37036 NOTES AGRICULTURAL & RURAL DEVELOPMENT Intellectual Property Rights for Agriculture in International Trade and Investment Agreements: ISSUE 11 JUNE A Plant Breeding Perspective 2006 BY: DEREK EATON, NIELS LOUWAARS, AND ROB TRIPP Intellectual property rights (IPRs) have become a topic sures for developing countries to go farther than on the international trade agenda since the negotia- required by TRIPS, notably in bilateral trade negotia- tion and adoption of the Agreement on Trade-Related tions and discussions in the framework of the World Aspects of Intellectual Property Rights (TRIPS) as part Intellectual Property Organization (WIPO). Such of the overall package of agreements leading to the strengthened IPRs need to be justified on the basis of creation of the World Trade Organization (WTO). careful assessment of the national breeding and farm- TRIPS places obligations on all WTO members to offer ing sectors and a process of consultation among the specified minimum standards of intellectual property main stakeholders. (IP) protection in a wide range of sectors. But the agreement also leaves developing countries a certain This note argues that policymakers need to pay close amount of flexibility in how they fulfill their obliga- attention to the role that IPRs can play in agricultural tions. This flexibility allows countries to tailor their IPR development by providing incentives for both domestic regimes to their own specific circumstances. and foreign investments. The note explains the special nature of plant breeding that has given rise to unique The agricultural sector, and in particular plant breed- forms of IPRs and reviews how this special nature is ing, is one area where this flexibility is quite broad. reflected in article 27(3)b of the TRIPS Agreement. The However, in the case of plant breeding, there are pres- note also reviews how developing countries are choos- ing to meet their obligations. It highlights the concern that both bilateral and multilateral trade negotiations may exert pressure on countries to adopt IPR regimes that are more rigid than those required to support national agricultural development. This brief is based on a study on the impact of IPRs in the breeding industry in developing countries undertaken in 2004 for the World Bank (Louwaars et al., 2005). PLANT BREEDING: A SPECIAL CASE BPlant breeding has traditionally presented challenges for patent protection due to a number of technical and legal factors that include difficulties in defining, as well as verifying, whether the breeding of a new plant vari- ety constitutes a new invention, as well as the fact that plants can self-reproduce. Nevertheless, there have been arguments for establishing some mechanism to reward the creativity inherent in new crop varieties almost from the beginning of modern plant breeding. During the last century, a specific type of IPR for new plant varieties, known as plant breeder's rights, has been developed. A system of plant variety protection (PVP) based on such ability to create transgenic varieties by transferring seg- rights can be seen as a modified patent. To qualify for pro- ments of DNA from one organism to another, there is an tection, a variety must be "new" (in the market) and must equally important contribution from a wide range of also be shown to be distinct, uniform, and stable (the DUS tools and processes that considerably improve the preci- criteria). The right holder then has exclusive rights to com- sion and speed of plant breeding. The genes and tech- mercialize the variety, but there are two important differ- niques used in developing transgenic crops, as well as the ences from patent protection. The "farmers' privilege" diagnostic tools and processes of marker-assisted breed- (which is distinct from "farmers' rights") allows farmers to ing that produce conventional plant varieties, are all can- save, reuse, and possibly exchange or sell their own har- didates for patent protection. Keeping pace with these vested seed. The "breeder's exemption" means that other rapid developments remains a challenge for patent sys- breeding companies and organizations are generally free tems, resulting in many areas of uncertainty and dispute. to use a protected variety for further breeding efforts. IPRs for biotechnology will present a complex set of These differences from patent systems are considered issues for policymakers, researchers, and the commercial necessary to avoid undue risks to seed supply, which is sector for many years to come. critical to agricultural output, food security, and rural liveli- hoods. PVP is thus rooted in agriculture and has been able to balance the rights of the inventor and those of farmers TRIPS ARTICLE 27(3)B while recognizing the importance of breeding and seeds Article 27(3)b of the TRIPS Agreement requires all WTO for agricultural output and rural livelihood. members to provide some effective form of IP protection Early PVP systems were eventually harmonized through for plant varieties, as well as patent protection for all the Convention for the Protection of New Varieties of other inventions, including those in plant