure the interests of the Indian generic industry, the Patents Act now contains a provision in Sec. 92A permitting compulsory licences for manufacture and export of generics to other developing countries. This is however, only relevant for the pharmaceutical sector.2302 See Sec. 84(1) of the Patents Act.2303 See Sec. 84(7)(a)(i).2304 See Sec. 84(7)(a)(iii).

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on a commercial scale to an adequate extent or is not being so worked to the fullest extent that is reasonably practicable”.2305

In considering the application, the Controller shall inter alia take into account “whether the applicant has made efforts to obtain a license from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit”.2306 This requirement is waived in the case of national emergency or other circumstances of extreme urgency or in the case of public non-commercial use or if it has been established that the patentee has indulged in anti-competitive practices.2307

In fixing the terms and conditions of the compulsory licence, the Controller “shall endeavour to secure” inter alia that the remuneration is reasonable, that the licence is non-exclusive and non-assignable and that the licence is for the balance of term of the patent, unless a shorter term is consistent with the public interest.2308

Under Sec. 85 of the Patent Act, the Controller may revoke a patent after expiration of two years from the date of the order granting the first compulsory license if the grounds for the grant continue to exist.

V. Conclusions

Even after the further amendment of the Patent Act 1970 by the Patents (Amendment) Act 2005, there are still important gaps in the patent protection for plant related biotechnological inventions. The Indian legislature has chosen to exclude plants and parts thereof, i.e. plant genes or regulatory DNA sequences, from patentability. It is unclear whether a claim to non-plant DNA regions may cover a plant containing this DNA or whether genes of non-plant origin used in plant transformation may only be claimed in their isolated form or as part of the source microorganism or of a host microorganism. The exclusion of products prepared or produced by chemical processes, including biotechnological processes, will has been removed the Patents (Amendment) Act 2005.

Plant transformation processes using recombinant DNA technology are without doubt patentable. Yet, only the repetition of the protected process is prevented. The meaning of “product obtained directly by [the patented] process” is not specified and may not cover biological material derived by natural propagation from products directly obtained by the patented process.

A noteworthy particularity of Indian patent law is its extensive compulsory licensing mechanism, which, however, has played only a minor role in practice in the past decades.

2305 See Sec. 84(7)(d).2306 See Sec. 84(6) of the Patents Act.2307 Id., proviso.2308 See Sec. 90(1) of the Patents Act.

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C. SALIENT FEATURES OF THE PROTECTION OF PLANT VARIETIES AND FARMERS’ RIGHTS ACT (PPV&FR ACT)

The most outstanding characteristic of the PPV&FR Act is its endeavour to take into account in one law the interests and protection needs of three groups of stakeholders, namely farmers, private sector breeding firms and public sector breeding organizations. It thus combines three different protection regimes, namely a PBR regime in the conventional sense, a protection regime for HYV bred in the past, mainly by the public sector, and a protection regime for landraces developed and conserved by farmers.

Accordingly, three types of varieties can be registered under Sec. 14 of the Act, leading to the grant of exclusive rights over such variety:2309 First, Sec. 14(a) provides for the registration of varieties of such genera and species as specified by the government. This corresponds to the new varieties which are conventionally protected under a UPOV 1978 regime limiting protection to certain genera and species. A second type of varieties which can be registered under Sec. 14(b) are so-called “extant varieties”. The definition of “extant variety” comprises four alternatives: (i) varieties “notified under section 5 of the Seeds Act, 1966”; (ii) “farmers’ varieties”; (iii) “varieties about which there is common knowledge”; and (iv), in order to close any remaining gap, “any variety which is in the public domain”.2310 Sec. 14(c) restates the possibility to register a farmers’ variety, which is probably due to the political will to make it as clear as possible that farmers are considered equal to formal plant breeders. The concept of extant varieties goes back to the initiative of the ICAR.2311 Varieties notified under Sec. 5 of the Seed Act, 1966 were in the past mostly public varieties.2312

It will permit the public sector to require seed producers which are marketing varieties previously released by the public sector to enter into a licensing agreement. The alternative (iii) has been included at the suggestion of the private seed industry which wanted its already marketed varieties to be treated the same as released public varieties.

A clear priority of the Act is the protection of the interests of farmers. The different aspects of this protection are dealt with under the headword of “farmers’ rights” in chapter VI of the Act. This concept includes, most importantly, the limitation of the rights conferred to breeders by a broad farmers’ privilege, the already mentioned protection of farmers’ varieties by PBRs, as well as the implementation of a benefit sharing mechanism for registered and unregistered farmers’ varieties.2313

In the following section I will describe the institutions to be set up under the Act and their respective responsibilities. Sections II to IV will explain the features of the three

2309 See Sec. 14 of the PPV&FR Act.2310 See Sec. 2(j) of the PPV&FR Act.2311 Personal conversation on 3 September 2001 with Dr. S. BALA RAVI, then Assistant Director General (IPR), ICAR.2312 Personal conversation on 31 August 2001 with Mr. R.S. ARORA, then Secretary General of the Seed Association of India.2313 For details, see below, at C.III.

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regimes designed to protect breeders’ rights, farmers’ rights and the interests of breeders of varieties released in the past.

I. Authorities administering the Act

For the purpose of the Act, three new bodies will be set up, namely the “Protection of Plant Varieties and Farmers’ Rights Authority”,2314 the “Plant Varieties Registry”,2315

and the “Plant Varieties Protection Appellate Tribunal”.2316

The Authority will have the general duty “to promote, by such measures as it thinks fit, the encouragement for the development of new varieties of plants and to protect the rights of the farmers and breeders”.2317 It will have tasks relating to the registration of plant varieties as well as relating to the benefit-sharing mechanism. In particular the measures of the Authority may provide for documentation and cataloguing of registered varieties, farmers’ varieties or even all varieties of plants.2318 Its measures may ensure that seeds of varieties registered under the Act are available to farmers and provide for compulsory licensing.2319 The National Register of Plant Varieties is kept under control and management of the Authority.2320 One of the most important responsibilities of the Authority is the determination of benefit sharing.2321

Furthermore it has dispute resolution functions in cases of dispute on the entitlement of a licensee or agent.2322

Most of the members of the Authority will be ex-officio members belonging to government departments, the ICAR, or the National Bureau of Plant Genetic Resources, others are representatives of groups who have an interest in seed production and use and will be nominated by the Government.2323 This composition has been criticised from the NGO side. Dr. Suman SAHAI stated that she would have liked to see many more experts and stakeholders as members of the Authority, as they have more knowledge and interest than ex-officio members.2324 It seems indeed questionable whether all members of the Authority will possess the knowledge necessary to decide highly technical questions, such as the essential derivation of one variety from another.

The Registrar of the Plant Varieties Registry is entrusted with most responsibilities in the registration proceedings.2325 The Appellate Tribunal will hear appeals against

2314 See Sec. 3 of the PPV&FR Act. 2315 See Sec. 12 of the PPV&FR Act.2316 See Sec. 54 of the PPV&FR Act.2317 See Sec. 8(1) of the PPV&FR Act.2318 See Sec. 8(2)(b)-(d) of the PPV&FR Act.2319 See Sec. 8(2)(e) and Sec. 47 et seq. of the PPV&FR Act.2320 See Sec. 13(2) of the PPV&FR Act.2321 See Sec. 24(2) and 41 of the PPV&FR Act.2322 See Sec. 28(4) of the PPV&FR Act.2323 See Sec. 3(5)(b) of the PPV&FR Act.2324 Personal conversation with Dr. Suman SAHAI, President of the Gene Campaign, on 29 August 2001.2325 See Sec. 14 et seq. of the PPV&FR Act.

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orders or decisions of the Authority or the Registrar.2326 As it will consist of judicial and technical members,2327 its decisions may be less at risk of being political than those of the Authority.

II. PBRs protection for new varieties

The PBRs regime established by the Act combines elements of the UPOV Acts of 1978 and 1991 with a broad farmers’ privilege which arguably leaves the margin left to the Member States of the UPOV 1978 Act.2328

1. Requirements for protection

a) Novelty, distinctness, uniformity, stability, variety denomination

Pursuant to Sec. 15 (1), “new varieties”, i.e. apparently all varieties that do not qualify for the special regime for “extant varieties”,2329 are eligible for protection, when they conform to the “classical” PBR criteria of novelty, distinctiveness, uniformity and stability. The definitions for these requirements for protection are to a large extent modelled on the UPOV Convention in its versions of 1978 or 1991.2330 Novelty requires that the material of the variety has not been sold or otherwise disposed of in India with the consent of its breeder for the purpose of exploitation of this variety earlier than one year before the date of filing of the application for registration.2331

Distinctiveness means that the variety is “clearly distinguishable by at least one essential characteristic from any other variety whose existence is a matter of common knowledge in any country at the time of filing of the application.”2332 According to the definition of “essential characteristics” the difference has to relate to a heritable determinant which contributes to “the principal features, performance or value of the plant variety”.2333 This is one of the few points in the DUS requirements where the Indian legislation departs from the UPOV approach.2334 According to Dr. BALA RAVI, the insertion of “essential characteristic” was suggested by the ICAR in order

2326 See Sec. 56 of the PPV&FR Act.2327 See Sec. 55 of the PPV&FR Act.2328 See below, at D.I.2.2329 The term “new variety” is nowhere defined in the Act, but Sec. 15 opposes “new varieties” and “extant varieties”, subjecting extant varieties to specific criteria of distinctness, uniformity and stability to be laid down in the regulations to the Act. 2330 See Art. 6 of the UPOV 78 Act and Art. 6 to 9 of the UPOV 91 Act.2331 See Sec. 15(3)(a)(i) of the PPV&FR Act. If the variety has been sold outside India, the maximum period is six years before the date of filing in the case of trees and four years in all other cases. See Sec. 15 (3)(a)(ii). The timeframes of Sec. 15 (3) are in line with both UPOV Conventions. Similar to Art. 6 (1)(b) UPOV 78 Act, two provisos to Sec. 15(3)(a) clarify that a trial of a new variety, which has not been sold or otherwise disposed of, shall not affect the right to protection. Likewise the fact that the variety is at the date of filing already a matter of common knowledge does not exclude novelty.2332 Sec. 15(3)(b) of the PPV&FR Act. The provision is a mix of the wordings of Art. 6(1)(a) UPOV 1978 Act and Art. 7 UPOV 1991 Act.2333 See Sec. 2 (h) of the PPV&FR Act.2334 As mentioned in chapter 3, A.III.1a), the UPOV 1991 Act has clarified that the distinctive feature does not have to relate to commercial value or agronomic merit.

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to make clear that distinctness in a minor characteristic is not sufficient and that this characteristic had to be economically useful.2335 A variety eligible for protection under the Act further has to be “sufficiently uniform in its essential characteristics”, however, “subject to the variation that may be expected from the particular features of its propagation”.2336 Finally, the new variety has to be stable, which is the case if “its essential characteristics remain unchanged after repeated propagation or, in the case of a particular cycle of propagation, at the end of each such cycle.”2337

Finally, paragraph 4 of Sec. 15 lays down the criteria to be met by the variety denomination.

b) Registration procedure

The registration procedure contains the usual elements of PBR legislation, including application for registration by a person claiming to be the breeder/successor/assignee;2338 deposit of seeds for the purpose of conducting tests;2339 acceptance of application;2340 advertisement of application;2341 opposition to the registration by third parties;2342 upholding or rejection of opposition leading to registration.2343 However Sec. 18 dealing with the form of applications contains particularities that are linked to the benefit sharing procedure: Every application has to contain a complete passport data of the parental lines from which the variety has been derived along with the geographical location in India from where the genetic material has been taken and information relating to the contributions of any farmer, village community, institution or organisation in developing the variety.2344 Moreover, the breeder has to furnish a “declaration that the genetic material or parental material acquired for breeding, evolving or developing the variety has been lawfully acquired.”2345 This provision could be interpreted as reference to the provisions of the Biological Diversity Act. As mentioned, this Act obliges foreigners and firms with foreign participation to apply for approval by the National Biodiversity Authority prior to “obtain[ing] any biological resource occurring in India or knowledge associated thereto for research or for commercial utilization […]”. It is not entirely clear whether material which is part of the Multilateral System established by the PGRFA Treaty falls under the relevant provisions of this Act.2346 In any case, the Registrar would have to verify whether the

2335 Personal conversation with Dr. BALA RAVI, Assistant Director General (IPR), ICAR, on 3 September 2001. Dr. BALA RAVI gave this interview in his personal capacity and did not necessarily reflect the official views of the ICAR.2336 See Art. 8 of the UPOV 1991 Act.2337 See Sec. 15(3)(d) of the PPV&FR Act. See also Art. 9 of the UPOV 1991 Act with the difference that it refers to “relevant characteristics”.2338 See Sec. 16 of the PPV&FR Act.2339 See Sec. 19(1) of the PPV&FR Act.2340 See Sec. 20(1) of the PPV&FR Act.2341 See Sec. 21(1) of the PPV&FR Act.2342 See Sec. 21(2) of the PPV&FR Act.2343 See Sec. 22 of the PPV&FR Act.2344 See Sec. 18(1)(e) of the PPV&FR Act.2345 See Sec. 18(1)(h) of the PPV&FR Act.2346 See below D.III.

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access conditions of the Multilateral System have been fulfilled. Finally, Sec. 19 of the PPV&FR Act requires breeders to submit seeds of the varieties and parental material.

Mr. ARORA, Secretary General of the Seed Association of India has voiced concerns with respect to depositing seeds of a variety together with its parental lines with the Registry.2347 He warns that its employees could be corrupted by competitors who would then benefit from the results of 10 years of R&D free of charge.2348 The SAI therefore suggested that the law should provide for the establishment of an independent agency rather than a State body.2349

c) Registration of essentially derived varieties

It may be recalled that the concept of “essentially derived varieties” is a concept introduced by the UPOV 1991 Act in order to slightly extend the zone of protection around a protected variety. The provisions in the PPV&FR Act concerning this concept are rather confusing and raise numerous issues of interpretation. Apart from the definition of essential derivation,2350 these provisions do not draw on the provisions in the UPOV Act. Whereas in UPOV 1991 Act EDVs are an issue concerning the scope of protection, the Bill provides for a special procedure for their registration. This is the reason why the issues raised by the Indian approach to essential derivation will be dealt with at this point.

Regrettably, the formulation of the scope of protection as laid down in Art. 14(5) of the UPOV 1991 Act is not used by the Indian legislature. At first sight, under the Indian Act, breeders’ rights only extend to the registered variety.2351 EDVs are mentioned neither in the provision setting out the exclusive right conferred on a breeder by a certificate of registration2352 nor in the provision on infringement.2353 But the Proviso to Sec. 23 (6), which specifies the rights conferred to the breeder of an EDV, clearly presumes that the breeder of an essentially derived variety needs an authorisation from the breeder of the initial variety under Art. 28(2).2354 This is

2347 See ARORA (undated), at 2. LOUWAARS et al. (2005), at 90, also report that some of the companies interviewed for their study expressed reservations about the requirement of depositing protected inbreds.2348 Personal conversation on 31 August 2001.2349 See SAI (undated).2350 According to Sec. 2(i) of the PPV&FR Act, a variety is essentially derived from an initial variety when it “(i) is predominantly derived from such initial variety, or from a variety that itself is predominantly derived from such initial variety, while retaining the expression of the essential characteristics that result from the genotype or combination of genotypes of such initial variety; (ii) is clearly distinguishable from such initial variety; and (iii) conforms (except for the differences which result from the act of derivation) to such initial variety in the expression of the essential characteristics that result from the genotype or combination of genotypes of such initial variety”. 2351 See Sec. 28(1) of the PPV&FR Act.2352 See Sec. 28(1) of the PPV&FR Act.2353 See Sec. 64 of the PPV&FR Act.2354 Sec. 26(6) of the PPV&FR Act reads as follows: “The rights of breeder of a variety contained in section 28 shall apply to the breeder of essentially derived variety: Provided that the authorization by the breeder of the initial variety to the breeder of the essentially derived variety under sub-section (2) of section 28 may be subject to such terms and conditions as both parties may mutually agree upon.”

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surprising, since Sec. 28 deals with the right of the breeder of the registered variety to authorise any person “to produce, sell, market or otherwise deal with the variety registered under this Act”.2355 It remains to be seen how these contradictory provisions will be interpreted. An interpretation extending the scope of protection to include varieties essentially derived from a registered variety would be preferable, as the concept of essential derivation introduced into the Act by Sec. 23 would otherwise be deprived of any effect in the relationship between breeder of the initial variety and breeder of the EDV.

