To Sow or Not to Sow – Dilemmas at the

Intersection of IP with Trade

Srividhya RagavanUniversity of Oklahoma Law

Center

Objective

The international regime for protection of plant varieties when examined in the light of the failed agricultural subsidies negotiations threatens food security in developing nations.

What is the international regime for protecting plants

Article 27.3 TRIPS “…members shall provide for the protection of

plant varieties either by patents or an effective sui generis system or by any combination thereof”

– What is a sui generis system?– Systems engineered to the unique, regional needs of

a particular country or nation

Disagreement on whether the reference to an effective sui generis system is a reference to UPOV

Issues with the international regime

The international regime for protection of plant varieties :

–Over protects hybrid varieties Danger: Loss of genetic materials

Over protects Hybrids

United States as an example: Plant patent (Sexually reproduced plants) Plant Variety Protection Act (Asexually

reproduced plants) Utility Patents

Judicial level:– Diamond v. Chakrabarthy– JEM Agro

UPOV as an example of the international regime

History as a tool of the breeder– Nothing wrong with that, except that its

effectiveness is limited in countries, like India, that may want to protect farmers.

Effectiveness of UPOV limited because

Diluted Eligibility Requirements

Exaggerated rights for breeders

Limited public interest exceptions

Diluted Eligibility Requirements Protection under UPOV for

–new (Novelty)–useful (Utility)– stable (Stability)–distinct varieties (nonobviousness)

Commercial Novelty The variety shall be deemed to be new if, at the date of filing of

the application for a breeder's right, propagating or harvested material of the variety has not been sold or otherwise disposed of to others, by or with the consent of the breeder, for purposes of exploitation of the variety

• ONLY Sale or disposal of the application material defeats novelty

• Cultivation, reference collection, publication etc., will not defeat novelty

• Breeder can potentially claim protection over genetic varieties that have been cultivated for centuries but never sold or disposed.

DistinctivenessArticle 7 of UPOV: “The variety shall be deemed to be

distinct if it is clearly distinguishable from any other variety whose existence is a matter of common knowledge at the time of filing the application.”

Application materials that are a matter of common knowledge can pass the test of distinctiveness if it can be distinguished from another material that is a matter of common knowledge.

Art 14:

A variety is “a matter of common knowledge”– if it has been subject “of an application for

the granting of a breeder's right” or

– has been entered in the official register of varieties, in any country”

Distinctiveness standard - ability to distinguish from another variety entered in the official register or, for which an application has been made.

Thus, varieties already cultivated, being cultivated, well known, and indistinguishable from well known varieties will pass the “novelty” threshold if it has not been sold and the “distinctiveness” threshold so long as close cousins of the variety have not been subject to an application for breeder’s rights. – The broad definition increases the scope for appropriation

from the public domain– CBD Art. 1 + Art. 15= mandatory to share genetic resources– Under UPOV they may become eligible for protection

After embodying diluted Eligibility requirements, UPOV compounds the problems by:

Exaggerated Scope of breeders’ rights

Limited public interest exceptions

Exaggerated Scope of protection

Breeder’s right covers protected variety and “varieties not clearly distinguishable” from protected variety (art. 14 (5)(a)) and “essentially derived variety”

Art. 14 (5)(b) - Breeder can exercise rights over ‘essentially derived varieties’

‘Essentially derived varieties’ are:– predominantly derived from the protected variety – derived from a variety that is predominantly derived

from the initial variety, and – it is clearly distinguishable from the initial variety

In effect, breeder’s rights extends both clearly distinguishable and clearly indistinguishable derivative varieties.– Provides scope for breeder to claim rights over farmer’s

experimented variety.

Hybrid

Protection over‘clearly indistinguishable varieties’

Protection over clearly distingusishable but essentially derived material

Limitations on Breeder’s Rights

Breeder’s rights have few restrictions– Art 14(1)(b): “Breeder may make his authorization

subject to conditions and limitations”– Art 17: “No Contracting Party may restrict the free

exercise of a breeder's right for reasons other than of public interest”

“Public interest” Similarity with the pharmaceutical patents argument

Implications of UPOV Privatization Monopolization

– B and M report argues that in the case of rice 4 firms dominated the number of certificates

– Profs Kesan & Janis study of Soya and Corn patents between 1970 and 2002 argue that half the issued certificates on Soy were owned by 3 companies; and by 4 companies in the case of corn.

