NOTES AGRICULTURAL & RURAL DEVELOPMENT 37039 Intellectual Property Rights in the Breeding Industry: Farmers' Interests ISSUE 14 JUNE BY: NIELS LOUWAARS, ROB TRIPP, AND DEREK EATON 2006 Intellectual property rights (IPRs) in plant breeding are This brief, which is based on a field study in five devel- being introduced or strengthened in developing coun- oping countries (China, Colombia, India, Kenya, tries as a result of the Agreement on Trade-Related Uganda) and a large number of stakeholder interviews Aspects of Intellectual Property Rights (TRIPS) of the (Louwaars et al., 2005), is directed at helping farmers World Trade Organization. Further pressure for the and their organizations gain a clearer understanding adoption of IPRs in agriculture comes from bilateral of the issues in the debate regarding IPRs. trade negotiations and export-oriented agribusiness. Farmers' organizations and nongovernmental organi- IPRs are meant to stimulate innovation. They provide zations that represent the interests of farmers need to temporary exclusivity on the commercialization of the know how to respond to these pressures and to par- protected invention. The holder of the right can pro- ticipate in debates about appropriate IPRs. Such hibit the use of the invention by others and negotiate organizations are likely to offer blanket opposition to conditions (normally royalty payments) for its use strengthened IPRs on plant varieties, but their interests under a license contract. To be useful for society, the will be better served by a more informed approach. rights and obligations of the right holder and the users have to be well balanced. Different IPR systems are appropriate for different types of inventions. In plant breeding, plant breeder's rights (and, more recently, patents) are the principal mechanisms, although trademarks and trade secret protection are also important. We briefly distinguish between plant breeder's rights and patents before analyzing the interests of farmers. PLANT BREEDER'S RIGHTS AND PATENTS Although living organisms have traditionally been excluded from patent protection, pressures to promote plant breeding in several industrialized countries (including pressure from farmers' organizations) result- ed in the development of specially adapted IPRs for plant varieties beginning in the 1930s. Many of these plant breeder's rights (PBR) laws were harmonized fol- lowing the Convention on the Protection of New Varieties of Plants in 1961, which also established an intergovernmental body, the Union for the Protection of New Varieties of Plants (UPOV), to support and oversee the new system. These so-called sui generis protection systems included two important conditions: a farmers' privilege, allowing farmers to reuse (and in exchange of protected varieties among farmers. UPOV some cases exchange and sell) the seed, and a breeder's now accepts new member countries only if they adhere exemption, allowing anyone to use the protected vari- to the 1991 convention. eties for further breeding. A major difficulty for farmers' organizations in develop- In addition, patents are now beginning to play a role in ing countries in adopting an appropriate position on IPRs plant breeding. A number of decisions by the U.S. Patent in plant breeding is that different farmers have different Office ntroduced patent protection for living organisms interests. The interests of commercial farmers are quite used in industry, as well as for genes, biotechnologies, close to those in industrialized countries, whereas those and plant varieties used in agriculture. Many of these of smallholders may be very different (box 1). An IPR sys- decisions were confirmed by court cases that provided tem that limits the degree of seed saving obviously new interpretations of the patent law. Farmers have not offers much stronger incentives to plant breeders, but been involved in this extension of the patent system to such restrictions may severely limit local seed provision, plant breeding. Patents on plant varieties provide much particularly where competitive and efficient commercial stronger protection to the inventor and do not take into seed systems are not in place. account the customary rights of farmers. Although patents on plant varieties are granted only in the United States, Japan, and Australia, biotechnology patents can Box 1. Different Farmers' Interests be granted in many more countries and can influence in IPRs: Two Contrasting Examples access to plant varieties and seeds. It is important to note that IPRs are based on national Flower producers in Kenya or Colombia, for laws and that protection granted in one country may not example, may get higher prices for new varieties be valid in other countries, either because protection of roses than for standard varieties. Novelty pays was never applied for or because of differences in in the flower market--traders and consumers national laws. There is