The second major point in which the Indian legislation departs from the UPOV model is the registration procedure. In contrast to the normal procedure under Sec. 14 et seq., in the registration of EDVs, the Authority plays an important role and takes the final decision whether a variety is essentially derived in the sense of the law. Under the procedure set out in Sec. 23, the Registrar only verifies that the application has been filed by or on behalf on a person entitled to do so under Sec. 14 and that the formal requirements of Sec. 18 are satisfied.2356 The file is then transferred to the Authority, which “shall get examined such essentially derived variety to determine as to whether the essentially derived variety is a variety derived from the initial variety by conducting such tests and following such procedures as may be prescribed”.2357

Sec. 23(4) and (5) provide that the Authority may direct the Registrar to register the EDV if it is satisfied that the variety applied for has been derived from the initial variety, and otherwise shall refuse the application.

The above provision raises several questions: Most importantly, it is unclear whether breeders have to apply under this special procedure. The wording of Sec. 23 does not necessarily imply an obligation. A further argument which speaks against such an obligation is that the concept of essential derivation being in its infancy, a breeder may not always know whether his new variety would be considered as essentially derived. Moreover, the Act does not provide for any sanction in case a breeder has used the normal procedure for registering a variety which later turns out to be an EDV. It is also interesting to note that essential derivation is not a ground for opposition.2358

A possible interpretation of Sec. 23 would be that the application under this procedure is not mandatory, but in some way advantageous, so that breeders would want to use this path whenever it applies. Sec. 23 expressly refers to Sec. 18, but not to the following Sections setting out the normal registration procedure. This would allow the conclusion e contrario that Sec. 19, 20, 21, and 22 referring inter alia to opposition by third parties are not applicable. Critics of the Act have raised the concern that a fast-track procedure has been introduced for EDVs, which would be mostly transgenic crops.2359 Again the wording of the Act is unclear, but teleological interpretation suggests that the above provisions also apply to EDVs. The tests to be conducted on

2355 Emphasis added b the author.2356 See Sec. 23(1) of the PPV&FR Act.2357 See Sec. 23(3) of the PPV&FR Act.2358 See Sec. 21(3) of the PPV&FR Act.2359 Dr. SUMAN SAHAI, for instance, raised this concern in a personal conversation on 29 August 2001.

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behalf of the Authority under Sec. 23(3) necessitate the availability of testing material, as required under Sec. 19. Furthermore, there is no apparent reason why the grounds for opposition would be less likely to apply in the case of EDVs. Dr. R.C. JAIN, Additional Secretary, Department of Agriculture and Cooperation, Ministry of Agriculture, confirmed in a personal conversation that the normal registration procedure applies.2360 Yet, an important procedural difference now results from the Protection of Plant Varieties and Farmers Rights Rules, 2003.2361 R. 29(4) states that “the DUS test shall be necessary for all new varieties except essentially derived variety.” R. 29(5) specifies that “the manner of testing essentially derived varieties shall be decided by the Authority on a case-to-case basis”. This could represent an advantage for breeders in some cases.

It remains to be seen how the relevant provisions will be interpreted. The reasons for this special procedure are not clear. One plausible explanation is that the Indian legislature did not want to leave the disputes over essential derivation in the private sphere of the parties, which would sort it out in negotiations and litigation, making their financial power an influencing factor. The idea behind this approach could be that quite often the variety from which another variety is essentially derived would be a farmers’ variety or a public variety.2362 If securing the interests of the weaker party is indeed the purpose of Sec. 23, the special registration procedure has to be considered as mandatory.

2. Rights conferred and limitations

a) Rights conferred

Pursuant to Sec. 28(1), a certificate of registration shall confer an exclusive right “to produce sell, market, distribute, import or export the variety”. The Indian Act thus opts for a version that mixes elements of the UPOV 1978 Act and the UPOV 1991 Act.2363

The list of acts reserved to the breeder is less extensive than that in the 1991 Act, but goes beyond that of the 1978 Act. In particular, it is noteworthy that the breeder cannot only prevent “production for purposes of commercial marketing”, but any production. Further, the subject matter of protection is not, as in the UPOV 1978 Act, “propagating material”, but “the variety”. This could cover seeds of the variety as well as grains. On the other hand, products derived from grains of the variety are apparently not included.

2360 Personal conversation on 6 September 2001.2361 Available at http://agricoop.nic.in/seeds/farmersact2001.htm.2362 In a personal conversation of 6 September 2001, Dr. R.C. JAIN, Additional Secretary, Department of Agriculture and Cooperation, Ministry of Agriculture, explained that in the Indian context, the concept of essential derivation lays down the principle of benefit sharing. This statement could be interpreted in the above sense.2363 Art. 5(1) of the UPOV 1978 Act refers to “the production for purposes of commercial marketing, the offering for sale and the marketing of […] propagating material of a variety”. Art. 14 of the UPOV 1991 Act is more comprehensive than Sec. 28 (1) of the Indian Act and also includes conditioning for the purpose of propagation and stocking for the purpose of any of the acts reserved to the breeder. The protected material includes under certain conditions harvested material or certain products. See above, chapter 3, A.IV.1.

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The period of validity of the PVP certificate shall not exceed 15 years from the date of registration of the variety.2364

As mentioned earlier, the legislature apparently had the intention to extend the scope of breeders’ rights to varieties essentially derived from the variety registered by the breeder. Yet, it is not clear how the courts will ultimately deal with the incoherent provisions described above.2365

As will be seen in the following, the relatively broad exclusive rights conferred on a breeder are subject to three exemptions in favour of researchers, breeders and farmers. Especially the last considerably reduces the scope of the rights conferred and of appropriability of breeding results. The PBRs conferred by a certificate under the Act are further restricted by a compulsory licensing regime.

b) Research exemption

Pursuant to Sec. 30(a) of the PPV&FR Act “nothing contained in [the] Act shall prevent [...] the use of any variety registered under this Act by any person using such variety for conducting experiment or research”. This exemption assures that researchers producing, importing or exporting the variety merely for experimental or research purposes do not need the authorisation of the right holder.

c) Breeders’ exemption

Sec. 30(b), which is modelled after Art. 5(3) of the UPOV 78 Act, provides for a breeders’ exemption, i.e. the right of breeders to use a variety as an initial source of variety for the purpose of creating other varieties. However, the authorisation of the breeder is required where repeated use of such variety as a parental line is necessary for commercial production of another newly developed variety.2366

While it is clear that breeders do not need the authorisation of the owner of a protected HYV to be able to use it in developing a new (not essentially derived) variety, the ratio legis of the breeders’ privilege is called into question by the wording of Sec. 26. The latter provides for “benefit sharing” with any “person or group of persons or firm or governmental or non-governmental organization” whose genetic material has been used in the development of the new variety. The benefit sharing claims are addressed to the Authority which determines the amount to be paid to the National Gene Fund, established by the Act. The Gene Fund in turn has to compensate the claimants who have contributed to the new variety. This provision will be explained more in detail below in the context of farmers’ rights, as the concept of benefit sharing had been originally discussed and developed in this context. Yet, nothing in the wording of Sec. 26 limits this mechanism to the contribution of farmers. On the contrary, the insertion of the terms “firm” and “governmental organization” in the version of the Act as passed by the Lok Sabha make it extremely difficult to find arguments to limit

2364 See Sec. 24(6)(iii) of the PPV&FR Act.2365 See above, at C.II.1.c).2366 See Proviso to Sec. 30 of the PPV&FR Act.

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the concept to its original purpose.2367 And yet, a literal interpretation seems contrary to the intentions of many stakeholders involved in the drafting process.2368 It may also be doubted that such a system would be workable. Determining the extent to which traditional germplasm contributes to the commercial success of a modern variety seems difficult enough. But rewarding every formal sector breeder whose varieties has been used somewhere in the pedigree of a new variety via a centralised administrative mechanism would be next to impracticable.

d) Farmers’ privilege

The feature which has been certainly most discussed and distinguishes the Indian system from a “classical” PBRs regime is the broad farmers’ privilege. It may be recalled that under the UPOV 1978 Act the exclusive right of the breeder only covers the production for the purpose of commercial marketing, offering for sale and marketing of propagation material.2369 Therefore a farmer may produce and save seeds of a protected variety for subsequent sowing on his own farm or for farmer-to-farmer exchange, provided that he does not supply the seed on a commercial basis.

The Indian draft goes a step further. Sec. 39(1)(iv) of the PPV&FR Act, which is one of the core sections of the Act, reads as follows:

“Notwithstanding anything contained in this Act, - […](iv) a farmer shall be deemed to be entitled to save, use, sow, resow, exchange, share or sell his farm produce including seed of a variety protected under this Act in the same manner as he was entitled before the coming into force of this Act:Provided that the farmer shall not be entitled to sell branded seed of a variety protected under this Act.Explanation.- For the purposes of clause (iv), ‘branded seed’ means any seed put in a package or any other container and labelled in a manner indicating that such seed is of a variety protected under this Act.”

Thus under Sec. 39(1)(iv) a farmer is not only entitled to “save, sow, resow, exchange and share” seed of a protected variety, but also to “sell” it, unless it is sold in labelled packages. The background of this provision has been discussed in the previous chapter. It is feared that more extensive PBRs may have tremendous implications for the existing system of seed supply. Currently, farmers produce more than 80% of the seed in circulation.2370 The current system guarantees a lot of flexibility to farmers. Wherever they see a well performing variety in their neighbourhood, they can ask for

2367 It is indeed interesting to note that Sec. 26(2) of the Protection of Plant Varieties and Farmers’ Rights Bill, 2000 as redrafted by the Joint Committee still refers only to “any person or group of persons or non-governmental organization”, whereas the final version passed by the Lok Sabha on 9 August 2001 adopts the larger wording cited above.2368 See above, at A.II. on the drafting history, and footnote 2397 below.2369 Art. 5 (1) UPOV 78.2370 Personal conversation with Dr. Dolly CHAKRABARTY on 7 September 2001. At the time of the interview Dr. Chakrabarty was Director (Seeds), Department of Agriculture and Cooperation, Ministry of Agriculture.

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seed without having to worry about the initial source of this variety. In the past, informal sources of seed supply have also played a key role in rapid diffusion of new technologies. In order to conserve this inter-farmer network of seed supply, the Act preserves to a large extent the status quo in the relationship between seed companies and farmers. According to Dr. Dolly CHACRABORTY a restriction of this large farmers’ privilege to small-scale farmers was considered.2371 Yet, it was found that it was too difficult to draw the line. The legislature did not want to make the system too complicated.

Interestingly, the drafters of the Seed Bill 2004 do not seem to attach the same importance to the informal seed sector as the legislators of the PPVFR Act. While farmers are exempted from the obligation to register the varieties they are selling,2372

they are not allowed to sell seed (or other planting material) “which does not conform to the minimum limit of germination, physical purity, genetic purity prescribed under clause (a) or clause (b) of section 6”.2373 No mention is made of any specific purity standards for farmers’ varieties. Depending on its implementation this provision could mean that seed selected from heterogeneous mixture of genotypes could not be sold anymore. This would contradict the farmers’ concept of variety which is rather based on the phenotype (or mixture of phenotypes) than on the genetic constitution.2374

e) Compulsory licensing

Finally, the Act provides for compulsory licensing on application by an interested person after the expiry of three years from the date of issue of the certificate, if “the reasonable requirements of the public for seeds and other propagating material of the variety have not been satisfied or [if] the seed or other propagating material of the variety is not available to the public at a reasonable price”.2375 The deciding body is the Authority.2376 When determining the terms and conditions of a compulsory licence the Authority “shall […] endeavour to secure […] reasonable compensation to the breeder of the variety […] having regard to the nature of the variety, the expenditure incurred by such breeder in breeding the variety or for developing it, and other relevant factors”.2377

2371 See id.2372 Sec. 43(1) reads as follows: “Nothing in this Act shall restrict the right of the farmer to save, use, exchange, share or sell his farm seeds and planting material, except that he shall not sell such seed or planting material under a brand name or which does not conform to the minimum limit of germination, physical purity, genetic purity prescribed under clause (a) or clause (b) of section 6.” 2373 Sec. 6 reads as follows: “The Committee may, by notification, specify- (a) the minimum limits of germination, genetic and physical purity, and seed health, with respect to any seed of any kind of variety; (b) the mark or label to indicate that such seed conforms to the minimum limits [...].”2374 See above, chapter 7, C.II.1.2375 See Sec. 47(1) of the PPV&FR Act.2376 See Sec. 47 et seq. of the PPV&FR Act.2377 Sec. 51(1)(ii) of the PPV&FR Act.

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III. Protection of farmers’ rights

Besides providing PBRs protection to formal breeders, the second important aim of the Act is to “recognise and protect the rights of the farmers in respect of their contribution made at any time in conserving, improving and making available plant genetic resources for the development of new plant varieties”.2378 Farmers’ rights in this large sense cover diverse aspects of the relationship between farmers and breeders, which are addressed in chapter VI of the legislation. The rights laid down in this chapter can be broadly grouped into two categories: first, the rights of farmers in their role as users of plant varieties; and second, the rights of farmers in their role as developers and conservers of germplasm.

1. Rights of farmers as plant variety users

In the first category, the broad farmers’ privilege has been discussed earlier.2379 The Act contains two further provisions which fall in this category:

a) Liability of breeders

Pursuant to Sec. 39(2) of the Act, when marketing a protected variety, the breeder “shall disclose to [the farmer(s) purchasing his seed] the expected performance under given conditions”. “[I]f such propagating material fails to provide such performance under such given conditions, [the purchaser] may claim compensation in the prescribed manner before the Authority.” After providing an opportunity to the breeder to file opposition and after hearing the parties, the Authority “may direct the breeder of the variety to pay such compensation as it deems fit”. Members of the seed industry wonder how the Authority will decide on matters of performance without conducting tests and criticise that the law does not provide for the necessary infrastructure for such tests.2380

b) Innocent infringement

According to Sec. 42(i), “a right established under this Act shall not be deemed to be infringed by a farmer who at the time of such infringement was not aware of the existence of such right”.2381 Due to the large farmers’ privilege, there remain only few possible cases of infringement of PBRs by farmers. A farmer who would export or import material of the variety without authorisation by the right holder would be infringing the PBR. Another possible case of infringement, where this provision could

2378 See Recital 1 of the PPV&FR Act.2379 See above, III.2.d) on Sec. 39(1)(iv) of the PPV&FR Act.2380 These concerns were voiced by Mr. R.S. ARORA, then Secretary General of the SAI, in a personal conversation on 6 September 2001. Interestingly, the Seeds Bill 2004 states merely that farmers can claim compensation under the Consumer Protection Act 1986. See section 20 of the draft bill, which is available at http://agricoop.nic.in/seeds/seeds_bill.htm, last visited on 1 July 2005.2381 Sec. 42(ii) of the PPV&FR Act reaffirms that “a relief which a court may grant in any suit for infringement […] shall not be granted by such court […] for such infringement by any court against a farmer who proves, before such a court, that at the time of the infringement he was not aware of the existence of the right so infringed.”

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prevent unfair sanctions, is where a farmer sells seed over the fence using a discarded seed packet. Such an act would normally fall under the prohibition of Sec. 64(b) protecting variety denominations.

Moreover, a farmer infringes a right under the Act if he sells labelled seed of a protected variety. The effect of Sec. 42(i) in this context will depend to a large extent on the repartition of the burden of proof. For infringement proceedings in court, Sec. 42(ii) seems to indicate that the burden of proof lies with the farmer invoking this provision.2382 If a farmer cannot prove that he was unaware of the introduction of a PBRs regime, it will be difficult for him to argue that he was not aware of the possibility of the sold variety being subject to exclusive rights. By labelling a variety, he shows that he knows the formal sector origin of the variety.

2. Rights of farmers as developers and conservers of germplasm

The second category of farmers’ rights serves to reward farmers for conserving and enhancing crop genetic diversity. The background of these provisions has been repeatedly discussed in this paper. Under conventional PBRs legislation, landraces, near relatives of cultivated species and wild species are in general freely available to plant breeders for breeding modern varieties. Leaving questions of equity aside, which are complex in the context of the Indian legislation with its broad farmers’ privilege, an economic reasoning still leads to the conclusion that farmers lack sufficient incentives to keep their extremely important conservation and breeding efforts at an optimal level. The Act seeks to remedy this market failure.

In order to remedy this market failure and reward farmers for their contribution to crop improvement, the Act provides for two mechanisms: First, as explained above, farmers’ varieties are expressly eligible for plant variety registration under the Act, giving rise to the same rights as those that formal sector breeders enjoy. Second, the Act establishes a benefit sharing mechanism that does not necessitate the previous registration of the germplasm developed by farmers.

a) Plant variety protection for farmers’ varieties

The Act provides for registration of farmers’ varieties under the plant variety protection regime with slightly adapted protection requirements.2383 A farmers’ variety is defined as

“a variety which—(i) has been traditionally cultivated and evolved by the farmers in their fields;or (ii) is a wild relative or land race of a variety about which the farmers possess common knowledge.”2384

2382 See previous footnote.2383 See Sec. 14(c), 15(2), 16(1)(d) of the PPV&FR Act, restated in Sec. 39(1)(i) of the PPV&FR Act. 2384 Sec. 2(l) of the PPV&FR Act.

