37038 NOTES AGRICULTURAL & RURAL DEVELOPMENT Public Research in Plant Breeding and Intellectual Property Rights: A Call for New Institutional Policies ISSUE 13 JUNE 2006 BY: NIELS LOUWAARS, ROB TRIPP, AND DEREK EATON Intellectual property rights (IPRs) are being introduced Research managers and policymakers responsible for or strengthened in developing countries as a result of public research, who are commonly in favor of using the Agreement on Trade-Related Aspects of IPRs in public sector breeding, have to consider the Intellectual Property Rights (TRIPS) of the World Trade potential impact on breeding strategies and on the Organization (WTO), bilateral trade negotiations, and costs and benefits before giving their unconditional pressure from export-oriented sectors in agriculture. support to IPRs in plant breeding and their use in pub- IPRs in agriculture provide a temporary exclusive right lic agricultural research. on the commercialization of the protected subject matter (the invention) and are meant primarily to stim- This brief is based on a study on the impact of IPRs in ulate investment in breeding and seed supply. the breeding industry in developing countries executed in 2004 for the World Bank (Louwaars et al., 2005). Different IPRs are available to the plant-breeding sec- tor: plant breeder's rights, patents, and trademarks are important; trade secrets and database protection EMBRACING IPRS may play a role in specific fields. According to TRIPS, There are three main reasons for national agricultural countries can choose between patents and "an effec- research institutes (NARIs) to embrace IPRs: tive sui generis system" for protecting plant varieties. Very few countries (e.g., the United States, Japan) cur- · Recognition rently provide strong patent protection to varieties; · Technology access and transfer most opt for plant breeder's rights. Many biotechno- · Revenue logical inventions are, however, patentable, and the scope of these patents may include varieties. In commercial breeding, the last reason prevails; IPRs cre- ate additional value for the plant variety by providing a legal basis for license contracts between the breeder and seed producers, commonly including a royalty payment. IPRs are thus an important tool to recoup the investment in research. In public research, however, variety develop- ment is paid from public funds and research managers tend to put some emphasis on the other objectives, too. IPRs formally link the variety to the institute and individ- ual breeders (recognition); furthermore, they may facili- tate seed production when only an exclusive market will entice an individual seed producer to take a new variety into its product range (to facilitate technology transfer), and technology may be more easily acquired if patents can be traded. However, given the declining public funding of agricul- tural research in many countries, revenue generation is an attractive option for many public institutions. Income from IPRs can--if the institution does not have to and breeding for low-input agriculture may be reversed surrender it to the treasury--support the institution to when NARIs focus on using IPRs for revenue generation. cover operational costs and even hire additional staff, and Another strategy of a NARI may be to secure a choice of provides managers with a financial tool to support partic- varieties for farmers in a market that may otherwise be ularly innovative researchers or research groups. Public dominated by large commercial firms owing to IPRs. varieties can generate a ready income, especially if vari- However, this latter option also may shift research prior- eties developed in the past can be protected. ities away from smallholder farmers' needs. Policymakers and research managers need to carefully IMPACT ON consider the impact of the use of IPRs in public breed- BREEDING STRATEGIES ing before including protection in their research strate- gies. If NARIs are not supposed to protect their inven- Introducing the concept of revenue generation in public tions, governments will have to provide the necessary plant breeding is likely to have an impact on the distri- funds for research. bution of funds within the NARI and on the breeding strategies applied. Since IPRs can be generated in plant breeding relatively easily compared with other sciences, IMPACT ON THE NARI the pursuit of revenue could lead to important disci- ORGANIZATION plines such as soil science, social sciences, and plant Protecting Own Intellectual Property pathology being marginalized or downgraded to sup- porting only breeding efforts. When a NARI intends to commercialize its varieties using IPRs, it must realize that the right holder is responsible A second possible impact is that funds will be distributed for implementing his or her right and that the NARI more to crops with a high value in seed production. needs capacities to design commercialization strategies These are, in general, crops that are produced for the and license contracts, and to follow up on these con- market (where investment in seed is common), that are tracts. Most NARIs are not used to employing marketing difficult to reproduce on-farm (e.g., cross-fertilizing staff and intellectual property (IP) specialists. Their focus crops), and that have a low seed rate (seed is a small part on research means they have little experience in attract- of total production costs). In practical terms, this means ing or administering appropriate personnel to manage that maize-breeding programs will get priority over those their IP portfolios. for open-pollinated small grains, most pulses, and root crops. The latter crops, however, may be important for In addition, research managers tend to look at the bene- the nutrition security of large parts of the population. fits derived from IPRs rather than the costs. Besides the costs of additional personnel, the direct costs of acquir- The third level of impact is within breeding programs ing and implementing IPRs may be substantial. themselves, where researchers have to choose which Application and maintenance fees can be considerable, ecological areas or client groups to target. Revenue gen- and commercial decisions have to be made on which eration will focus breeding on commercial farmers and rights to apply for and when to surrender them. An even hybrids rather than on resource-poor farmers and open- more significant cost can arise when the rights have to be pollinated varieties, where the seed industry is unlikely defended, especially against experienced negotiators of to generate profits and pay royalties to the breeder. commercial companies with significant resources. NARIs should be prepared to spend money on protecting IP. The shift to commercial crops and farmers may be con- sistent with recent changes in national agricultural poli- Managing Third-Party IP cy and trends of