no such thing as a global patent pay more for new colors and flower types. Flower or plant breeder's right. breeders get their share of this profit by charging higher royalty fees.They are thus very careful to FARMERS' INTERESTS ensure that their market is not spoiled by illegal production, and they are more likely to introduce Why would farmers be interested in a legal instrument their newest flower varieties in countries where that is likely to make them pay more for seed? The their control over the planting materials is answer is that farmers are the immediate beneficiaries of ensured by strong IPR laws. Flower farmers gen- new varieties, and they benefit from increased invest- erally have no problems with an effectively imple- ments in breeding. Even though the immediate link mented protection system based on the latest between IPRs and investment in plant breeding is debat- UPOV convention. ed, and the study showed a very weak link between the introduction of IPRs and the emergence of a private seed Smallholder farmers commonly obtain new vari- sector, farmers have an interest in creating incentives to eties through informal channels. Rural develop- develop better planting materials. The farmers' privilege ment policies may support such channels for dif- creates a useful balance between the rights of breeders fusing modern varieties of grains and legumes and those of farmers. However, revisions of the UPOV (called "lateral spread" in countries in South Asia) convention (representing the needs of the industrialized to stimulate uptake and for reasons of food secu- member countries of UPOV) have gradually strength- rity. IPR laws that attempt to limit such lateral ened the rights of the breeders at the expense of farm- spread of modern varieties act against the inter- ers' flexibility. The 1991 convention allows breeders to ests of these smallholder farmers. prohibit farmers from saving seed of protected varieties, Source: Authors unless specifically excluded, and prohibits any seed 2 Box 2. Article 9 of the IT PGRFA: Farmers' Rights 9.1 The Contracting Parties recognise the enormous contribution that the local and indigenous commu- nities and farmers of all regions of the world, particularly those in the centers of origin and crop diver- sity, have made and will continue to make for the conservation and development of plant genetic resources which constitute the basis of food and agriculture production throughout the world. 9.2 The Contracting Parties agree that the responsibility for realizing Farmers' Rights, as they relate to plant genetic resources for food and agriculture, rests with national governments. In accordance with their needs and priorities, each Contracting Party should, as appropriate, and subject to national leg- islation, take measures to protect and promote Farmers' Rights, including: (a) protection of traditional knowledge relevant to plant genetic resources for food and agriculture; (b) the right to equitably participate in sharing benefits arising from the utilization of plant genetic (c) the right to participate in making decisions, at the national level, on matters related to the con- resources for food and agriculture; and servation and sustainable use of plant genetic resources for food and agriculture. 9.3 Nothing in this article should be interpreted as to limit the rights that farmers have to save, use, exchange and sell farm-saved seed/propagating material, subject to national law and as appropriate. Source: International Treaty on Plant Genetic Resources for Food and Agriculture FARMERS' RIGHTS national IPR legislation. This protection is not in conflict with conventional IPR systems, but several points Decisions about what level of farmers' privilege is appro- deserve attention. If this right is to be implemented by priate in national IPR legislation are further complicated relaxing the standards for application (especially unifor- by the related concept of farmers' rights. The mity standards for the variety), there is a risk that it can International Treaty on Plant Genetic Resources for Food be misused to protect broader gene pools rather than and Agriculture (ITPGRFA) confirms the important role individual varieties. Others argue that IPRs on varieties of farmers in conserving, improving, and making avail- conflict with the moral values of farming communities able the genetic resources used in modern breeding, that have always relied on free exchange of materials, and establishes the concept of farmers' rights (box 2). and that such protection should not be promoted for The treaty confirms the right to save, use, exchange, farmers' varieties. Finally, protection itself serves a pur- and sell seed, the implementation of which is, however, pose only when the variety is commercialized on a suffi- subject to national law. ciently large scale to cover at least the cost of protec- tion. At the very least, an IPR system should avoid