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As a result of this registration the “farmer or group of farmers or community of farmers” who have “bred, evolved or developed”2385 the farmers’ variety will be granted the same exclusive rights as any other breeder. The registration procedure is initiated either by an application2386 or by a declaration by a (formal sector) breeder stating that the farmers’ variety was used as material for breeding the new variety.2387

aa) Persons entitled to registration

It can be derived from the definition of farmers’ variety read together with Sec. 16(1) defining the persons entitled to make an application that only “[a] farmer or group of farmers or community of farmers claiming to be the breeder of the variety” may apply for registration of a farmers’ variety. Pursuant to Sec. 2(k), a farmer means

“any person who—(i) cultivates crops by cultivating the land himself; or (ii) cultivates crops by directly supervising the cultivation of land through any other person; or (iii) conserves and preserves, severally or jointly, with any person any wild species or traditional varieties, or adds value to such wild species or traditional varieties through selection and identification of their useful properties.”

Paragraph (iii) is surprisingly wide in its scope and could even apply to breeders. Breeders are very often engaged in ex situ germplasm conservation. However, a reasonable interpretation of the term “farmer” in the context of the farmers’ privilege suggests that the term needs to be narrowly construed.2388 A consistent interpretation of the Act requires giving the definition of farmer the same narrow meaning in the present context. This also seems to correspond to the intentions of the legislature. The above provision, therefore, has to be read to refer merely to in situ conservation.

Pursuant to Sec. 16(d) and 39(1)(i), this adapted plant variety protection regime seems to reward plant population enhancement rather than conservation of existing populations. As mentioned, the applying farmers have to claim to be the breeder of the variety,2389 which means “a person or group of persons or a farmer or group of farmers or any institution which has bred, evolved or developed any variety”.2390 Yet, this conclusion would contradict the wording and the spirit of the concept of farmers’ varieties as defined in Sec. 2(l), which expressly includes “a wild relative or landrace of a variety about which the farmers possess the common knowledge”. The terms in

2385 Pursuant to Sec. 16(d), the applying farmer or group of farmers or community of farmers has to claim to be the breeder of the variety. Pursuant to Sec. 2(c), breeder “means a person or group of persons or a farmer or group of farmers or any institution which has bred, evolved or developed any variety”.2386 See Sec. 14(c) and 39(1)(i) of the PPV&FR Act.2387 See Sec. 39(1)(ii) read together with Sec. 18(1)(h) of the PPV&FR Act.2388 Otherwise, any competitor firm qualifying for the farmer definition could sell a protected variety under a different brand name, enhancing their own goodwill with the variety of the holder of the PBR.2389 See Sec. 16(d) of the PPV&FR Act.2390 See Sec. 2(c) of the PPV&FR Act. Sec. 39(1)(i) likewise refers to “a farmer who has bred or developed a new variety”.

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Sec. 2(c) will therefore have to be interpreted in their broadest sense. In order to accommodate the intentions of the legislature as expressed in the recitals as well as the definition of farmers’ variety, any bulk selection from traditional populations has to be considered as breeding or evolving a variety.

bb) Protection requirements

As explained in detail in chapter 7, plant populations traditionally used and enhanced by farmers have diverse population structures, depending on their mating system, their geographical location, and the agricultural practices applied.2391 Most do not meet the conventional DUS requirements. Sec. 15(2) therefore stipulates that “an extant variety [which notion includes farmers’ varieties] shall be registered under this Act […] if it conforms to such criteria of distinctness, uniformity and stability as shall be specified under the regulations”. These regulations still have to be adopted by the Authority.

In chapter 7, the limits of relaxing the DUS criteria have been pointed out. The fluctuations of characteristic expression found within one variety must be less significant than the differences exhibited between two different varieties. Consequently, a more generous application of the uniformity and stability criteria also means increasing distances between varieties. The less stringent and detailed the description of a plant population is, the more plant groupings with different genetic make-ups will be identified with this “variety”. The “variety” being defined by broader parameters, the probability that another farmer or a formal sector breeder could arrive at the same result without using the protected variety or using it only as one parent among others is much greater.2392 This might ultimately restrict the breeders’ privilege considerably and would change the character of plant variety protection. In order to avoid giving overbroad rights, the range of variation allowed within one population necessarily has to be limited. Many farmers’ varieties will therefore not be able to meet even relaxed DUS criteria. But the Indian experience will provide valuable findings on the possibilities and limits of the “PBRs approach” to the IPR protection of landraces.

What makes the Indian approach even more complex than a separate sui generisprotection system for farmers’ varieties is that different eligibility standards will have to be integrated into one plant variety protection system. Answers will have to be found to the question of how to deal with cases where a modern variety has already been granted PBRs protection and its different characteristics and states of expression are covered by the necessarily broad parameter which define the landrace of a later application. Or conversely, what should happen if a breeder develops a stable homogenous variety which falls under the broad description of a protected highly heterogeneous landrace?

2391 As mentioned above, it is therefore surprising that the Seeds Bill 2004 envisages that seed sold by farmers has to meet genetic purity standards. Even if the Committee would set specifc standards for farmers’ varieties it may be doubted that an kind of pressure towards more genetic purity in populations of farmers’ varieties wouldbe beneficial.2392 BHUTANI/KOHLI (2004), at 3 of 4, rightly criticise that the Act does not offer any solution if claims of farmers conflict.

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It does not become entirely clear from the Act whether extant varieties and in particular farmers’ varieties have to meet the novelty requirement or not. Sec. 39(1)(i) seems to indicate that novelty is required.2393 Yet, this would overthrow the concept of extant varieties which can only be explained by the endeavour to protect varieties released in the past. The application of the novelty criterion to farmers’ varieties would also ignore the reality of the development of traditional varieties. The exact moment of the emergence of the variety as described in the application would be difficult to define. Consequently, in many cases it would be unclear whether material sold in the past belonged to the same variety or not. The Act will therefore probably be interpreted in a way to omit the novelty requirement for farmers’ varieties.

cc) Registration

The formal application requirements under Sec. 18 do not apply to the registration of farmers’ varieties, which will be subject to a special regime to be determined by rules.2394 Yet, the Protection of Plant Varieties and Farmers’ Rights Rules, 2003 do not address this question.

dd) Rights conferred

The registration of a farmers’ variety has the same legal consequences as the registration of a formal sector variety. Given the wide scope of the breeders’ exemption, there are only two types of situations where a farmer will be able to invoke his exclusive rights against a formal sector breeder. He will be able to oppose his right in the rather rare case that his farmers’ variety is already uniform and stable in the sense of Sec. 15(3)(c) and (d) of the Act and is as such produced (other than for research purposes or for use in a breeding program), sold, marketed, distributed, imported or exported by a formal sector breeder. More often, a farmers’ variety will not qualify for the conventional DUS criteria. Consequently, a breeder will first subject the population to a selection process to increase its uniformity and stability. This may lead to distinguishing features unless the farmers’ variety is very broadly defined. Where the resulting population still “retains the expression of the essential characteristics that result from the […] combination of genotypes of such initial variety” the new formal sector variety is an essentially derived variety which falls within the scope of the PBR of the farmer-breeder.2395 The application of the concept of essential derivation developed by UPOV for the relationship between two uniform and stable plant varieties to the relationship between a traditional heterogeneous population and a modern variety will raise an issue of consistency. Thresholds of genetic similarity elaborated for derivation from stable and uniform varieties will not be applicable in the context of farmers’ varieties. Much of the success of the

2393 The relevant sub-section states that “a farmer who has bred or developed a new variety shall be entitled for registration and other protection in like manner as a breeder of a variety under this Act” (emphasis added by the author).2394 See Proviso to Sec. 18(1) of the PPV&FR Act; Sec. 96(2)(xiv) of the PPV&FR Act. 2395 Provided the Indian EDV concept is interpreted to extend the scope of protection of the PVR. See above, at C.II.1.c).

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legislation will depend on the solutions found for its implementation at the regulatory level.

Interestingly, there is no explicit provision on the duration of the PVP conferred on a farmers’ variety. Since the definition of “extant variety” covers farmers’ varieties, the latter would seem to fall under Sec. 24(6)(ii). Yet, this provision only regulates the case of extant varieties notified under Sec. 5 of the Seeds Act, 1966. There are good arguments for concluding that other categories of extant varieties fall under Sec. 24(6)(iii). Registered farmers’ varieties would thus fall back into the public domain after 15 years. From this moment on, the farmer-breeder of this variety would only be rewarded via the benefit sharing mechanism, not by direct licence payments from seed producers who may want to multiply and market his variety. Dr. SAHAI., convenor of an important NGO promoting farmers’ rights and involved in the process of emergence of the PPV&FR Act, stressed that her understanding was that ownership of farmers over their varieties continues after the time limit in Sec. 24(6)(ii).2396

b) Benefit-sharing mechanism

aa) Overview

Sec. 39 is the central provision enumerating farmers’ rights. Under Sec. 39(1)(iii)

“a farmer who is engaged in the conservation of genetic resources of land races and wild relatives of economic plants and their improvement through selection and preservation shall be entitled in the prescribed manner for recognition and reward from the Gene Fund:Provided that material so selected and preserved has been used as donors of genes in varieties registrable under this Act”.

Sec. 26 provides for a procedure following the plant variety registration procedure which gives claimants the possibility of filing benefit sharing claims and leads to the determination by the Authority of the amount of benefit sharing to be paid to the National Gene Fund, set up under the legislation. The Gene Fund will then compensate the claimants. Sec. 41 provides for the possibility of persons or organisations acting on behalf of a village or local community to trigger a benefit-sharing procedure to a large extent similar to that under Sec. 26. The procedure under Sec. 41 also leads to the fixation by the Authority of a compensation to be paid to the Gene Fund.

In this paper, Sec. 26 is discussed under the headline “Farmers’ Rights”. This is in linewith the understanding of commentators and stakeholders,2397 and the intentions of the

2396 Personal conversation with Dr. Suman SAHAI, President of the GENE CAMPAIGN, on 29 August 2001.2397 See, e.g. JAFRI (2000), at 9; SESHIA (2002), at 1; SINGH (2002), at 3; GOPALAKRISHNAN (2001), at 165. In the interview on 29 August 2001, Dr. Suman SAHAI explained the establishment of a central Gene Fund with the difficulty of local communities to negotiate with companies and monitor payments. This confirms that the function of the Gene Fund is not to compensate formal sector breeders. The above interpretation was further confirmed by a statement of Dr. Dolly CHAKRABARTY, Director (Seeds), Department of Agriculture and Cooperation, Ministry of

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legislature as it emerges from the drafting history.2398 Yet, it should be noted that Sec. 26 nowhere refers to farmers or village communities. In the version of the Act as passed by the Lok Sabha, “firms” and “governmental organisations” had been added as possible claimants.2399 These have been removed in the final version as redrafted by the Joint Committee. Sec. 26(2), however, still refers to “any person or group of persons or non-governmental organisation”.2400 Interpreted in a broad way, this would contradict the philosophy of the PBRs system of which the breeders’ exemption is a core part. The application of the benefit-sharing mechanism under Sec. 26 to modern germplasm would also be in contradiction to the principal functions of the Gene Fund. The Gene Fund is dealt with in the chapter VI of the Act, i.e. in the chapter on “Farmers’ Rights”. Further, according to R. 70,

“[t]he Gene Fund shall be applied for meeting the following purposes in accordance with the priority made hereunder: (a) to support and reward farmers, community of farmers, particularly the

tribal and rural communities engaged in conservation, improvement and preservation of genetic resources of economic plants and their wild relatives, particularly in areas identified as agro-biodiversity hot spots;

(b) for capacity building on ex situ conservation at the level of the local body, particularly in regions identified as agro-biodiversity hot spots and for supporting in-situ conservation;

(c) on benefit sharing and compensation in accordance with sub-section (5) of section 26 and sub-section (3) of section 41; and

(d) on transaction cost of administering the Gene Fund.”

Therefore, even if the legal issue is left aside, it is rather unlikely that breeders will invoke the benefit sharing mechanism against their pairs. In the following, the mechanism under Sec. 26 will therefore be interpreted as one pathway designed to compensate farmers for their contributions to modern breeding.

Thus, besides the PVP regime for farmers’ varieties, which requires registration of the variety to give rise to protection, the Act creates another mechanism of rewarding farmers for their breeding work: The benefit-sharing mechanism gives rise to the obligation of breeders to pay a compensation for the use of traditional germplasm

Agriculture, in a personal conversation of 7 September 2001. In response to a question about the difference between the benefit-sharing mechanism under Sec. 26, on the one hand, and Sec. 41, on the other hand, Dr. CHAKRABARTY explained that Sec. 26 prescibed a routine procedure following every application and involving advertising in newspapers. Sec. 41 assured that a particular community would be able to forward a claim at any moment. The possible applicant were the same in both cases.2398 See above, A.II. 2399 See “The Protection of Plant Varieties and Farmers’ Rights Bill, 2001, as passed by Lok Sabha on 9 August, 2001”, on file with the author.2400 See Bill No. 123 of 1999 as redrafted by the Joint Committee, and the Act 53 of 2001 “The Protection of Plant Varieties and Farmers’ Rights Act, 2001”, available at http://www.grain.org/DOCS/india.PDF, which however is not an official source but an NGO site. However, neither the website of the Indian Parliament, nor the one of the Ministry of Agriculture contain the full text of the Act.

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independently of any prior establishment of individual rights to a defined subject matter.

bb) Gene Fund

Even though Sec. 39(1)(iii) uses the terms “shall be entitled”, it is not clear whether the benefit-sharing mechanism gives rise to individual rights of the contributing farmers. The regime leaves no room for negotiations between farmers/farming communities and users of their germplasm. It is the Authority that decides on the amount of benefit sharing.2401 Any compensation granted under this regime has to be deposited into the Gene Fund2402 which is constituted under the Act.2403 To this Fund will be credited all benefit sharing payments, annual fees to be paid by every breeder “on the basis of benefit or royalty gained by such breeder […] in respect of [a] registered variety”,2404 as well as “the contribution from any national and international organization or other sources”.2405 Pursuant to Sec. 45(2)(a), the Gene Fund shall be applied inter alia for meeting the compensation claims of farmers, villages or local communities. This could suggest that the concerned farmers will receive the entire sum deposited into the Fund by the breeder for their free disposition. But, at the same time, the Fund is obliged to meet “the expenditure for supporting the conservation and sustainable use of genetic resources including in-situ and ex-situ collections and for strengthening the capability of the Panchayat in carrying out such conservation and sustainable use” and the costs of administration and enforcement of the benefit sharing mechanism.2406 Sec. 46 gives the Government the power to frame schemes on “the utilization, by the way of disbursal (including apportionment) or otherwise, of any amount received in satisfaction of such [benefit-sharing] claims [under sec. 41]” and on “the utilization of benefit sharing for the purposes relating to breeding, discovery or development of varieties”.2407 Finally, the above-mentioned R. 70, makes clear that benefit-sharing payments are only the third priority in the use of the funds. It is therefore unclear what share of the compensation amount will ultimately be paid to the farmers concerned.

cc) Establishing the contribution

There are different ways how the Authority will learn about the contribution of a farmers’ variety to a registered variety:

A first possibility is that the use of a certain landrace becomes evident from the indications made by the breeder in his application for registration. Pursuant to Sec. 18(1)(e), breeders applying for protection for a new variety have to provide

2401 See Sec. 26(5) and 41(3) of the PPV&FR Act.2402 See Sec. 26(6) and 41(4) of the PPV&FR Act.2403 See Sec. 45 of the PPV&FR Act.2404 See Sec. 35(1) of the PPV&FR Act.2405 See Sec. 45(1) of the PPV&FR Act.2406 See Sec. 45(2)(c) and (d) of the PPV&FR Act.2407 See Sec. 46(2)(d) and (f) of the PPV&FR Act.

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“a complete passport data of the parental lines from which the variety has been derived along with the geographical location in India from where the genetic material has been taken and all such information relating to the contribution, ifany, of any farmer, village community, institution or organization in breeding, evolving or developing the variety.”2408

As discussed in chapter 7, the formulation “parental lines” has to be read as “parental lines and populations” as the parents in the case of open-pollinated crops are populations rather than lines. It should be possible to verify whether the information given by the breeder is plausible, as molecular marker techniques allow establishing genetic similarities, parental relationships between genotypes and checking to a certain extent the validity of pedigree data. Yet, what will be very difficult to establish, if it is not indicated by the breeder, is the contribution of a specific landrace population rather than another to a modern variety. Breeders may not always be able to provide information on the origin of the populations they have used. If the material comes from the breeder’s nursery there will be often no record of the original source, at least for germplasm collected in the past. The link between the used germplasm and a farmer or community would then have to be established in one of the two procedures under Sec. 26 or 41.