biotechnology. Plants (Paris, 1961), which also established the Union for Under TRIPS, countries thus have flexibility in whether the Protection of New Varieties of Plants (UPOV). UPOV they offer patents or PVP (or both) for plant varieties. provides technical guidelines for standardized application Furthermore, there are no specific requirements on the procedures, and specifies the scope and coverage of pro- scope or strength of PVP protection. tection. The UPOV system was revised in 1972, 1978, and 1991, gradually strengthening breeders' rights by Although not specifically mentioned in the TRIPS adding crop species, restricting farm-saving of seed, and Agreement, UPOV is the main existing system for pro- extending the scope of protection. These adjustments tecting plant varieties, and it is seen by many as the most were made in reaction to evolving circumstances in seed straightforward choice to comply with the TRIPS markets in industrialized countries. Agreement. Countries that now wish to join UPOV need to comply with the rules and standards of the latest con- In the past two decades, biotechnology has transformed vention (of 1991), which provides broader protection for the science of plant breeding. Aside from the well-known the breeder than the previous (1978) convention. Table 1. Countries That Have Acceded to the Different UPOV Conventions Convention UPOV members 1961/72 Belgium,* Spain 1978 Argentina, Bolivia, Brazil, Canada, Chile, China,* Colombia, Ecuador, France, Ireland, Italy, Kenya, Mexico, New Zealand, Nicaragua, Norway, Panama, Paraguay, Portugal, Slovakia, South Africa, Switzerland, Trinidad and Tobago, Ukraine, Uruguay 1991 Albania, Australia, Austria, Azerbaijan, Belarus, Bulgaria, Croatia, Czech Republic, Denmark,* Estonia, Finland, Germany, Hungary, Israel, Japan, Jordan, Korea, Rep. of, Kyrgyz Republic, Latvia, Lithuania, Netherlands,* Poland, Moldova, Romania, Russian Federation, Singapore, Slovenia, Sweden, Tunisia, United Kingdom, United States*, Uzbekistan * = with reservations Source: UPOV, October 2006 2 However, several developing countries have designed OTHER DEVELOPMENTS protection systems based on the 1978 version because AFFECTING IPRS they consider its greater flexibility more appropriate for Several types of negotiations could reduce the flexibility their agricultural conditions. Even though they are then provided by TRIPS. At a multilateral level, negotiations are not eligible to join UPOV, they need this flexibility to sus- continuing under the auspices of WIPO on a substantive tain the dynamic farmers' seed systems that provide patent law treaty. If the resulting agreement includes a more than 80 percent of the seed used by farmers in requirement that plants or plant varieties should also be most countries. patentable, then this would effectively eliminate the choice that countries have under TRIPS to choose PVP instead of Although the decision to join UPOV may be problematic patent protection. for many developing countries, the use of the UPOV guidelines for testing new varieties against DUS criteria As negotiations in the WTO Doha Round have been making offers clear advantages. The further adoption of such a slow progress on further trade liberalization, many develop- harmonized approach opens the door to acceptance ing countries have been interested in securing improved of test reports from other countries and to regional col- market access to the European Union (EU) or the United laboration on testing. This can lower costs for PVP agen- States by means of bilateral or regional trade agreements. cies and applicants, shorten the approval process, and Other initiatives include bilateral agreements on investment facilitate seed trade. or development cooperation. These agreements may con- tain provisions about IPRs, including a commitment by the However, the harmonization of criteria for granting pro- developing country to either join UPOV by adhering to the tection does not have to go hand in hand with uniform 1991 Act or even to offer patents for plant varieties. As such scope or coverage of protection. Countries can base their provisions may go beyond the minimum requirements PVP system on UPOV testing guidelines but maintain under TRIPS, they are sometimes termed TRIPS-plus. For a broader farmers' privilege. Similarly, countries can example, under a development cooperation agreement choose to offer stronger protection for more commer- negotiated in 1999 with the EU, Bangladesh will endeavor cialized crops and relatively little for subsistence crops, to join UPOV by adhering to the 1991 Act, and under a maintaining the option to adjust the system as the seed bilateral trade agreement with the United States, Chile will sector develops. provide patent protection for plant varieties. Table 2. Comparison of Major IP Systems for Plant Varieties Criteria UPOV 1978 UPOV 1991 Utility patents (United States) Requirements Novelty (in trade) Novelty (in trade) Novelty (in invention) Distinctness Distinctness Utility Uniformity Uniformity Non-obviousness Stability Stability Industrial application Seed saving Allowed for private and For use on own holding Not allowed without noncommercial use only (but for listed consent of patent holder crops only) Seed exchange Allowed for Not allowed without Not allowed without noncommercial use consent of right holder consent of patent holder Breeder's exemption Use in breeding allowed Use in breeding allowed Not allowed without (but sharing rights in consent of patent holder case of essentially derived varieties (EDVs)) Source: Adapted from Helfer (2002), Krattiger (2004), and van Wijk et al. (2003). 