Effect of privatization of breeding Increases pricing discretion of the monopoly

holder– B and M report suggests that seed prices increased by

176% between 1970-1980.– Correlation between monopoly and pricing evidence

in several other areas of IP Aggressive use of genetic diversity without

corresponding returns (B and M)

Effect of privatization of breeding

Increased R & D as a possible advantage

– (Pre-1970): R & D increased proportionally with the increase in sale of seeds

– (Post-1970): Companies spent less on R & D per sales-dollar earned

Effect of privatization of breeding Increased R & D as a possible

advantage– (Pre-1970): R & D increased proportionally

with the increase in sale of seeds – (Post-1970): Companies spent less on R &

D per sales-dollar earned

R & D dependent on the market and sales– Supported by studies also from

pharmaceutical industry

Concentration of R & D on commercially yielding varieties– B and M Report attributes impact of PVPA on Soy in

the US on size of the market and expectation of yield

Sales in developing nations bound to be lower– Analogy with pharmaceutical market

Effect of privatization of breeding

Danger of reduced allocation of R and D for developing country crops – Parallel with the pharmaceutical debate

Direct affect on investment– Also enhanced because of type of crops that are generally

grown Developed nations prefer more open pollinated crops while

hybrid crops are preferred in developing nations.– Eg: US: Soybeans accounted for 1,022 applications (20 % of

the total) and wheat for 472 (10%) of the applications. Only 12 % of the total applications were for corn varieties.

– CHINA: 61% percent of the total applications was for maize, followed by rice (21%), wheat (4 %), and soy (3%).

Effect of privatization of breeding

Effect of subsidies on PBR Assuming that PBR results in higher yield, newer

varieties and better crop:

Economies will flourish if farmers can sell the produce

Farmers will not be able to sell because of the dumping of subsidized products in both local and international markets

Economic effect of PBR Current operation of PBR will also be subject to operations under

Agricultural Agreement– Art 13 of AoA precluded challenges for noncompliance with

Agricultural liberalization commitments– Exceptions to GATT, AoA and SCM permitted developed nations to

maintain subsidies of totaling upto $ 150 billion

Dumping caused from the agricultural subsidies of several developed nations– Resale in third markets at less than the cost of production in the

exporting country; The export subsidies, direct payments and credits bridge the gap between high cost of production, high internal prices and lower world prices.

Effect of PBR on Farming Abundant availability of food becomes inconsequential if majority

population (farmers) suffers from lack of trade and hence is unable to afford food

Farmer cannot stock and reuse the seed because UPOV prohibits it (art 14)

Farmer cannot continue farming because he may not be able to afford the cost of seed for the next cultivation– Throws farmers out of business– Creates more international trade barriers – atleast does not reduce the

international trade barriers.

Majority of population will be affected if the produce of the farmers cannot be sold

Objective based approach Public Benefit & Reduction of trade barriers

– US: Effect of the cost of foreign trade barriers on U.S. agricultural exports for 1997 was around $5.8 billion annually (includes barriers from agricultural subsidies in third world and due to lack of plant variety protection).

– Developing nations’ loss from agricultural subsidies of developed nations: $ 24 billion.

– Latin America and the Caribbean: US$8.3 billion in annual income from agriculture

– Asia: US$6.6 billion;– Sub-Saharan Africa: US$2 billion. – Total agricultural exports displaced by trade distorting measures of

developed nations alone from developing countries: US$40 billion per year

Source: USDA's Economic Research Service and Foreign Agricultural Service

Suggestions Agricultural liberalization to precede PBR

Differential monopoly term– Reduction of monopoly term– Differential pricing

Amendments in case of emergency– Definition of public interest– Introduction of compulsory licensing– Involvement of international organization– Exceptions to least developed nations