The procedure under Sec. 26 is a second way of how the Authority may learn about the contribution of a farmers’ variety to a registered variety. It automatically follows the registration procedure for plant variety protection and will take place even if the breeder has provided complete information under Sec. 18(1)(e). The Authority upon receiving the certificate of registration publishes the contents of the certificate and invites claims of benefit sharing “in the manner as may be prescribed”.2409 On this invitation any citizen of India (or group of citizens) or firm or governmental or non-governmental organisation formed or established in India may submit its benefit sharing claims to such variety.2410 Unless the breeder himself has indicated the use and origin of a farmers’ variety, cases where farmers will be able to put forward firm claims will probably be rare. Unless he has interacted with the breeder and provided him with breeding material, it will be difficult for a farmer to know merely based on the contents of the application whether similarities between the registered variety and his own variety are due to a parental relationship. The Authority will have to accept under term “claim” in Sec. 26 also requests for DNA profiling and other tests permitting to establish a possible contribution. As a rule, the claims have to be made within a time limit of six months from the date of invitation of claims.2411 After submission of claims, and as the case may be, opposition by the breeder, the Authority shall dispose of the claim taking into consideration “the extent and nature of the use of

2408 It should be noted that according to the Proviso to Sec. 18(1), these provisions do not apply in respect of the application for registration of a farmers’ variety.2409 See Sec. 26(1) of the PPV&FR Act.2410 See Sec. 26(2) of the PPV&FR Act.2411 See R. 41(1). Yet, the Proviso permits the Authority to extend this time period “in special circumstances”.

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genetic material of the claimant in the development of the variety” and “the commercial utility and demand in the market for the variety”.2412

The third possibility of how the Authority will be informed about a case giving rise to benefit sharing is the procedure under Sec. 41. At any time, “any person, group of persons (whether actively engaged in farming or not) or any governmental or non-governmental organization may on behalf of any village or local community in India” file in specific centres “any claim attributable to the contribution of the people of that village or local community […] in the evolution of any variety”.2413 Again the Act refers to claims, whereas it seems more probably in many cases that the applicants will file requests for further verification of a potential contribution. The centres are notified by the Authority in the Official Gazette with the previous approval of the Central Government.2414 The decision on benefit sharing again lies with the Authority.2415 But interestingly, the notified centres have a filter function in this procedure which does not exist in the procedure under Sec. 26.2416 The Authority will verify that the variety to which the report is related has been registered under the provisions of the Act.2417

After providing an opportunity to the breeder to file an objection and to be heard, the Authority may “subject to any limit notified by the Central Government, by order, grant such sum of compensation to the [claimant] as it may deem fit”.2418 The compensation will again be deposited by the breeder in the Gene Fund.2419 It is interesting to note that the germplasm contributors which will be rewarded by this mechanism are only referred to as “village or local community”. Individual farmers do not seem to be entitled to compensation under this provision. But experts do not attach any significance to this limited wording. Dr. Sudhir KOCHHAR, Principal Scientist (Plant Breeding/IPR), ICAR, for instance, explains the difference between the two different clauses for benefit sharing, i.e. Sec. 26 and Sec. 41, as follows: One relates to the official enquiry by the Authority following the issuance of the PVP certificate and the other concerns a voluntary approach made by the farmer/s or their well wishers, e.g. NGOs.2420

IV. Appropriation of varieties in the public domain

1. Overview

Besides newly bred high yielding varieties and farmers’ varieties, the Act introduces a third category of varieties which may be registered under the PVP system, namely

2412 See Sec. 26(5)2413 See Sec. 41(1)2414 See Sec. 41(1).2415 See Sec. 41(2), (3).2416 A centre “may verify the claim […] in such a manner as it deems fit and if it is satisfied that such village or local community has contributed significantly to the evolution of the variety […] it shall report its findings to the Authority”. See Sec. 41(2). 2417 See Sec. 41(3).2418 See id.2419 See Sec. 41(4).2420 Personal communication dated 21 April 2004.

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“extant varieties” (which confusingly include farmers’ varieties).2421 These varieties, which would not normally qualify for protection under a conventional PBRs regime because they are not new, can now be registered for PVP and thus removed from the public domain. The owner enjoys the same rights as a breeder who is granted a certificate for a new variety.2422 In many cases these owners will be public breeding institutions as they have developed the bulk of self- and open-pollinated varieties now in circulation.

Where the applicant does not succeed in establishing his position as a breeder, the Central Government or the State Government will be the owner of the PBRs under the Act.2423 Here the issue arises again how the term “breeder” will be interpreted. If breeder is construed narrowly a farmer who did not breed, evolve or develop a traditional variety in a narrow sense, but “just” carried on using and thus conserving it, might not be entitled to registration. The variety would be nevertheless registered if it is distinct, stable and uniform as defined by the Government Regulations under Sec. 15 (2). Consequently it would be removed from the public domain and put under the ownership of the Government. Due to the broad farmers’ privilege, this would normally not impact the activity of the applying farmers. Nevertheless this result would be in contradiction to the idea that farmers may register farmers’ varieties, including varieties which have been traditionally cultivated by them and wild relatives or varieties about which they have common knowledge.2424 As mentioned above, in order to implement the concept of farmers’ rights as expressed in the recitals, Sec. 2(c) will have to be interpreted in the broadest sense where farmers are concerned. Any bulk selection from traditional populations by farmers has to be considered as breeding or evolving a variety. If this interpretation is followed, cases where the ownership of varieties will accrue to the State could only occur where the applicant is not a farmer. Interestingly, according to Sec. 16(1) which specifies the persons who may apply for PVP, the Central Government and State Governments cannot take the initiative themselves and go for registration of extant varieties that cannot be traced back to a particular breeder.

2. Requirements for protection

a) Definition of extant variety

As outlined above, the definition of extant varieties comprises four alternatives. These reflect the drafting history and the endeavour of different stakeholders to have their material included in this provision. The term “extant variety” ultimately covers any variety in the public domain. The first alternative of the definition refers to varieties

2421 For the text of the definition in Sec. 2(j) of the PPV&FR Act, see below a).2422 See Sec. 28(1).2423 The Proviso to Sec. 28(1) defining the rights conferred by a PVP certificate specifies that “[…] in the case of an extant variety, unless a breeder or his successor establishes his right, the Central Government, and in cases where such extant variety is notified for a State or for any area thereof under section 5 of the Seeds Act, 1966 the State Government, shall be deemed to be the owner of such right.”2424 For the definition in Sec. 2(l) of the PPV&FR Act, see C.III.2.a).

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“notified under Section 5 of the Seeds Act, 1966”. This will mainly applies to varieties bred in the public sector,2425 as private seed companies have been reluctant to go for notification, which involves a time-consuming testing procedure in coordinated trials. Public sector varieties notified in the past will qualify for PBR protection, thus ending the current policy of free supply of public varieties to the private sector for multiplication and further development. The second alternative of Sec. 2(j) refers to the aforementioned farmers’ varieties. The third alternative of Sec. 2(j) relates to “a variety about which there is common knowledge” and, according to Dr. CHAKRABARTY, covers varieties which are growing in the country in remote localities and whose existence is known.2426 The fourth alternative relating to “any other variety which is in public domain” had been claimed by the private seed industry, which sought to make sure that they benefited from the same possibilities as the public sector.2427

b) Distinctness, uniformity, stability

As the idea of extant varieties is to provide protection to varieties which are already marketed or otherwise commonly known, novelty is not required.2428 The meaning of the DUS requirements may be reframed specifically for extant varieties by government regulations under Sec. 15(2). As explained above, this makes sense for farmers’varieties as they have difficulty meeting the standard DUS criteria. Commercial public and private sector varieties, however, even if the have been marketed prior to the introduction of the PPV&FR Act, do not raise the same issue. The introduction of a different standard for all categories of extant varieties therefore unnecessarily complicates the legislation and its implementation.

3. Registration

The registration of extant varieties (with the exception of farmers’ varieties)2429

follows the same procedure and formal requirements as a new variety. In particular, the application also has to contain the complete passport data of the parental lines and information on the contribution of a farmer, village community, institution or organisation in developing the variety. Likewise, the procedure for determination of benefit sharing by the Authority under Sec. 26 applies also to extant varieties.

2425 This was confirmed by Dr. Dolly CHAKRABARTY, Director (Seeds), Department of Agriculture and Cooperation, Ministry of Agriculture, in a personal conversation on 7 September 2001.2426 Personal conversation with Dr. Dolly CHAKRABARTY, as above note 2425. 2427 In a personal conversation on 31 August 2001, Mr. R.S. ARORA, Secretary General of the SAI, explained that the possibility to register varieties, which are already in the public domain, was against the spirit of the UPOV Convention. However, since the Bill introduced the concept of extant varieties, the private sector industry claimed the same right to register varieties which are already in the public domain.2428 See Sec. 15(2).2429 See Proviso to Sec. 18(1).

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4. Rights conferred

The breeder of an extant variety, the Central or the State Government,2430 as the case may be, enjoys the same exclusive rights as the breeder of a new variety. Thus his authorisation is required for producing, selling, marketing, distributing, importing or exporting the variety.2431 This will in particular impact small seed firms which are engaged in the production of public sector varieties. Their activity may in the future be subject to licence payments.

The period of validity of a PVP certificate for an extant variety is limited to “fifteen years from the date of notification of that variety by the Central Government under Section 5 of the Seeds Act, 1966”.2432 The Act does not address the case of those extant varieties which have not been notified under this provision, but it may be assumed that the latter are subject to the general rule. The total period of validity of a certificate related to such varieties would thus be 15 years.

V. Summary of part C

The PPV&FR Act combines different IP protection regimes in one law: firstly, a PBRs regime for new formal sector varieties; secondly, a sui generis system closely modelled after the PBRs system for the protection of farmers’ varieties; thirdly, a benefit-sharing mechanism for contributions of farmers and possibly other providers of germplasm to the development of formal sector varieties; and finally a PBRs type protection regime which confers rights to plant varieties bred in the past.

The PBRs regime is to a large extent based on the features of the UPOV regime and mixes elements of the 1978 and the 1991 Acts. Regrettably, the PPV&FR Act does not closely follow the UPOV model as concerns the concept of essential derivation. While the definition is the same, it is unclear what will be the actual effect of this concept in the Indian PBRs regime. The PPV&FR Act provides only for a special application procedure, but does not confer clear rights to the owner of the initial variety. The breeders’ exemption is explicitly laid down, but called into question by the benefit-sharing mechanism which is not limited to farmers’ varieties but could possibly also encompass material of formal sector breeders. The UPOV features are further modified or added to in several respects in order to protect the interests of farmers. Most importantly the PPV&FR Act provides for a broad farmers’ privilege, which allows for brown-bag seed sales.

The exclusive rights conferred to farmers applying for protection of a farmers’ variety are similar to those of formal sector breeders. The breeders’ exemption applies to the same extent. The definition of the protection requirements has been postponed to the elaboration of the regulations. The relationship between PBRs of farmers and PBRs of formal sector breeders has not been defined. It is in particular unclear whether a formal

2430 See Proviso to Sec. 28(1).2431 See Sec. 28 (1). 2432 See Sec. 24(6)(ii).

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sector variety which falls under the broader definition of a farmers’ variety could still find protection if it conforms to the higher DUS standards for formal sector varieties.

It is unclear whether both, farmer-breeders and formal sector breeders are entitled to benefit sharing. The benefit-sharing mechanism gives rise to the obligation of the formal sector breeders to pay a compensation to a national Gene Fund, where somebody claims to have contributed with his germplasm to the breeding result. It is unclear to what extent these contributors are legally entitled to receiving the benefit-sharing sum from the Gene Fund. The establishment of the contribution is sought to be facilitated by the requirement imposed on applicants for PBRs to provide a complete passport data of the parental lines along with the location from where the genetic material has been taken and information on farmers or village communities who have contributed to the development of the new variety. The amount of benefit sharing to be paid will be determined by the Protection of Plant Varieties and Farmers’ Rights Authority, established under the Act. This Authority is mainly composed of ex-officio members from government departments.

The protection for so-called extant varieties, a term which covers all crop material currently in the public domain follows the same principles as the PBRs protection for new varieties. The idea behind this regime is to enable the public sector to claim royalties from private sector firms which built their business on the multiplication of public sector varieties.

D. UPOV-CONFORMITY AND COMPLIANCE WITH INTERNATIONAL OBLIGATIONS

In the area of IP protection for crop genetic resources, international obligations for India currently arise from the TRIPS Agreement and the FAO International Treaty, which have been described in the second chapter of this paper. This part will measure the Indian patent and sui generis legislation against these standards. The Convention on Biological Diversity does not create any obligation of relevance in the present context.2433

India has taken steps to become a member of the 1978 Act of the UPOV Convention. During the drafting process of the PPV&FR Act numerous meetings took place between UPOV and officials of the Ministry of Agriculture.2434 In May 2002, the Indian Cabinet approved the proposal for India’s accession to the UPOV 1978 Act.2435

In June, India submitted a request to the Council to advice it in respect of the

2433 In particular, it does not oblige the State of origin of plant genetic resources to vest rights over these resources with the farmers or communities who use, conserve and develop them. See above, chapter 2, B.II.2434 See in particular UPOV Doc. C/35/2, at para. 60, 70, 91, 111 and 115. 2435 See ECONOMIC TIMES (2002). With the coming into force of the new Act, the 1978 Act would normally have been closed for further accessions. Yet, in 1997, UPOV had decided to permit accession to the 1978 Act to those States which had requested the Council’s advice on conformity of their legislation with the 1978 Act prior to the entry into force of the 1991 Act. This possibility was prolonged even beyond the initially set deadline for India, Nicaragua and Zimbabwe. See UPOV Doc. C/34/2, at para. 1 and 2.

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conformity of its laws.2436 This request was preliminarily examined by the Consultative Committee in its 64th session on 23 October 2002.2437 The Consultative Committee concluded that with regard to conformity with the 1978 Act of the Convention, further clarification was needed concerning the PPV&FR Act and its implementing regulations.2438 In the Annual Report 2004, it is only stated that the Committee continued the preliminary examination of the conformity of the Indian Act with the UPOV 1978 Act taking into account additional information provided by the Government of India. Nevertheless, by the time of the preparation of the UPOV Report on activities during the first nine months of 2005 India had still not acceded to the Organisation. While contacts with India are mentioned, apparently no furtherprogress has been made in the accession process.2439

Even if accession to the UPOV 1978 Act does not happen at all or at least not in the near future, the conformity with UPOV standards is an important issue, as it has implications for the question of whether India meets her obligations under Art. 27.3(b) of the TRIPS Agreement. For this reason, the conformity of the PPV&FR Act with the UPOV 1978 standards will be examined first in Section I. Sections II and III will analyse the compliance of this Act and of the Patent Act with the obligations under the TRIPS Agreement and the FAO International Treaty respectively.

I. Conformity of the PPV&FR Act with the standards of the UPOV 1978 Act

The reaction of the Consultative Committee of UPOV suggests that, in the view of the Organization, the PPV&FR Act is not in conformity with UPOV 1978. There are indeed valid arguments for this position, even though a more generous interpretation of the pertinent provisions might have been possible.

1. Distinctness requirement

As mentioned above, the Indian distinctness criterion establishes a higher threshold than the UPOV requirement, as the UPOV Convention, in its 1978 versions as well as in its 1991 version, does not permit that considerations of value or performance enter the DUS test which is different from the “value of cultivation and use” test.

2. Brown-bag sales by farmers

Under Art. 5(1), 1st sentence of the 1978 Act, Member States must at a minimum provide for exclusive rights covering the production for purposes of commercial marketing, the offering for sale and the marketing of reproductive or vegetative propagating material, as such, of the variety.

Sec. 39(1) (iv) of the PPV&FR permits inter alia farmer-to-farmer exchange and brown bag sales of protected varieties by farmers. The terms “commercial marketing”

2436 See UPOV Doc. C/36/3, at para. 4.2437 See UPOV Doc. C/37/2, at para. 11.2438 See id., at para. 12.2439 See UPOV Doc. C/39/3, at para. 1 et seq. and 83.

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and “offering for sale” in Art. 5(1) UPOV 1978 Act have been interpreted in a very narrow way by the Indian Government, insisting on the term “commercial”. “Commercial” in this interpretation requires a certain extent of sales and a certain degree of professionalism. In contrast brown bag sales, i.e. sales in undesignated bags without the brand name are seen as “non-commercial” practices. “Offering for sale” is interpreted to involve some special activity to attract clients, some kind of advertisement, which is not the case if a farmer with no allusions to a certain designated variety simply supplies some of this harvested material, if asked by a fellow-farmer who has seen the performance of the variety in the fields.