grant- The restriction on saving seed in UPOV 1991 (and even ing protection for farmers' varieties without the consent stronger restrictions provided by patent laws) creates a of the community that developed them. conflict between the two concepts that has to be resolved at the national level. In many countries, private rights (IPRs) seem to have priority over communal rights. THE ROLE OF FARMERS' A major question is whether the farmers' rights should ORGANIZATIONS apply to all situations or whether farmers can agree to Farmers' associations and nongovernmental organiza- limit these rights for their own benefit (e.g., for prof- tions (NGOs) that represent farmers need to be involved itable export crops, such as described in box 1). in the national debate on agricultural IPRs. The concept of farmers' rights in the ITPGRFA obliges countries to In some countries (e.g., India, Thailand), the right of involve farmers in decision making relevant to plant farmers to protect their own local varieties is included in genetic resources, including IPR systems for plant vari- 3 eties and genes. Organizations that represent farmers Efforts should concentrate on balancing the different thus need to develop consultation mechanisms with interests. The five-country study concluded that there is their members on this issue and to develop a well- no reason for developing countries to adopt overly informed capacity to involve them in decision-making restrictive plant variety protection systems; adoption of processes. At the same time, national political systems such systems to acquire trade benefits reduces options need to ensure adequate opportunities for open debate for broader support of rural development objectives. The about IPR legislation. report stressed that opportunities exist to create a useful balance within the minimum requirements offered by The challenge of enforcing IPR legislation offers a sec- the TRIPS Agreement. Important elements are the right ond justification for ensuring a strong political voice for of farmers to save, use, exchange, and/or sell seed; the farmer organizations in the development of IPR legisla- right to use protected materials for further breeding; tion. If farmers have not participated in the debate and and protection against appropriation of farmers' vari- helped define the nature of IPRs for plant varieties, the eties for commercial purposes. enforcement of these rights is liable to be problematic. Wide differences in success among European Union (EU) The interests of different groups of farmers can be countries in enforcing royalty payments on saved seed, served by providing different levels of protection within and the current controversy over royalty collection for one legal framework. This can be done by either provid- transgenic soybean varieties widely sown in Argentina ing a minimum level of protection and adding rules for and Brazil, illustrate this point. specific crops or farmers (e.g., export crops can be pro- tected according to the UPOV 1991 model and subsis- The fact that IPRs can help stimulate the development of tence crops by a less restrictive system), or by designing a stronger commercial seed system offers an additional a stronger IPR system but carefully delimiting exceptions. justification for involving farmer organizations in the For instance, smallholder farmers should be free to save development of IPR legislation. The commercial seed sec- their own seed of protected varieties, while commercial tor will thrive in developing countries only if farmers are farmers are not (as is the case in the EU for seed pro- well acquainted with the rules and regulations that gov- tected by both plant breeder's rights and patents). ern the companies that offer their products to farmers. In countries where the rights are weaker, it is important STRIKING A BALANCE to recognize that private sector incentives for investment will be correspondingly lower, and that public-sector It is unlikely that all farmers' organizations and NGOs in plant breeding will need to be well financed to provide a country will adopt a similar stance on IPR legislation, the necessary support. given the range of interests of different types of farmers. Countries' legal systems differ, and the balance between export-oriented farming, production for national mar- REFERENCE kets, and subsistence agriculture will also vary. It is not Louwaars, N.P., R. Tripp, D. Eaton, V. Henson-Apollonio, R. Hu, M. reasonable to expect blueprint advice on the design of Mendoza, F. Muhhuku, S. Pal, and J. Wekundah. 2005. "Impacts an optimum IPR law. of Strengthened Intellectual Property Rights Regimes on the Plant Breeding Industry in Developing Countries: A Synthesis of However, the yes-or-no discussion on IPRs that is occur- Five Case Studies." Wageningen, Centre for Genetic Resources, ring in many countries today is not very productive. 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