Provisions of the TRIPS Agreement Relevant to Agriculture (Part I)
R. Silva Repetto and M. Cavalcanti
To review the provisions and principles of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) relevant to agriculture, in order to enable countries to strengthen their capacities to meet their obligations under the Agreement and be prepared to participate in the multilateral negotiations dealing with its review.
3.2 Patent protection of agricultural chemical products: Articles 70.8 & 70.9
3.3 Geographical indications: Articles 22-24
3.4 Recognition of "formal" and "informal" innovation
This module is the first of two modules dealing with the provisions of the TRIPS Agreement relevant to agriculture. Section 3.2 of this first module makes particular reference to the protection of agricultural chemical products through patents. Section 3.3 discusses the potential of protection of geographical indications. Section 3.4 explains the differences between the level of recognition and protection of `formal' and `informal' innovation and describes the rights conferred to these categories.
Within the framework of the TRIPS negotiations, the issue of providing intellectual property (IP) protection for pharmaceutical and agricultural chemical products was particularly controversial. Given the substantial significance of these products for the domestic agriculture and food-related economy in developing countries, most of these countries feared serious increases of costs, since these products are often supplied by developed countries.
Transitional provisions for pharmaceut-icals and agricultural chemicals
According to Article 27 of the Agreement, Members are obliged to make patents available for any inventions, whether products or processes, in all fields of technology. In recognition of the controversial aspects in these issues, Article 70.8 provides for transitional exceptions to the mandatory principle for pharmaceutical and agricultural chemical products. This is done by committing those countries currently not granting legal protection for the products in question to establish what is called a "mailbox" system for receiving and filing patent applications concerning these products. This allows inventors to file for patents establishing priority dates that serve as evidence of the novelty of their inventions, allowing countries to defer the subsequent actual granting of patents to the time when the requested system has been established. After the passage of a specified period, a country must then retrieve applications from its "mailbox" and review them for patentability, granting protection to those applications meeting the patentability criteria.
Exclusive marketing rights
Article 70.9 of the Agreement moreover commits Members to grant exclusive marketing rights to parties who file mailbox applications. This right is contingent upon two preconditions:
In principle, pharmaceutical and agricultural chemical products are thus conferred a similar protection as under patent law, in countries where the latter does not exist.
Diverging interpretation of the provisions has been a reason for insufficient implementation. India, for example, argued that it was not required to have in place an existing system for granting exclusive marketing rights to products covered by mailbox applications, but rather that it was sufficient to provide such rights after a product was patented in another WTO Member and had received marketing approval in India1. This standpoint undoubtedly gains weight when considering the institutional costs inherent to the development of a domestic "mailbox" system. In addition, India saw no need for a filing system since no applicant fulfilled the preconditions of Article 70.9.
The complexity of the subject is mirrored by the number of countries that have complied with the provisions. However, the knowledge deficiencies concerning the legal subject matter, and various other elements, are causing implementation delay.
Fears that rights to indigenous knowledge could be over-ridden
Most developing countries hesitate in complying with Articles 70.8 and 70.9 commitments in order to avoid inequity. The main concerns are that the medicinal properties of several plant species, now commercially exploited by pharmaceutical industries, have been discovered because indigenous peoples and local communities have been using such material for centuries, inheriting their knowledge throughout generations. Scientists have used this knowledge to "develop" pharmaceuticals now marketed throughout the world. The actual knowledge-providers fear that they will have to pay royalties for products which for centuries have been part of their own culture. To ensure an equitable exploitation of the products in question, the development and establishment of a legal system for equitably sharing the benefits, and the implementation of Farmers' Rights, are deemed necessary. The same applies for chemical agricultural products.
Nevertheless, Members are committed to compliance with Articles 70.8 and 70.9 provisions. A solution to the controversies might be sought either within the TRIPS review process or within the establishment of national intellectual property rights (IPR) systems, where within the means supplied by Article 27, the aforementioned concerns could be considered and finally embodied in a legal framework.
Role of geographical indications
As seen in Module IV.2, Section 3 of the TRIPS Agreement is dedicated to geographical indications. This type of IP protection is designed to safeguard a specific description or presentation, in relation to products, used to indicate the geographical origin of the goods; where the geographical origin means a country, region, locality, or linear feature to which a product may be attributed as being customarily harvested or manufactured there.
This protection is likely to benefit producers in those countries or regions that have already established the reputation of their products. Other beneficiaries will be consumers, availing themselves of reduced search costs as well as avoiding confusion about the true origin and quality of the products.
Potential to benefit rural communities...