For the following discussion, two cases of farmer-to-farmer seed supply can be distinguished. One involves a pecuniary remuneration and is referred to as seed sale, the other is based on social relationships rather than remuneration and is often termed “over the fence”-exchange of saved seed. The transition between these two modes may be gradual.

Interestingly, the question whether or not seed sale or exchange may, under certain conditions, fall under the farmers’ privilege is not a major issue in the legal literature on the UPOV Convention. When the farmers’ privilege is discussed, often the focus is on on-farm seed saving.2440 Those rare authors who analyse the farmers’ privilege in detail tend to take a more restrictive view than the Indian Government. BYRNE, for instance, observes that an “indirect exemption” arises from the fact that a farmer may produce and sell part of his crop as consumption crop to a neighbouring farmer. The latter may decide to use this material as propagating material. “The vendor does not infringe the breeder’s right since he does not produce for the purposes of marketing, nor does he market, the reproductive material as such, of the protected variety.”2441

However, this controversial2442 interpretation would permit seed sales only in practice. A provision expressly allowing brown-bag sale would not be UPOV-conform. BYRNE emphasizes that “the present 1978 Convention does not exempt farmers’ activities from the scope of the breeder’s right, though national laws generally do (some indirectly).”2443 NEUMEIER states that besides seed saving for one’s own holding, the non-remunerated supply of seeds in the framework of “neighbourly help” [“Nachbarschaftshilfe”] may not be prohibited by the breeder, as it cannot be regarded as “commercial”.2444 Yet, he points out that this interpretation of the UPOV Convention is controversial. The question of whether limited seed sales by farmers could be exempted from the scope of PBRs is not addressed by NEUMEIER, but his reference only to seed supply free of charge [“kostenlos”] speaks for itself.

2440 See e.g. GREENGRASS (1993), at 61; TRITTON (1996), at 261; HEITZ (1987), at 82 et seq., who retraces the history of the Diplomatic Conference of 1957-1961; WIPO (1997), at 457/458 para. 27.14.2441 See BYRNE (1991), at 62.2442 The German Bundesgerichtshof, in a ruling of 15 December 1987 – “Achat”, concludes that not the intentions of the seller, but the definitive use of the material as propagation material is of prime importance/decisive. A good summary and references to opposite opinions is given by NEUMEIER (1990), at 153/154. 2443 See BYRNE (1991), at 62, who cites only the United States as an example.2444 See NEUMEIER (1990), at 42 and 152 et seq.

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Many European Member States, prior to the revisions following the 1991 Act, chose a formulation in their national laws such as “for the purposes of commercial marketing”,2445 “for the purposes of selling”2446 and the like2447 and thus left the way open for an interpretation allowing at least non-remunerated seed exchange. Yet, the author is not aware of any law in a European State member to the UPOV 1961 or 1978 Act that expressly allowed “over-the-fence” exchange or even brown-bag sales. To the contrary, even the implied exemption of non-remunerated seed exchange was always subject to debate. In Germany, for instance, the interpretation of “commercial marketing” [“gewerbsmäßiger Vertrieb”] has been settled to the disadvantage of seed selling farmers and is controversial as far as non-remunerated seed exchange is concerned. SCHADE/PFANNER favour a narrow interpretation of “gewerbsmäßig” and require that the concerned acts are profit or income orientated,2448 or even that they serve the purpose of professional seed marketing [“zum Zwecke des gewerbsmässigen Saatgutvetriebs”],2449 the latter opinion coming close to the Indian viewpoint. Consequently, seed exchange would fall outside the scope of the PBR. The opposite opinion in the literature holds that “commercial” refers to all acts that fall outside the private sphere and do not serve experimental or testing purposes.2450 According to this view, making a profit or a profit motive is not necessary.2451 Not all commentators draw the same conclusions from this definition. While it is clear that seed sales are prohibited, some authors and, more importantly the German lawmakers thought that there is leeway, for example, for gifts or neighbourly help.2452 This seems to be the dominant opinion in Germany.2453 Other authors conclude from the restriction of the exemption to the private sphere that farmers who earn their living by agriculture always act outside their private sphere when they save or supply seed, as this is related to their profession.2454

The European law and practice provides arguments for the UPOV 78 compliance of the Indian exemption of non-remunerated seed exchange, but provides no support for the Indian viewpoint that also brown-bag sales may be exempted. However, the US law and practice prior to 1994 may provide an argument for the Indian position. 7

2445 See § 15 (1) of the German Plant Variety Protection Law of 1977. 2446 See e.g. Sec. 4(1) of the British Plant Varieties and Seeds Act 1964. 2447 These States include the Netherlands and Denmark. See NEUMEIER (1990), at 156 and notes 425 and 427.2448 See SCHADE/PFANNER (1962), at 350.2449 See BÜTTNER, Die Saatgutordnung, eine Einführung in das Saaten- und Sortenrecht, Hannover 1954, at 18 point 29, and 76 point 142, as cited in NEUMEIER (1990), at 154.2450 See BRUCHHAUSEN (1985), at 196/197; NEUMEIER (1990), at 154 with further references in note 415; WUESTHOFF (1977), at 104, who specifies that in the IP context “gewerbsmäßig” does not have its natural meaning or the meaning given in penal law and industrial law; JÜHE (1963), at 528.2451 BRUCHHAUSEN (1985), 197; WUESHOFF (1977), at 104.2452 See Gesetzesbegründung zum Sortenschutzgesetz [Statement of reasons for the Plant Variety Act of 19??], BT-Drs. 10/816, at 20, quoted after WUESTHOFF et al. (1999), at 197, para. 344.2453 See WUESTHOFF (1999), at 197, para. 345.2454 See WUESTHOFF (1977), at 104.

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U.S.C. § 2543, which was part of the Plant Variety Act of 1970, contained until 19942455 a broad statutory exemption from infringement liability:

“Except to the extent that such action may constitute an infringement under subsections (3) and (4) of Section 2541[2456] of this title, it shall not infringe any right hereunder for a person to save seed produced by him from seed obtained […] by authority of the owner of the variety for seeding purposes and use such saved seed in the production of a crop for use on his farm, or for sale as provided in this section: Provided, That without regard to the provisions of Section 2541(3) of this title it shall not infringe any right hereunder for a person, whose primary farming occupation is the growing of crops for sale for other than reproductive purposes, to sell such saved seed to other persons so engaged, for reproductive purposes […].”

While there have been court disputes on the question of whether there is a limit to the quantity of protected seed that a farmer can sell under this exemption, there is no doubt that this US provision allowed farmers to sell seed. This provision remained in force when the United States became bound by the UPOV Convention.2457 As is evident from the relevant case law, the language of § 2543 allows different interpretations as to the amount of authorised seed sales. The US Court of Appeals for the Federal Circuit interpreted the statute to mean that a farmer may sell up to half of every crop he produces from PVPA protected seed to another farmer for use as seed.2458 This viewpoint was not shared by the US Supreme Court which held that the Act, as construed, prohibits farmers from marketing or selling seeds beyond the amount of saved seed necessary to replant his own acreage.2459 The argument was based on the reference to § 2541(3). A farmer does not qualify for the exemption from infringement liability if he has grown the variety “as a step in marketing”. This is considered to be the case, unless a farmer saves seed initially to replant his acreage, but then changes his plans. According to the Supreme Court, marketing does not require “extensive or coordinated selling activities, such as advertising, using an intervening sales

2455 This broad exemption is no longer part of the PVPA. Its language was narrowed in 1994. See Pub. L. No. 103-349, as quoted in “Delta and Pine Land Company and Mississippi Agricultural and Forestry Experiment Station v. the Sinkers Corporation”, U.S. Court of Appeals for the Federal Circuit, 177 F.3d 1343 (1999).2456 § 2541, in it relevant paragraphs provides that it is an infringement of the breeders’ rights to perform without authorization any of the following acts: “(3) sexually multiply the variety as a step in marketing (for growing purposes) the variety; or (4) use the novel variety in producing (as distinguished from developing) a hybrid or different variety therefrom”. (Emphasis added by the author.)2457 This happened on 8 November 1981, see UPOV, States Party to the International Convention for the Protection of New Varieties of Plants, link at http://www.upov.org/en/about/members/index.htm.2458 United States Court of Appeals for the Federal Circuit, 982 F.2d 486 (1992), as quoted by the Supreme Court of the United States, opinion of January 18, 1995, Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1995).2459 Supreme Court of the United States, opinion of 18 January 1995, Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1995). The United States Court of Appeals for the Federal Circuit (982 F.2d 486 (1992)), that had interpreted § 2543 to permit a farmer to sell up to half of every crop he produces, was reversed.

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representative, or similar extended merchandising or retail activities,” but that marketing is in process “even when the holding forth for sale relies upon no more than word-of-mouth advertising.”2460

In the context of the interpretation of the UPOV 1978 standards, the approach of the US Supreme Court to “marketing” seems to be the dominant view. Still the interpretation of the US Court of Appeals for the Federal Circuit possibly remained within the margin given by the UPOV 1978 Act to its Member States. The Office of UPOV acknowledged during the 1991 Revision process that under the national laws implementing the Convention “use [was] made of special forms of distribution [of seed] that may not necessarily be considered as marketing”, which included “production of seed by a cooperative for distribution to its members” and “sale or exchange between farmers”.2461 The Office, which was providing a “summary of various situations in which the protection afforded by plant breeders' rights was inadequate or could be considered as such”, did not conclude that this State practice was contrary to the Convention but that the concept of “marketing” as a basis for the exclusive rights conferred to the breeder might be too narrow.2462 This suggests that the US provision with its various possible interpretations was considered UPOV compatible.

If we just consider the wording of the UPOV Convention and the subsequent practice in the first three decades of its implementation there are arguments in favour of the consistency of Sec. 39(1)(iv) of the PPV&FR Act with Art. 5(1) of the UPOV 1978 Act.2463 Yet, concerning the accession of India to UPOV, it has to be taken into account that the interpretation of a Convention by its members may evolve over time. It is very unlikely that the current Member States of UPOV, which now adhere to a narrow interpretation of commercial marketing, will accept the Indian approach even within the framework of the 1978 Act.

3. Benefit sharing

a) The principle

The Indian Act introduces a compensation claim of the provider of germplasm used in the development of a variety. It does not subject this use to the authorisation of the germplasm provider. The principle therefore is not in conflict with the wording of Art. 5(3) of the UPOV 1978 Act. Yet, it might contravene the spirit of this provision if

2460 The Court thus disagrees with the Court of Appeals, which had defined “marketing” with reference to these activities.2461 See UPOV Doc. CAJ/XVIII/6, at 2/3.2462 See id., at 1/2.2463 The Indian exemption is at the same time broader and narrower than the US provision. There is no express limitation of the exemption to farmers whose primary occupation is the growing of crops for sale other than reproductive purposes. On the other hand, only brown-bag sales are permitted. This restriction will probably have the same result as the condition of primary occupation. It is difficult to imagine how a farmer could make seed production his primary occupation if any promotional activity other than word-of-mouth advertising are prohibited. This will automatically limit the amount and radius of the sales.

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applied to all germplasm, including improved formal sector varieties. Breeders would tend to avoid germplasm which could give rise to compensation claims. The positive effect of the breeders’ privilege on breeding progress would thus be called into question. The situation is different if the interpretation suggested above is followed, which limits the concept to contributions by farmers, village and tribal communities. Only specific subject matter would be removed from the germplasm pool that is not only legally but also practically freely accessible as breeding material.

b) Requirement to indicate the pedigree, especially the use and origin of farmers’ varieties

What could possibly contradict the provisions of the UPOV Convention, however, is the requirement to indicate the complete passport data of the parental lines/populations, the geographical location in India from where the genetic material has been taken and information relating to the contribution of farmers in developing the variety under Sec. 18(1)(e) of the PPV&FR Act. Likewise the obligation to file a “declaration that the genetic material or parental material acquired for breeding, evolving or developing the variety has been lawfully acquired” under Sec. 18(1)(h) of the PPV&FR Act could raise a problem. Art. 6(2) of the 1978 Act states that, provided the breeder complies with its “formalities” under national law, including the payment of fees, a UPOV Member State may not subject the grant of protection to requirements other than the criteria set out in Art. 6 (1) of the 1978 Act.2464 The term formalities is not defined and could at first glance be understood to include also the requirements under Sec. 18(1)(e) and (h) of the PVP&FR Act. The UPOV technical questionnaires to be filed by PVP applicants require “information on origin, maintenance and reproduction of the variety”.2465 However, this requirement has to be seen in the light of Art. 7 on examination of the variety, which states that “[f]or the purpose of [DUS] examination, the competent authorities of each member State of the Union may require the breeder to furnish all the necessary information, documents, propagation material or seeds.”2466 It would be contrary to Art. 6(2) read together with Art. 7 to make the grant of a PBR contingent on the delivery of information that is only useful for the establishment of a benefit-sharing case. This is also the view expressed taken by UPOV:2467

“As for the disclosure of origin of genetic resources, UPOV is not opposed to the disclosure, per se, of countries of origin or geographical origin of genetic resources in any way that will facilitate the examination of whether a variety qualifies for protection. It should be recalled, however, that under the UPOV Convention, protection shall be granted where the variety is new, distinct, uniform and stable. Further or different conditions for protection are excluded.”

Some of the elements that have to be contained in the application pursuant to Sec. 18(1)(e) can be regarded as necessary in order to establish distinctness from

2464 Which are commercial novelty, DUS and a denomination in accordance with Art. 13 of the Act. 2465 See, e.g. UPOV Docs. TG/3/11, at 31 and TG/16/4, Annex, at 1.2466 Emphasis added.2467 See UPOV (2002a), at para. 9.

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farmers’ varieties. It is a common practice in granting procedures to use the passport data of the parental lines to determine what other varieties have to be included in the growing test. The indication of the geographic location will also help in some cases to identify farmers’ varieties from which the examined variety has to be distinct. Yet, the other requirements and the declaration under Sec. 18(1)(c) are difficult to justify with necessities of the DUS examination.

A possible way to establish such requirements in a way consistent with the UPOV obligations is pointed out by the Vice-Secretary General of UPOV:2468

“The grant of protection should not give the holder or his licensee a positive right to exploit the variety; it is open to UPOV Contracting Parties to regulate the exploitation of varieties being part of a genetic resource falling within the provisions of Article 15 of the Convention on Biological Diversity where the prior informed consent of the person providing the resource has not been obtained.”

For breeders the difference between both legislative solutions is crucial. Even if the grant of a PBR does not give a positive right to exploit the variety, it will at least protect the breeder against the exploitation of his work by competitors firms.2469 The latter would, by the way, use this variety without paying any compensation to the farmers having contributed to the breeding result.

4. Compulsory licensing

Whether the compulsory licensing regime is in line with the UPOV Convention would seem to depend on the interpretation of the Indian Act. Art. 9 of the UPOV 1978 Act allows for the restriction of the free exercise of the exclusive right accorded to the breeder for reasons of public interest. However, “when any such restriction is made in order to ensure the widespread distribution of the variety, the Member State of the Union concerned shall take all necessary measures to ensure that the breeder receives equitable remuneration.”2470 The PPV&FR Act, which requires the Authority merely to “endeavour to secure […] reasonable compensation to the breeder”,2471 could conflict with this provision if the compensation is not definitely accorded in each individual case.

5. Conclusion

The interpretation of an international treaty can evolve over time if the Member States agree on a new interpretation. The reticent reaction of the UPOV Consultative Committee towards the Indian PPV&FR Act suggests that the current interpretation of the provision on the farmers’ privilege is more restrictive than it may have been in the first decade of its application. Following this interpretation, Sec. 39(1)(iv) PPV&FR

2468 See JÖRDENS (2001).2469 Farmers could always invoke the farmers’ privilege.2470 Emphasis added.2471 See Sec. 51(1)(i) of the PPV&FR Act, emphasis added.

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Act is not in line with the UPOV Convention. Likewise some of the requirements in Sec. 18(1)(e) and (h) are not consistent with the commitments of a Member State to the UPOV 1978 Act.