3 The development of a competitive and viable plant anced against the need to ensure an equitable, transpar- breeding sector can benefit from an appropriately ent, and flexible IPR system that encourages local inno- designed IPR system. While not essential for the initial vation. They should have the opportunity to consult development of a commercial seed sector, a properly bal- widely when considering possible commitments to go anced combination of PVP, trademarks, and patents can further than the minimum requirements of TRIPS. The contribute to a fair and competitive business environ- flexibilities under TRIPS allow developing countries to tai- ment that stimulates innovation and provides trans- lor their IPR systems to fit their needs and to make nec- parency for farmers. These are the considerations upon essary adjustments as their economies grow. Admittedly, which policy choices in the seed sector should be based, negotiating international agreements has become a and care should be taken that trade considerations do daunting task, given the range of issues put on the table not dictate development pathways for national seed sys- at once. Governments need to find ways to ensure tems. IPR systems that are overly ambitious relative to appropriate consultation, for example, between different local needs and capacities are likely to lead to missed ministries. IPRs are typically under the jurisdiction of an opportunities in seed sector development, to create economic ministry, but in the case of plant breeding, the implementation problems that undermine the credibility ministry of agriculture will be an equally important part- of the system, and to divert resources and attention from ner for consultation. But it is also important that consul- more important priorities. tation and debate involve other stakeholders, perhaps first and foremost farmers, who should be the principal beneficiaries of the development of a commercial seed GIVING DUE ATTENTION sector. A wider debate on such decisions should improve TO IPRS understanding and commitment in what is often seen to IPRs are a tool that can support agricultural development. be a controversial field. To do so, IPRs need to be tailored to the circumstances of the country. Developing countries, with their diversity of REFERENCES farmers and seed systems, present special challenges for designing a supportive IPR system. The goal should be to Helfer, L.R. 2002. "Intellectual Property Rights in Plant Varieties: An Overview with Options for National Governments." Food provide incentives for seed sector development while not and Agriculture Organization (FAO) Legal Papers #31, FAO, creating unnecessary or unrealistic limitations on the Rome, Italy. practices and livelihoods of smallholder farmers. Meeting Krattiger, A. 2004. "Editor's Introduction: PVP and Agricultural this goal requires a careful balancing of rights and obli- Productivity." IP Strategy Today 9: ii-vi. gations, which may imply adapting, as opposed to simply adopting, the standard models available. Louwaars, N.P., R. Tripp, D. Eaton, V. Henson-Apollonio, R. Hu, M. Mendoza, F. Muhhuku, S. Pal, and J. Wekundah. 2005. "Impacts of Strengthened Intellectual Property Rights Regimes on the Plant Policymakers responsible for implementing TRIPS need to Breeding Industry in Developing Countries: A Synthesis of Five Case Studies." Wageningen, Centre for Genetic Resources, be aware of the complexity of the national seed systems The Netherlands. through which IPRs will be implemented. Policymakers charged with negotiating trade agreements need to real- van Wijk, A.J.P., N.P. Louwaars, and D.J.F. Eaton. 2004. "Framework for the Introduction of Plant Variety Protection ize that the role of IPRs is to stimulate innovation in their in Developing Countries." Wageningen, Centre for Genetic countries, and that trade considerations must be bal- Resources, The Netherlands. Derek Eaton is an Economist at the Agricultural Economics Research Institute at Wageningen University and Research Centre, Wageningen, The Netherlands. Niels Louwaars is a Senior Scientist at the Centre for Genetic Resources at Wageningen University and Research Centre, Wageningen, The Netherlands. Rob Tripp is a Research Fellow for the Rural Policy and Governance Group at the Overseas Development Institute, London, United Kingdom. This note was prepared with financial contributions by the World Bank and the Netherlands Ministry of Agriculture, Nature and Food Quality. You can download the text of this note, at www.worldbank.org/rural or email ard@worldbank.org. THEWORLDBANK 1818 H Street. NW Washington, DC 20433 www.worldbank.org/rural