commercialization of public entities. In Even if the NARI does not intend to protect its own other countries, however, the public task of NARIs is inventions, the introduction of IPRs may have a signifi- based on supporting both equity and national agricul- cant impact on the organization. While plant varieties tural production. The trend toward crop diversification are in almost all cases freely used as parents in further 2 breeding, this is not the case in patented (bio)technolo- management will have to lead the way in this gradual gies. Hence, NARIs will need to develop ways and means shift, assisted by well-designed capacity-building initia- to observe rights on technologies and materials that tives and support systems. they use in breeding. Most countries (with the exception of the United States) have a fairly liberal "research exemption" in their patent laws, which means that IMPACT ON INTERNATIONAL patented technologies can be freely used in research, AGRICULTURAL RESEARCH but as soon as the research leads to a product, the rights The same considerations are important in international of the patent holder have to be recognized and consent agricultural research. Strategies for protecting inventions must be sought. This commonly leads to a license con- by the International Agricultural Research Centres (IARCs) tract in which the patent holder can specify the uses, the concentrate on the technology transfer argument on the ways of commercialization, and benefit sharing (royalty one hand and the original objective to develop interna- payment). Before a research product leaves the institute, tional public goods on the other. Several IARCs are devel- a thorough IP audit may be necessary to avoid claims. oping agribusiness parks or other mechanisms to link them directly with the private sector to provide addition- NARIs thus need to identify possible risks associated al routes for technology transfer. There are, however, also with the use of patented technologies. An IP plan needs cases in which IARCs obtain research funds for develop- to be developed for each project, in which it is decided ing varieties jointly with the private sector or obtain royal- when and how contact will be established with the ties on the commercialization of varieties. technology provider (i.e., whether to ask for a research license or wait until a product is developed; whether to protect the NARI's own inventions; and how its innova- tions may be commercialized). This plan starts with a patent search to establish rights over technologies used. Although most biotechnologies are not protected in developing countries, this is changing rapidly for large countries like China, India, and Brazil, and may also change for a range of least developed countries. This analysis may lead to a search for alternative tech- nologies (or genes) that may be in the public domain and that may serve the research objective as well. If that is not feasible, the next step is to get approval to use the protected technology. This requires a negotiation capac- ity that is commonly not well developed in public institu- tions. License contracts may also include a requirement to monitor the market for the technology on behalf of the patent holder, which may be difficult for a NARI. The introduction of IPRs introduces new tasks and Another challenge for IARCs is to get access to protect- responsibilities to the NARI. It requires not just access to ed technologies without diminishing their primary task of lawyers, IP specialists, negotiators, and marketers, but poverty alleviation. Materials and tools may not be used more important, it calls for a shift in "culture" among in research if the products cannot be made available to the researchers. All researchers will have to be aware of the target groups of the centers (i.e., "the poor") with- the potential impact of IPRs on their work, when they out restrictions. Humanitarian licenses and cooperation commonly prefer to concentrate on their own science agreements (e.g., of the Generation Challenge Program and not be bothered by "administrative rules." Senior consortium) should at least contain such provisions. 3 A less debated result of the spread of IPRs on IARCs is · How should the NARI maximize income? the impact of the commercialization of some NARIs on · How dependent on such income does the NARI want the capabilities of IARCs to reach the resource-poor. to be? NARIs that will concentrate their strategy on revenue generation through IPRs and thus move away from pro- Such strategies require a thorough analysis of the mis- ducing solutions for resource-poor farmers in favor of sion and mandate of the NARI and the environment in commercial production may not always be suitable part- which it operates. The strategies also need to be linked ners of IARCs for reaching the poor. The latter may need with national strategies toward funding arrangements to look for other ways, for example, through non- for research. governmental organizations and in some cases, direct contacts with seed producers. CONCLUSIONS Policymakers and research managers have to be aware INSTITUTIONAL STRATEGIES of potential difficulties of matching revenue generation Public research institutions have to include aspects of IP through IPRs and the public tasks of the NARIs. Explicit in their strategies on the basis of their mission and man- national and institutional policies are needed to guide date. Clarity about the position of the institution is choices regarding the management of IPRs in breeding. important for internal and external use. It will help to create a coherent attitude by NARI staff and a clear posi- Research institutes have to prepare for managing IPRs, tion in its relation with partners. These institutional whether they intend to protect their own inventions or strategies may include, for example, answers to the fol- not. Human and financial resources have to be made lowing questions: available, and the institutional culture has to be adapted to the new developments. · Should maximum restriction levels be set for accessed protected technology? · Should the research exemption be used or research REFERENCE licenses requested? Louwaars, N.P., R. Tripp, D. Eaton, V. Henson-Apollonio, R. Hu, M. · Should foreign technologies that are not protected in Mendoza, F. Muhhuku, S. Pal, and J. Wekundah. 2005. "Impacts the country be licensed? of Strengthened Intellectual Property Rights Regimes on the Plant · Should the NARI's own inventions be protected or not Breeding Industry in Developing Countries: A Synthesis of Five Case Studies." Wageningen, Centre for Genetic Resources, (commercial or defensive protection)? The Netherlands. · Should the NARI be protected nationally and abroad? · Should licensing strategies be exclusive or not, and if so, to what kinds of partners? 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