II. Conformity of the PPV&FR Act and the Indian Patents Act with thestandards of the TRIPS Agreement

1. Effective sui generis system

According to the interpretation of Art. 27(3)(b) of the TRIPS Agreement outlined above, the term “effective sui generis system” cannot be simply equated with a system in conformity with the UPOV 1978 Act. Yet, States are not totally free in framing their protection system either. The regime has to confer proprietary rights to the variety, i.e. rights to exclude others from the use of the protected plant variety. At the same time, Member States may provide for exceptions to and limitations of these rights. Beyond this point, there is considerable uncertainty and it is difficult to predict how a dispute settlement panel would decide. It is suggested in this paper that, as concerns the scope of exceptions and limitations of breeders’ rights, the UPOV 1978 Act is an important line of orientation. The more a regime departs from these standards of protection, which were apparently accepted by the WTO Member States as a balance between the interests of users and producers of technological knowledge, the greater the need to justify this deviation by arguments pertaining to “development objectives”, “social and economic welfare” and “public nutrition”.2472

a) Limitation of protection to certain genera and species

As explained earlier, the absence of a transitional arrangement and the “line of orientation” provided by the UPOV 1978 Act suggest that the limitation of protection to certain genera or species is TRIPS compliant.

b) Disclosure of origin requirements

The requirements to disclose the “complete passport data of the parental lines”, the geographical location and other information permitting the contribution of a traditional variety to be evaluated and traced back to a farming community, if applied in a reasonable way,2473 do not touch the core of breeders’ rights. The above-mentioned provision of the UPOV 1978 Act which restricts the requirements to which the grant of a PBR may be subjected can therefore not be regarded as a necessary element of a sui generis system in the sense of the TRIPS Agreement.

2472 See above, chapter 2, A.I.4.2473 Breeders may not have complete information on the origin of farmers’ varieties which they have collected in the past and maintained in their own germplasm collection. “Reasonable application” would mean that these difficulties are taken into account and that incomplete information is accepted where a breeder establishes that he has collected a farmers’ variety in the past.

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c) Brown-bag sales by farmers

As seen above, there are doubts whether the Indian provision on brown-bag sales is in line with Art. 5(1) of the UPOV 1978 Act. On the other hand, the scope for different interpretation left by the terms “commercial marketing” and State practice of some members until the 1980s suggest that the Indian legislation merely states explicitly what was tolerated practice under the laws implementing the UPOV 1978 Act. It is therefore submitted in this paper that the gap between the Indian provision and a UPOV compliant provision is only small and can be justified by arguments pertaining to development objectives, social and economic welfare, and public nutrition.

Since there is hardly any evidence on the impact of UPOV type PBR on informal sector seed supply, these arguments can only be based on a reasoned prognosis. As discussed above in chapter 6, there are serious concerns that even UPOV 1978 type PBRs could heavily impact the possibilities of small farmers to obtain seed from informal off-farm sources. This source of seed supply is of primordial importance, not only because it is often the only way of access to new seed technology but also because, more generally, many farmers believe that foreign fresh seeds yield better. As seen above, it could be argued that PVP does not restrict access to new technology but, in a dynamic perspective, encourages its creation and thus its availability. It could be further said that PVP concerns only a fraction of the seed in circulation leaving enough possibilities to farmers to get fresh seed from unprotected varieties. From a legal point of view PVP would indeed in no way impede farmers from providing themselves with fresh seed of varieties which are already in the public domain. The principal problems of exclusive rights preventing farmers from selling seed arise from the fact that the effect of any restriction will in all likelihood extend beyond its mere legal scope. Not only will farmers often be uncertain about their exact rights and obligations, but they will also not necessarily distinguish between modern varieties from different sources and they will integrate the new variety into the local gene pool without knowing how to deal with the resulting populations. One of the possible consequences might be that bigger farmers, who so far have an important role in the extension of new seed technology, would be reluctant to sell new varieties in general, i.e. even those varieties provided by the public sector with the permission to redistribute them to other farmers. A solution, which would affect the interests of breeders less severely, is not available, since restricting the broad farmers’ privilege to small farmers would not solve the problem of their access to new seed technology which they often obtain from bigger farmers. Other solutions should be explored in the future but so far they do not impose themselves as there remain serious doubts as to their practicability. Evidently a much more positive scenario would be conceivable. But given the importance of seed supply for food security at the individual and national level, a margin of appreciation needs to be left to the TRIPS Member States concerned.

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2. Compliance of patent protection for plant related inventions with TRIPSminimum standards

a) Patentable subject matter

It may be recalled that pursuant to Art. 27(1) read together with Art. 27(3) of the TRIPS Agreement patent protection has to be provided for product and process inventions in all fields of technology, but that plants and animals (other than microorganisms) and essentially biological processes for the production of plants or animals may be excluded from patentability.

The exclusion of the “discovery of any living thing or non-living substance occurring in nature” (Sec. 3(c) of the Patents Act) is, according to the interpretation of the TRIPSAgreement outlined above, in line with India’s obligations even if the borderline between invention and discovery were to be drawn in a way different from the European or US approach. It is suggested here that one TRIPS compatible interpretation of discovery, which had been discussed in Europe but is meanwhile the view of a small minority, focuses on the previous existence of the claimed subject matter. However, chimeric genes or genes with a modified coding sequence or chemically synthesised genes will have to be patentable, unless they fall under the exclusions allowed by Art. 27(3)(b) of the TRIPS Agreement.

As discussed earlier in chapter 2, Art. 27(3)(b) of the TRIPS Agreement does allow for the exclusion of plants in all stages of development, including isolated plant cells. Moreover the term “plant” can be interpreted to cover all plant parts including plant genetic components. According to this view the general exclusion under Sec. 3(j) of the Indian Patent Act of “plants […] in whole or any part thereof other than micro-organisms but including seeds, varieties and species” is TRIPS conform. Yet, this interpretation might be challenged by other TRIPS Member States.

b) Derived product protection for products obtained directly by a protected process

According to the interpretation of Art. 28(1)(b) and 27(3)(b) of the TRIPS Agreement developed in chapter 2 of this paper, the Indian legislation goes too far. The statement of Art. 28(1)(b) is clear and not in conflict with Art. 27(3)(b) of the TRIPS Agreement. Thus direct products of processes for the genetic manipulation of plant genes, plant cells and plants would have to be protected. Consequently, the proviso to Sec. 48(b) of the Patents Act reducing the scope of patent protection for certain products obtained directly by a process is not in compliance with the TRIPS Agreement insofar as products of non-“essentially biological processes” are concerned, such as modified cells, regenerated genetically or chemically modified plants.

On the other hand, the obligation to provide protection for breeding processes other than “essentially biological processes for the production of plants”, i.e. conventional breeding processes, may be interpreted not to include subsequent selection and hybridisation steps. Consequently, a variety bred by conventional methods using plant

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material modified according to a patented process is not a product obtained directly by this protected process.

c) Disclosure of origin requirement

As mentioned above, the Indian Patent Act contains only an obligation to disclose the source and geographical origin of the biological material used in an invention, but no proof of prior informed consent requirement. This approach is in line with India’s obligations under the TRIPS Agreement, as these requirements may be necessary to help examiners to assess novelty and inventiveness.2474

d) Compulsory licensing

The Indian compulsory licensing provisions raise several problems of compatibility with Art. 31 and 2(1) TRIPS Agreement read together with Art. 5(A) of the Paris Convention. Only major issues are outlined here.

Depending on the interpretation by the Controller, a conflict may arise from the discrepancy between the broad Indian concept of “reasonable requirements of the public” and the requirement under the Paris Convention that compulsory licences may in the case of failure to work or insufficient working only be granted to prevent abuses.2475 Art. 27(1) of the TRIPS Agreement stating that “patent rights [shall be] enjoyable without discrimination as to the place of invention, […] and whether products are imported or locally produced” rules out the possibility to consider working of a patent abroad as such as an abuse of the patent. Further, Sec. 90(1)(vi) appears to be in conflict with Art. 31(c) and (g) of the TRIPS Agreement. Both TRIPSprovisions give the patentee the possibility to remedy a situation which lead to the compulsory license and thus to influence its duration, whereas the Indian Act stipulates that the licence extends until the end of the patent term “unless a shorter period is consistent with public interest”.

III. Conformity with the standards of the PGRFA Treaty

Concerning the benefit-sharing mechanism introduced by the PPV&FR Act, curiously, it might be the unanimously welcomed PGRFA Treaty which gives rise to constraints for India. The Treaty creates a Multilateral System of Access and Benefit Sharing.2476

It may be recalled that the aim of this system is “to facilitate access to plant genetic resources for food and agriculture” and “to share, in a fair and equitable way, the benefits arising from the utilization these resources”. The Multilateral System has its own benefit-sharing system, where “level, form and manner of the payment” will be determined by the Governing Body established under Art. 19 of the Treaty.

2474 See above, chapter 2, A.II.3.c).2475 See Sec. 84(7) of the Indian Patents Act and Art. 5(2) of the Paris Convention as interpreted above, chapter 2, A.II.5.b).2476 See Part IV of the PGRFA Treaty.

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This raises the question whether a parallel national system of benefit sharing does not conflict with this international system which already intends to strike a fair balance between the interests of users and providers of plant genetic resources. Art. 12(3)(h) expressly states that “the Contracting Parties agree that access to plant genetic resources for food and agriculture found in in situ conditions will be provided according to national legislation […]”. It may be concluded e contrario that material conserved ex situ, for instance in nurseries of breeding firms or public ex situcollections, fall principally under the benefit-sharing mechanism of the Treaty once they are included in the Multilateral System. This happens automatically for genetic resources of the listed genera which are “under management and control of the Contracting Parties and in the public domain” and on a voluntary basis for the plant genetic resources of other holders.2477 Only in cases where proprietary rights are attributed to specific communities can their varieties be considered being outside the public domain. Yet, without exempting material which falls under the international regime, Sec. 20 of the Biological Diversity Act envisages that the National Biodiversity Authority may reject the application. Further, Sec. 21 stipulates, without any reference to the PGRFA Treaty, that this same Authority determines equitable benefit sharing. It is submitted here that the Indian legislation, in order to conform to the PGRFA Treaty, would need to be interpreted in a way exempting material accessed under the Multilateral System. This would principally concern the use of traditional varieties maintained ex situ by public institutions or private breeding firms. The Indian benefit-sharing mechanism under the PPV&FR Act would generally only apply to in situ material.

E. CONCLUSIONS

Faced with the challenges outlined in chapter 5 above, the Indian legislature has opted for the combination of a quite weak protection for plant related biotechnological inventions, a PBRs regime with a broad farmers’ privilege, a sui generis protection regime for crop genetic resources enhanced and conserved by farmers, as well as a protection regime for plant varieties developed in the past which is intended to strengthen the public sector.

Patent protection is provided only for biotechnological processes and microorganisms or parts thereof. Plants in whole or any part thereof are excluded from patentability. According to the interpretation favoured in this paper, this should be TRIPS conform. The chosen approach suggests that the Indian legislator, for the time being, sets on technology spillovers via imitation and prefers leaving more time to the Indian public and private sectors to build up their biotechnology competence.

The PBRs regime is to a large extent modelled after the UPOV Acts, but for reasons which have been explained in chapter 6, provides for a large farmers privilege, which allows even for brown-bag sales. Against this background this seems to be a reasonable solution, but the limited possibility of breeders to appropriate the added value of their new varieties is not taken into account in other features of the law.

2477 See Art. 11 of the PGRFA Treaty.

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PBRs protection and protection for the germplasm provided by farmers are for the first time addressed in one Act. This is a strong political signal which was certainly necessary to ensure the acceptance of PBRs. Yet, while the concepts of PBRs protection for farmers’ varieties and benefit sharing are without doubt the strength of this law, their implementation needs further discussion for the following reasons: Firstly, integrating farmers’ varieties into the PBRs system instead of having a separate part in the Act which deals specifically with farmers’ varieties may give rise to difficulties as the same standard cannot be applied to modern varieties and farmers’ varieties. This has been taken into account for the DUS requirements, but not, for instance, for the definition of essential derivation. Further it is regrettable that the legislature dodges the complicated question of how the DUS requirements should be defined and thus raises hopes which the PPV&FR Act will not be able to fulfil.

Secondly, the benefit-sharing mechanism introduced by the PPV&FR Act has several weaknesses. The advantage of the benefit-sharing concept as chosen by the Indian legislature certainly is that the effort of defining the relevant plant population or plant genetic trait, determining its dissemination, possibly finding its developers is only undertaken where the concerned germplasm has been actually used in formal sector breeding. This approach also avoids situations where the contribution of farmers’ varieties to a new variety is clear, but could not be taken into account without registration. However, the disadvantage is that breeders face undefined future financial obligations, which might constitute a disincentive to use the germplasm concerned. It may be recalled that breeders do have alternative ex situ sources for traditional germplasm and may prefer to use the Multilateral System for Access and Benefit Sharing under the PGRFA Treaty. Moreover, the content of the benefit-sharing mechanism was apparently changed during the drafting process by including formal sector breeders into the definition of the possible applicants. This enlargement, if interpreted literally by the Authority, could undermine the breeders’ privilege and be very counterproductive.

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CHAPTER 9: CONCLUSIONS

The previous chapters have shown that there is no unambiguous best solution, which irrefutably imposes itself as the right strategy. This is due to the considerable uncertainty about the precise effects of different types of plant-related IPRs. Especially the effects of patent protection on an emerging indigenous industry are unclear. There are strong arguments for a positive impact only where the local industry has already reached a competitive level of technological competence. But the uncertainty also extends to the factual situation in India. The available evidence on the biotechnology competence in the Indian public and private sectors is very limited. Moreover, regarding the introduction of a PBRs system different scenarios are conceivable of how the informal seed sector would be impacted by a narrow farmers’ privilegeprohibiting seed sales. The worst case scenario involves a break-down of the informal seed supply system. As mentioned in the introduction, a policy change impacting the agricultural sector always has to be carefully designed as it may impact the food security of a large number of farmers.

Against this background, in the following, rather cautious propositions are made which admittedly would introduce no radical new incentive for any of the three types of crop improvement activity in the focus here. In contrast to the Indian legislation, which takes a prudent attitude only towards the protection of formal sector germplasm, it is argued here that in the interdependent relationship between farmers, breeders, and plant genetic engineers, the benefit-sharing mechanism of the PPV&FR Act might be too burdensome for breeders.

The solution suggested here is further based on the consideration that “classical” IP systems should be regarded as “modular construction system” and that elements of different systems can be combined. The relationship between the innovator and his competitors, on the one hand, and between the innovator and the users of his technology, on the other hand, need to be considered separately. With respect to certain biotechnological inventions, for instance, it may be less sensible to adopt elements of the patent system among breeding companies than in the relationship between breeders and farmers.

The following parts will in turn discuss the shape of suitable regimes for the protection of formal sector varieties, farmers’ varieties, and plant related biotechnological inventions.

A. PROTECTION FOR FORMAL SECTOR VARIETIES

I. Need for and limits of private sector R&D

Many Indian authors argue that the task of plant breeding should remain in the hands of the public sector as profit orientation renders the private sector incapable of choosing the right R&D strategy which is oriented towards sustainable agricultural development. Others take the opposite view and consider the private sector as the better performing developer and supplier of plant varieties. It is assumed here that, in any case, private sector participation in crop R&D is necessary as the public sector

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does not possess enough funds to sufficiently invest in the technological solutions necessary to achieve a permanent growth of crop production.2478

It has been explained in chapter 6 that private sector breeders will probably also target and reach certain groups of small farmers and that high potential rain-fed zones will profit from private sector R&D. However, only limited private involvement can be expected in crop technology for poor farmers and for marginal heterogeneous environments.2479 This has to be taken into account when framing IPR legislation as neither the public sector should be hindered to provide seed for the farmers concerned nor should the current mechanism of seed supply which relies largely on informal sources be interrupted.

II. PBRs protection: In principle the suitable form of protection

Inferring from the experience gained in Europe and especially the views of stakeholders, the PBRs system can be considered a convincing solution for the protection of plant varieties.2480 Small and medium companies appreciate in particular the simplicity and the low costs of the system, as well as the free access to protected germplasm for the development of new varieties. The public sector should be able to benefit from this new protection, even if they may lose market shares in profitable markets to the private sector.2481 In the context of the aforementioned necessity to preserve the freedom to operate in technologies which could be used for answering the needs of small-scale farmers and farmers in marginal environments it is important to recall that PBRs are directed merely to a specific variety, not the underlying genetic components which remain free for further breeding.

The principle of essential derivation does not, as has been assumed in the Indian literature2482 undermine the breeders’ privilege. Since “cosmetic breeding” has become easier, and since there is a need in the plant biotechnology industry for finished high-yielding varieties for inserting their genetic constructs, the essential derivation concept is now a necessary element of a balanced PBRs protection regime.

III. Scope of the farmers’ privilege

The dilemma has been explained in detail in chapter 6.2483 On the one hand, the appropriability of part of the social benefits derived from improved varieties will determine the willingness of the private sector to invest in non-hybrid crops, especially in self-pollinated crops. On the other hand, the introduction of PVP bears the risk that the dissemination of varieties via the informal seed supply system breaks down, while the formal sector extension networks continue to concentrate on economically interesting markets. In a pessimistic scenario, farmers would not be sure about the

2478 See above, chapter 5, C.V.2.2479 See above, chapter 6, A.I.1.2480 See above, chapter 3, A.V.2481 See above, chapter 6, B.II.2482 See, e.g. SAHAI (1994c), at 88.2483 See above chapter 6, D.I.

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scope of the farmers’ privilege and the extent to which any kind of modern variety is actually covered by proprietary rights and would stop selling improved varieties altogether. In traditional agricultural systems the distinction between local and improved varieties is not clear-cut. Newly introduced material becomes part of the local gene pool and the distinction between local and improved varieties is eventually blurred. A farmer selling seed would often not know whether the degree of admixture with foreign seed or the degree of foreign contamination already makes a different variety out of the population which was initially protected by PBRs. He mighttherefore hesitate to sell seed. Moreover, farmers do not necessarily make a distinction between formal sector varieties from different sources. Consequently, the diffusion of public sector varieties could be hampered indirectly by a PBRs regime.

Exempting only small-scale farmers would not be a solution, as precisely the large-scale farmers are in terms of financial resources the ones who aliment the informal seed system with new varieties. They have a key role in distributing these varieties to smaller farmers. On the other hand, the solution chosen by the Indian legislator extending the farmers’ privilege to brown-bag seed sales may lead to a significant competition of farmers in seed supply even in areas where farmers should normally have sufficient resources to invest in improved varieties. Two compromises that might be explored are suggested here: Firstly, a claim of breeders to being remunerated could be introduced for cases where large-scale farmers sell proprietary varieties if the seed price reflects the added value of the new germplasm. However, the implementation of such as concept would be rather complicated. Secondly, the farmers’ privilege could be limited to sales to small-scale farmers. In this case, the privilege would only exempt those activities which are necessary for ensuring seed supply to more vulnerable groups of farmers. But the definition of small-scale farmer would need to be very clear and recognizable for farmers. Otherwise it could again have paralysing effects on the informal seed supply system.

The fact that the three solutions considered here, the Indian exemption of brown-bag sales just as the aforementioned two suggestions, allow for the dissemination of proprietary varieties at least to small-scale farmers without any return for the breeder of this variety must have implications for the other features of the IP protection system for crop genetic resources. Breeders already capture only part of the value of improved seed with the remainder going to farmers.

B. PROTECTION FOR FARMERS’ PLANT GENETIC RESOURCES

I. Need for in situ crop conservation and improvement

Farmers’ varieties provide not only risk advantages in marginal environments suffering from drought, heat, and soil problems, there is also a need for in situ crop genetic diversity in formal sector breeding. Farmers who resist the advantages of switching over to modern varieties, who dedicate their time to crop improvement, need an incentive for this activity just as formal sector breeders.

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However, it needs to be kept in mind, that farmers maintaining genetic diversity and traditional crop management practices may nevertheless be interested in and benefit from the provision of new germplasm. Even from the perspective of this group of farmers the incentives for and burdens on formal sector breeding therefore need to be balanced. It further needs to be kept in mind that India is bound by the PGRFA Treaty and will therefore have to exempt germplasm that falls under the Multilateral System of Access and Benefit Sharing from its benefit-sharing system under the PPV&FR Act. Consequently breeders have an alternative to in situ conserved farmers’ varieties. They seem, in any case, to be rather reluctant to broaden the genetic base of their varieties and use farmers’ varieties as parents.

II. Possible types of subject matter and scope of protection

Concerning the protectable subject matter, lawmakers in developing countries have two options. They may either protect stable farmers’ varieties or genes governing qualitative plant characters, or both. Both types of subject matter have disadvantages which need to be kept in mind when framing the system.

The disadvantage of the protection of stable farmers’ varieties is that, if overly broad rights are to be avoided, the varieties need to conform to (relaxed) DUS requirements, which allow to identify the variety over space and time. However, out-crossing species are naturally heterogeneous and in particular under the crop management practices of traditional farmers. A large share of the applications for the protection of open-pollinated farmers’ varieties would probably have to be refused. The advantage of this subject matter would be that its protection permits to prevent uses by breeders which are rightly perceived as misappropriation while at the same time not interfering with the breeders’ privilege.

The advantage of protecting the second type of subject matter is that single genes or clusters of genes governing valuable qualitative traits are what breeders are mostly interested in when using traditional germplasm. The disadvantage of the protection of genes governing qualitative characteristics is that there is necessarily a conflict with the idea of free availability of germplasm for plant breeding. Modern plant varieties often have a pedigree building on several dozens of other varieties and exhibit a large number of characteristics which are governed by a single gene or a cluster of genes.2484

Negotiating licenses for these characteristics would be a huge burden on breeding firms and also the public sector. Especially opponents of patents should consider that such a regime, if it confers exclusive rights, creates the same constraints as patents. In particular, it would raise the entry barriers to crop R&D, as firms would need to keep themselves informed about the presence of the protected genes which may not be identifiable merely on the basis of phenotypic or chemical analysis and may consequently require biotechnological capacity.

2484 For instance, insecticidal activity, protein against viral infection, resistance to herbicides, delay of senescence, tolerance to environmental stresses, improved nutritional quality of seed proteins and self-incompatibility. See GLICK/PASTERNAK (1998), at 427.

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A compromise may be to give the developers of the variety exhibiting the characteristic of interest to a breeder only a claim to remuneration, not an exclusive right. Since the breeder would later not need the authorisation of the right holder, he could possibly risk carrying out his breeding programme without knowing whether heis using protected genetic components.2485 This approach comes at first sight quite close to the benefit-sharing concept in the PPV&FR Act, which also does not necessitate previous registration and determines the contributions of specific genes of farmers’ varieties only a posteriori. However, it is suggested here that there should be a standard percentage to be paid from the seed sale benefits, rather than a complicated mechanism for deciding on the contribution and the amount of benefit sharing in each individual case. This burdens the breeding activity with a lot of uncertainty and might be a serious disincentive to crop R&D if combined with low appropriability of the benefits of the breeding result.

III. Right holders

It is submitted here that rights or entitlements to benefit sharing should be granted to village or tribal communities rather than individual farmers. If the remuneration paid by breeders is paid to a central fund with discretionary power to decide on the use of these payments, there is a risk that the economic and moral incentive for grassroot innovators gets partly lost. If the link between a variety and a community or a small number of communities can be established, they should be able to decide themselves on the use of the remuneration for their breeding effort. The community should then decide whether it attributes the rights to an individual farmer or a household which has played an outstanding role in the development of this farmers’ variety.

C. PROTECTION FOR PLANT RELATED BIOTECHNOLOGICAL INVENTIONS

I. Need for biotechnology R&D

The conclusions of this paper are based on the assumption that genetically modified crops are a necessary element in the strategy to maintain food security in India. This seems to correspond to a majority view among agricultural experts and policymakers in India. Only under this assumption does patent protection for plant related innovations need to be considered as an instrument of Indian agricultural R&D policy.

II. Pros and cons of product patents

In the context of plant biotechnology, the Indian Patent Act provides only for the protection of biotechnological processes and parts of microorganism which can be interesting for crop transformation (such as plasmids). The protection of processes for crop transformation are of limited interest to crop genetic engineers. In contrast to medicinal biotechnology, the aim of a plant transformation process using recombinant DNA technology is not to produce a component on an industrial scale. It is normally

2485 Additionally there should be a provision against “royalty” stacking.

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sufficient to perform the transformation process a single time in each target species. Consequently, trade secrets are likely to be sufficient to protect these processes.

What could be of interest as an incentive for the Indian plant related biotechnology industry are product patents. However, since the patent system is based on the principle of dependency (in the legal sense of the term) and may limit the freedom to operate of “weaker” competitors, it needs to be taken into account whether or not Indian firms and agencies have a sufficient biotechnology capacity in the private as well as in the public sectors to benefit from patent protection. It needs to be recalled that economic science does not clearly define the roles of imitation, foreign direct investments, and (voluntary) technology transfer by foreign firms in the development of domestic capacity. We actually do not know whether or not a strong involvement of foreign firms in a phase where a developing country still needs to catch up technologically is beneficial or not. But the argument that patent protection might lead to a long-term domination of MNCs rather than the development of domestic capacity is difficult to refute on the basis of the scant available evidence.

III. Unclear level of biotechnological competence

Unfortunately, giving a meaningful picture of the current biotechnological capacity in the plant improvement sector is very difficult. There is no unified definition of the term biotechnology. Statistics do not differentiate between firms involved in micro-propagation and those doing biotechnological R&D. Figures on total public R&D investments in biotechnology do not exist. Expert views can be interpreted in different ways. No clear picture emerges. But it seems very well possible that the Indian industry and public sector research institutions have acquired sufficient scientific competence and only lack the competence to transform science into commercial applications. At this threshold and given the funding constraints that private firms experience, a middle path might be the most suitable solution.

IV. Modulated patent protection

The patent system can be modulated and adapted to the needs of a specific sector. The European system has shown the path by excluding plant varieties and essentially biological processes from patentability and providing even for an, albeit restricted, farmers’ privilege. India could go several steps further and ensure that the patent protection regime concerns neither farmers nor, in principle, conventional breeders, unless genetically modified plant traits. In the Indian context the farmers’ privilege could even take the form of the broad privilege as provided under the PPV&FR Act.

India might additionally exclude the protection of any plant genetic component which is indigenous to the species claimed and of plants defined by a combination of these components and other traits. Otherwise the breeders’ exemption could be undermined in the long run. Conventional breeders in India, which for the most part do not have biotechnological competence yet, should not be obliged to keep track of the presence of genes which are at their disposal without the help of genetic engineers. Furthermore, certain explicit legislative measures could ensure that the extent of the

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conferred exclusive right corresponds to the actual contribution to the art. Purpose-bound product protection for DNA molecules should be introduced. A stricterapproach towards claims defining the invention merely in terms of the effect to be achieved should be defined. Finally, the Indian legislator could consider introducing an obligation for inventors to refer in their product claim to the process for obtaining the product if the inventiveness does not lie in the conception of its structural features but merely in the provision of a process for obtaining this product.2486

Depending on the actual status of the Indian biotechnology sector, it could further be considered to introduce only a protection for small steps of innovation. It is stressed in the Indian literature that Indian companies do not find sufficient funding for research programmes leading to break-through inventions. This could suggest a solution where break-through inventions can be imitated, but “small” inventions are protected. It is submitted here that this kind of protection could be obtained by linking the disclosure requirement closer to the examples described in the patent specification. Where only wheat has been transformed, only plants of this species may be claimed. Where a chimeric gene has been construed with the promoter X only this genetic construct may be claimed. This approach certainly would require an in-depth analysis on where to draw the borderline. For instance, working examples would often relate to a specific strain of the transformed crop. But a restriction of protection to this strain would be of no interest at all to the inventor. Trivial generalizations would need to be permitted.

D. OUTLOOK

The Indian breeding and biotechnology sectors are in movement. Where stronger protection appears to be premature today, the situation may change in the next decade and make full-fledged patent protection worthwhile for the leading domestic firms and public sector institutions. In the long run, India might have an interest in introducing a protection system for the genes governing qualitative characters found in farmers’varieties as well as patent protection for transgenic plants. Likewise, the agricultural sector might change, more and more farmers might rely on formal sector seed supply so that the groups of farmers or regions which depend on informal sector dissemination of germplasm could be clearly identified and exemptions be more clearly targeted. For today, however, the cautious approach of the Indian legislature should not be too hastily criticized. At the same time, Indian lawmakers should endeavour in this phase of small steps to keep the balance between rights and obligations of formal sector and informal sector stakeholders.

2486 Such a restriction could have for instance prevented the aforementioned claims directed to transgenic soybean seed. See chapter 3, B.I.4.b).

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GLOSSARY

Allele: Alternative form of a gene. Alleles of a specific gene occupy the same location on homologous chromosomes.

Arhar: pigeon pea.

Bajra: Pearl millet.

Breeder seed: In the formal seed sector, the transfer of seed in a sufficient quantity from the breeder to the farmers involves the production of at least three seedgenerations. These consecutive generations are termed breeder, foundation and certified or labelled seed.

Coarse cereals: The term coarse cereals covers all cereals except rice and wheat. The economically important cereals cultivated in India include sorghum, maize, pearl millet, finger millet, Kodo millet and other small millets.

Crop genetic resources: Crop genetic resources relates to plant genetic resources (as defined below) of all species of economic and/or social interest, particularly for agriculture at present or in the future.

Crop germplasm: “Crop germplasm” can be defined as an array of plant materials, such as landraces, improved varieties or wild relatives, that serves as a basis for crop improvement.

Crore: 1 crore = 10 000 000

Cross-pollinated varieties: varieties whose individual plants are pollinated with pollen from another plant.

Crossing block: Nurseries that contain the active parental stocks that breeders use in their crossing programmes.

Cultivar: A distinctive cultivated variety of plants produced by selective breeding by humans and maintained by humans.

Dicotyledonous plants: flowering plants with an embryo which bears two embryonicleafs (cotyledons).

DNA: Deoxyribonucleic acid; the genetic material of living things.

Enzyme: An enzyme is a protein that catalyses, i.e. speeds up, a chemical reaction.

EST: Expressed sequence tags (ESTs) are cDNA molecules which correspond to the coding parts of the genes active in a particular cell type at a given time. They can therefore be used to “tag” or “label” the genes concerned by permitting a hybridisation reaction between the complementary nucleotide sequences.

Glossary

460

Ex situ conservation: Ex situ conservation refers to maintenance of genetic resources in gene banks, botanical gardens, and agricultural research stations.

Farmers’ varieties: Farmers’ varieties are rather heterogeneous crop populations that humans deliberately cultivate and that are not products of modern plant breeding or subject to purifying selection.

Formal sector research/crop improvement/breeding: Formal sector research/crop improvement/breeding is understood here as activity that takes place in public academic or other scientific institutions, as well as in corporate research laboratories, greenhouses, test fields, etc. and is carried out by specialized researchers/breeders/staff. It is embedded in a scientific knowledge system which assumes that researchers have the potential to understand the processes of nature, to describe underlying causalities in theory and to harness theory to manipulate the environment. VAN DUSSELDORP/BOX (1993), at 22, term this the “voluntaristic worldview”. In contrast, informal sector research takes place outside this organized environment, is not necessarily based on the voluntaristic worldview and may therefore arrive at different causal explanations.

Formal sector seed supply system: This system of seed supply is characterized byscientific plant breeding work, planned production, some form of mechanized processing, named varieties (registered, released or notified), seed marketed in identified packages, a system of quality assurance to buyers and also by a clear distinction between seed and grain.

Foundation seed: See breeder seed.

Genotype: The genetic constitution of an individual or group.

Genetic drift: Random fluctuations in allelic or genotypic frequencies in a population resulting from its small size.

Germplasm: see crop germplasm.

Grassroot: “Grassroot” is used here as a synonym for “informal”. See the definition of “formal sector research/crop improvement/breeding”.

Green Revolution: An increase of crop production, especially in developing countries, achieved by using artificial fertilizers, pesticides, and high-yielding crop varieties.

Heterozygous: Genotype with Individuals in which the two alleles at corresponding loci on homologous chromosomes differ for one or more loci.

Homozygous: Individuals in which the two alleles at corresponding loci on homologous chromosomes are identical for one or more loci.

Glossary

461

Hybrid: A hybrid is a cross between two plants of different genotypes. However, in commercial grain crops, the term hybrid refers more specifically to the first generation plant resulting from the cross of two carefully selected parent plants.

Inbreeding: See self-pollinated.

Informal seed supply system: The informal seed supply system is based on farmer-selected and farm-saved seed (of landraces or of modern high yielding varieties) and on localized farmer-to-farmer or community-to-community exchanges and characterized by the absence of control by official monitoring bodies at different points of the seed production chain.

In situ conservation: In situ conservation designates the maintenance of genetic resources in the habitats where they arose and continue evolving.

Jowar: Sorghum.

Kinase: A protein kinase is an enzyme that modifies other proteins by chemically adding phosphate groups to them. This usually results in a functional change of the target protein, by changing enzyme activity, cellular location or association with other proteins.

Lakh: 1 lakh = 100 000.

Landraces: See farmers’ varieties.

Line: A family of plants resulting from linebreeding, i.e. of the mating, usually in successive generations, of individuals having a known common ancestor.

Linkage: Association in inheritance of genes and the traits they control which is due to the location of genes in proximity on the same chromosome.

Locus: The site on the chromosome where a specific gene is located.

Lok Sabha: House of the people; one of the two houses of the Indian Parliament.

Metapopulation: Group of subpopulations interconnected by geneflow and submitted to local colonisation and replacement by new populations.

Monocotyledonous plants: Flowering plants with a single embryonic leaf (cotyledon).

Moong: Green gram.

Mutagen: An agent that gives rise to mutations. Common mutagens include UV radiations and certain chemicals.

Mutagenesis: Mutagenesis refers to the development of mutations, i.e. of alterations in a gene sequence.

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462

Mutant: "Mutant" refers to an organism, population, gene, etc. which differs from the corresponding wild type by one or more mutations, i.e. a heritable change in DNA sequence.

Oligonucleotide (biotechterms.org): Short chains of nucleotides (i.e. single-stranded DNA or RNA) that have been synthesized by chemically linking together a number of specific nucleotides.

Open-pollinated varieties: Varieties of cross-pollinated species which, in contrast to hybrid production, are not pollinated artificially, but naturally by the wind, animals etc.

Outbreeding: See cross-pollinated.

Panchayat: Village council.

Phenotype: A set of observable characteristics of an individual or group which results from the interaction of its genotype with its environment.

Phosphatase: Protein phosphatases are enzymes that remove phosphate groups that have been attached to proteins by protein kinases. Whereas a kinase activates an enzyme by phosphate addition, a phosphatase inactivates an enzyme by phosphate removal.

Plant genetic resources: The term is understood here in the sense of Art. 2 of the International Undertaking on Plant Genetic Resources (FAO Res. 8/83), i.e. ‘plant genetic resources’ means the reproductive or vegetative propagating material of the following categories of plants: (i) cultivated varieties (cultivars) in current use and newly developed varieties; (ii) obsolete cultivars; (iii) landraces/farmers’ varieties; (iv) wild and weed species, near relatives of cultivated varieties; and (v) special genetic stocks (including elite and current breeders’ lines and mutants).

Polymerase: Polymerase is a general term for an enzyme that catalyses addition of subunits to a polymer.

Polymerase chain reaction (PCR): A method of creating copies of specific fragments of DNA by using termostable DNA polymerase, desoxyribonucleotides, and primer sequences in multiple cycles of denaturation, renaturation and DNA synthesis.

Polypeptide: A polypeptide is a linear series of amino acids linked together with peptide bonds, also called protein or protein chain.

Population: A community of individuals which shares a common gene pool.

Protein: Linear polymer of amino acids linked together in a specific sequence by covalent linkages, the so-called peptide bonds. See ALBERTS et al., Glossary G-15, and p. 61.

Glossary

463

Promoter: A segment of DNA to which RNA polymerase will bind. The promoter sequence aligns the RNA polymerase so that transcription will initiate at a specific nucleotide.

Purchasing power parity (PPP): Purchasing power parity is a theoretical exchange rate derived from the perceived parity of purchasing power of a currency in relation to another currency. The PPP exchange rate is calculated from the relative value of a currency based on the amount of a “basket” of goods the currency will buy in their nation of usage.

Qualitative character: A character which is governed by one or a few major genes and concerns discontinuous variations, i.e. differences which can be classified into discrete classes. These traits which can be introduced into plants by a single gene or a cluster of genes include, for instance, insecticidal activity, proteins against viral infection, resistance to herbicides, delay of senescence, tolerance of certain environmental stresses, improved nutritional quality of seed proteins, and self-incompatibility, the latter character being important for hybrid breeding.

Quantitative character: A character in which genetic variation is continuous so that classification into discrete categories is not feasible. This type of characters is as a rule controlled by many genes, each of these polygenes having only a small effect.

Ragi: finger millet.

Rajya Sabha: Council of States, one of the two houses of Parliament in India.

RNA: Ribonucleic acid.

Self-pollinated varieties: varieties whose individual plants are pollinated with the pollen from the same plant.

Stakeholder: Persons or entities with a stake in a particular issue or resource, e.g. in the IP context producers and users of knowledge.

Strain: breed or stock of plants.

Tur: pigeon pea.

Urad: Black gram.

List of cited experts and stakeholders consulted orally or in writing

465

LIST OF CITED EXPERTS AND STAKEHOLDERS CONSULTED ORALLY OR IN WRITING2487

Mr. R.S. ARORA, Secretary General of the Seed Association of India (SAI).

Dr. S. BALA RAVI, Assistant Director General (IPR), Indian Council of Agricultural Research (ICAR).

Dr. Dolly CHAKRABARTY, Director (Seeds), Department of Agriculture and Cooperation, Ministry of Agriculture, Government of India.

Dr. R.C. JAIN, Additional Secretary, Department of Agriculture and Cooperation, Ministry of Agriculture.

Dr. Rolf JÖRDENS, Vice-Secretary General, UPOV.

Dr. Sudhir KOCHHAR, Principal Scientist (Plant Breeding/IPR), Indian Council of Agricultural Research (ICAR).

Dr. Margaret LLEWELYN, Senior Lecturer, Sheffield Institute for Biotechnological Law and Ethic (SIBLE), Department of Law, University of Sheffield.

Professor Dr. sc.agr. E. MELCHINGER, Head of Department, Institute for Plant Breeding, Seed Science and Population Genetics, University of Hohenheim, Germany.

Dr. Shashank MAURIA, Principal Scientist, Crop Science Division, Indian Council of Agricultural Research (ICAR).

Mr. Deepak MULLICK, Managing Director, Advanta India Ltd., Director (International Affairs) of the Association of Seed Industry.

Dr. K.K. NARAYANAN, Managing Director of Metahelix Life Sciences, Bangalore.

Dr. Suman SAHAI, President of the NGO Gene Campaign.

Dr. S. SELVARAJAN, Principal Scientist, National Centre for Agricultural Economics and Policy Research (NCAP)

Dr. K.K. TRIPATHI, Advisor (Industrial Biotechnology), Department of Biotechnology, Government of India.

Dr. S. VISALAKSHI, Senior Scientist at the National Institute of Science, Technology and Development Studies (NISTADS).

Mr. Douglas WATERHOUSE, Registrar, Australian Plant Breeders Rights’ Office.

2487 The title or occupation refers to the time of the interview/correspondence.

References

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European Patent Office Boards of Appeal (available at http://legal.european-patent-office.org/dg3/search_dg3.htm)

Enlarged Board of Appeal

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Technical Boards of Appeal

T 26/81, decision of 28 October 1981 – “Containers/ICI”, OJ EPO 1982, 211.

T 150/82, decision of 7 February 1984 – “Claim Categories/IFF”, OJ EPO 1984, 309.

T 49/83, decision of 26 July 1983 – “Propagating material/CIBA-GEIGY”, OJ EPO 1984, 112.

T 206/83, decision of 26 March 1986 – “Pyridine herbicides/ICI”, OJ EPO, 1987, 5.

T 68/85, decision of 27 October 1988 – “Synergistic herbicides/CIBA-GEIGY”, OJ EPO 1987, 228.

T 133/85, decision of 25 August 1987 – “Amendments/XEROX”, OJ EPO 1988, 441.

T 248/85, decision of 21 January 1986 – “Radiation Processing/BICC”, OJ EPO 1986, 261.

T 292/85, decision of 27 January 1988 – “Polypeptide expression/GENENTECH I”, OJ EPO 1989, 275.

T 301/87, decision of 16 February 1989 – “Alpha Inferons/BIOGEN”, OJ EPO 1990, 335.

T 320/87, decision of 10 November 1988 – “Hybrid Plants/LUBRIZOL GENETICS”, 1990 OJ EPO, 71, also reproduced in 21 IIC 1990, 361.

T 19/90, decision of 3 October 1990 – “Onco-mouse/HARVARD”, OJ EPO 1990, 476, also reproduced in 22 IIC (1991), pp. 74 – 84.

T 130/90, decision of 28 February 1991 – “Recombinant monoclonal antibody/THE BOARD OF REGENTS, TEXAS”, not published in the OJ EPO.

T 409/91, decision of 18 March 1993 – “Fuel oils/EXXON”, OJ EPO 1994, 653.

T 435/91, decision of 9 March 1994 – “Detergents/UNILEVER”, OJ EPO 1995, 188.

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T 694/92, decision of 8 May 1996 – “Modifying plant cells/MYCOGEN”, OJ EPO 1997, 408.

T 939/92, decision of 12 September 1995 – “Triazoles/AGREVO”, OJ EPO 1996, 309.

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T 296/93, 28 July 1994 – “Hepatitis B virus antigen production/BIOGEN”, OJ EPC 1995, 627.

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T 412/93, decision of 21 November 1994 – “Erythropoietin/KIRIN-AMGEN”, not published in the OJ EPO.

T 475/93, decision of 17 July 1997 – “IFN-II/CHIRON”, not published in the OJ EPO.

T 380/94, decision of 12 November 1998 – “Insect Control/PGS”, not published in the OJ EPO.

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T 1051/96, decision of 13 July 1999 – “Genetic linkages/PIONEER”, not published in the OJ EPO.

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T 333/97, decision of 5 October 2000 – “Somatic changes/MONSANTO”, not published in the OJ EPO.

T 338/97, decision of 7 February 2000 – “Molecular Farming/CALGENE”, not published in the OJ EPO.

T 479/97, decision of 6 September 2001 – “Expression System/NOVARTIS”, not published in the OJ EPO.

T 838/97, decision of 14 November 2000 – “Translational inhibition/RESEARCH FOUNDATION”, not published in the OJ EPO.

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T 1052/98, decision of 8 May 2001 – “Gene Switch/SYNGENTA”, not published in the OJ EPO.

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T 363/00, decision of 30 March 2004 – “Beer adsorbent/PQ”, not published in the OJ EPO.

T 505/00, decision of 25 March 2005 – “Assay of free and complexed prostate-specific antigen (PSA)”, not published in the OJ EPO.

T 626/00, decision of 30 September 2004 – “Framework-mutated antibodies/WELLCOME”, not published in the OJ EPO.

T 787/00, decision of 26 June 2003 – “Erythropoietin/KIRIN-AMGEN”, not published in the OJ EPO.

T 984/00, decision of 18 June 2002 – “Ti-plasmid vectors/MAX-PLANCK-GESELLSCHAFT”, not published in the OJ EPO.

T 1066/00, decision of 14 July 2005 – “Protoplasten-Transformation/SYNGENTA”, not published in the OJ EPO.

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T 179/01, decision of 6 April 2005 – “Herbicide resistant plants/MONSANTO”, not published in the OJ EPO.

T 416/01, decision of 8 March 2005 – “Method for controlling fungi on plants/THERMO TRILOGY CORPORATION”, not published in the OJ EPO.

T 475/01, decision of 15 June 2004 – “Phosphinothricin-Resistenzgen/BAYER”, not published in the OJ EPO.

T 579/01, decision of 30 June 2004 – “Cytoplasmic male sterile plants/ENZA ZADEN”, not published in the OJ EPO.

T 619/01, decision of 20 August 2004 – “Immunotoxins/RESEARCH DEVELOPMENT FOUNDATION”, not published in the OJ EPO.

T 1198/01, decision of 22 September 2004 – “Vaccines expressed in plants/PRODIGENE”, not published in the OJ EPO.

T 1231/01, decision of 14 September 2005– “Porcine virus/SOLVAY”, not published in the OJ EPO.

T 875/02, decisions of 7 December 2004 – “Microbial phytase/BASF”, not published in the OJ EPO.

T 890/02, decision of 14 October 2004 – “Gène chimère/BAYER”, OJ EPO 2005, 497.

References

526

T 891/02, decision of 29 October 2003– “Potato starch/BASF”, not published in the OJ EPO.

T 1006/02, decision of 9 December 2004 – “Selection of transformed cells/SYNGENTA”, not published in the OJ EPO.

T 1026/02, decision of 5 March 2004 – “Oilseed Brassica/PIONEER HI-BRED INTERNAT., INC.”, not published in the OJ EPO.

T 90/03, decision of 17 March 2005 – “Phytase/BASF”, not published in the OJ EPO.

T 182/03, decision of 23 June 2004 – “Phosphodiesterase/SMITHKLINE BEECHAM”, not published in the OJ EPO.

T 315/03, decision of 6 July 2004 – “Transgenic animals/HARVARD”, to be published in the OJ EPO.

T 843/03, decision of 25 October 2004 – “Human papillomavirus/THE UNIVERSITY OF ROCHESTER”, not published in the OJ EPO.

T 877/03, decision of 4 July 2005 – “Anti-CD30 antibodies/ROCHE”, not published in the OJ EPO.

T 539/04, decision of 28 June 2005 - “Transgenic plants/SYNGENTA”, not published in the OJ EPO.

T 870/04, decision of 11 May 2005 – “BDP1 Phosphatase/MAX-PLANCK”, not published in the OJ EPO.

Opposition Divisions

V 8/94, decision of 8 December 1994, OJ EPO 1995, 388.

British courts

House of Lords, decision of 31 October 1996 – “Biogen Inc v. Medeva PLC”, 1997 RPC 1, also reproduced in Frederik Abbott/Thomas Cottier/Francis Gurry, “The International Intellectual Property System: Commentary and Materials”, Kluwer Law International, The Hague, London, Boston 1999, pp. 45 – 63.

House of Lords, decision of 21 October 2004 – “Kirin-Amgen Inc. v. Hoechst Marion Roussel Ltd.”, available at http://www.publications.parliament.uk/pa/ld200304/ldjudgmt/jd041021/kirin.pdf, last visited 31 October 2005.

Plant Varieties and Seeds Tribunal, decision of 25 September 1975 – “Daehnfeldt v. Controller of Plant Varieties”, [1976] Fleet Street Reports, pp. 95 – 106.

Canadian courts

References

527

Federal Court of Canada, decision of 29 March 2001 – “Monsanto Canada Inc. and Monsanto Company (Plaintiffs) and Percy Schmeiser and Schmeiser Enterprises Ltd. (Defendants)”, 2001 FCT 256, available at http://decisions.fct-cf.gc.ca/fct/2001/2001fct256.html, last visited 25 March 2003.

German courts

Bundesgerichtshof [German Federal Supreme Court], decision of 5 December 1995 –“Polyferon”, GRUR 1996, 190.

Bundesgerichtshof [German Federal Supreme Court], decision of 30 March 1993 –“Tetraploide Kamille” [Tetraploid camomile], GRUR 1993, 651, 654.

Bundesgerichtshof [German Federal Supreme Court], decision of 15 December 1987 –“Achat”, GRUR 1988, p. 370.

Bundesgerichtshof [German Federal Supreme Court], decision of 12 February 1987 –“Tollwutvirus”, GRUR Int. 1987, 357.

Bundesgerichtshof [German Federal Supreme Court], decision of 11 March 1975 –“Bäckerhefe” [Baker’s Yeast], 6 IIC 1975, 207.

Bundesgerichtshof [German Federal Supreme Court], decision of 6 July 1971 –“Trioxane/Farbwerke Hoechst A.G.” IIC 1972, p. 226.

Bundesgerichtshof [German Federal Supreme Court], decision of March 27, 1969 –“Rote Taube” [Red Dove], IIC 1970, 136, 138.

Bundespatentgericht [German Federal Patent Court], decision of April 15, 1999 –“Schnee” [Snow], GRUR 2000, pp. 312 – 314.

Bundespatentgericht [German Federal Patent Court], decision of 5 April 1978 –“Lactobacillus bavaricus”, GRUR 1978, 586, 587.

US courts and appeal boards

Supreme Court of the United States, decision of 10 December 2001 – “J.E.M. AG Supply, Inc. dba Farm Advantage, Inc., et al. v. Pioneer Hi-Bred International Inc.”, reproduced in the proceedings of the Expert Workshop on “Gewerbliche Schutzrechte für Sorten, Pflanzen und pflanzenbiotechnologische Erfindungen,” on December 12, 2002 in Frankfurt, organized by the Forum Institut für Management; or in GRUR Int. 2002, pp. 355 – 361.

US Court of Appeals, Federal Circuit, decision of 10 June 1985 – “In re Durden, Jr., et al.”, No. 85 – 601, 226 USPQ 1985, pp. 359 – 362.

Patent and Trademark Office Board of Appeals and Interferences, opinion dated 18 September 1985, as corrected 24 September 1985 – “Ex parte Hibberd”, (1985) 227 USPQ, pp. 443 – 448.

References

528

WTO Panels and Appellate Body (available at http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm)

WT/DS2/AB/R, Report of the Appellate Body of 29 April 1996 – “United States –Standards for Reformulated and Conventional Gasoline”.

WT/DS26/AB/R, Report of the Appellate Body of 16 January 1998 – “EC Measures Concerning Meat and Meat Products (Hormones)”.

WT/DS50/AB/R, Report of the Appellate Body of 19 December 1997 – “India –Patent Protection for Pharmaceutical and Agricultural Chemical Products”.

WT/DS79/R, Report of the Panel of 24 August 1998 – “India – Patent Protection for Pharmaceutical and Agricultural Chemical Products”.

WT/DS114/R, Report of the Panel of 17 March 2000 – “Canada – Patent Protection of Pharmaceutical Products”.

WT/DS114/13, Award of the Arbitrator of 18 August 2000, “Canada – Patent Protection of Pharmaceutical Products”.

WT/DS135/AB/R, Report of the Appellate Body of 12 March 2001 – “European Communities – Measures Affecting Asbestos and Asbestos-Containing Products”.

WT/DS170/AB/R, Report of the Appellate Body of 18 September 2000 – “Canada –Term of Patent Protection”.