Since most currently established geographical indications are broadly related to agricultural products, the world-wide establishment of an IPR system related to this specific means of protection will most likely favour rural economies by increasing and ensuring farmers' incomes and investments in production and marketing in this field. This would benefit several developing countries that have already established valuable geographical indications inasmuch as their local qualifying products and industries frequently represent the main share of domestic economy.
...but the exemptions granted could limit advantages...
Problems may arise where the provided exceptions to the IP protection are to be applied to concrete cases. Given the various consumers' perceptions that may prevail in different countries with regard to some indications, protecting geographical indications may become the source of controversies and eventually disputes between countries, i.e. if certain product related information is customarily used to indicate a certain type of product characteristics, especially to designate superior quality (thus market potential), and another country commonly uses the same definition as a generic term of product description. Since the latter makes the product ineligible for IP protection under the TRIPS Agreement, this is destined to be a source of tension. Countries implicated in this scenario should negotiate for an equitable solution, especially trying to emphasize this concern within the TRIPS review negotiations.
...and may need to be reviewed
A further element of discussion is related to the second exception recognized under IP protection for geographical indications as provided by the Agreement. According to Article 24.5 protection may not be granted where it interferes with formerly accredited rights for trademarks. Most developed countries avail themselves of trademark law under domestic IPR legislation and have ascribed trademark-related rights to local industrial products which have been marketed using geographical indications long before being used by developing countries' farmers or indigenous communities. It is obvious that affected developing countries, on behalf of the related farmers or indigenous peoples, will have concerns about the implementation of an international IPR regime which could definitively establish developed countries' self-attributed rights upon "pirated" product definitions. Before these diverging aspects can be balanced, TRIPS implementation within developing countries will face substantial deterrents. Given the narrow possibility of re-interpreting the wording, solutions must eventually be sought within the TRIPS review negotiations.
Global trade and other types of economic interaction have been increasing between countries within the last decades. Those countries availing themselves of high technological standards and strong economic structures have obviously sought to strengthen their own market position to maintain economic success. Technological knowledge in all fields is a key element in this context as being the main source for further development and economic growth.
The issue of IP protection, offering shelter to this "backbone" of economy, has thus steadily increased its importance within an economically more integrated and competing world. It is no surprise that the world's present IPR mechanisms were reasonably designed, in principle, to meet the needs of the industrialized countries.
IPR systems emerged from market economies...
Technological knowledge in developed countries is mainly the result of profit-based research and development promoted by private industrial and public, mostly academic, undertakings. The development is mainly focused on economically exploitable knowledge. Research is undertaken and financed mainly when financial gain may be expected. The main value of such results thus lies in their market potential. Ensuring that the financial yield derived from these products accrues to their promoters - be it an individual, a private corporation or a public institution - is the main objective to be pursued by the legal means of IP protection. As stated above, patents, geographical indications and other established IPR are adapted to satisfy this objective. According to IP law, innovative knowledge must comply with different demands to enable legal protection. Thus directed, innovative processes are inevitably institutionalized by the requests of a legal framework. Innovation eventually becomes a "formal" procedure, acknowledged merely if it complies with given legal parameters. Thus established, research and development in developed countries fall under what is now defined as "formal innovation". This "formal innovation" is appropriate for modern, market societies.
Particularly in biotechnological domains, within the framework of international trade relations and the introduction of a standardized international IPR regime, the global community has been confronted by complex hitherto neglected issues. The growing importance of biodiversity and genetic information within food, pharmaceutical and cosmetic industries has initiated a struggle for the protection of innovative knowledge associated with biological material. Industries have been accused of practising "biopiracy" not only on indigenous resources but knowledge.
...and are not well suited to protection of indigenous knowledge
Indigenous peoples and local farmers have long had a significant interdependence with the lands and environments in which they live. These lands and environments are vital for their survival, providing food and "medicinal" products. Their development and improvement were the result of mundane necessities and are often interlaced with the social and religious structures of their communities. A wide array of plant species was bred over generations to resist specific pests or just to enhance the harvest. The healing properties of many plants have been discovered and developed over years to cure community-specific diseases. Any improvement in knowledge or biodiversity was regularly sought on behalf of the society. On these grounds, indigenous farmers and communities never deemed protection of their knowledge necessary. This innovation, not recognized within legal structures, is known as "informal innovation".
However, a great deal of the indigenous knowledge stock has substantial importance for the world's food supply, and for the development of several pharmaceutical and cosmetic products, thus attracting the attention of these industries. These industries have, not surprisingly, taken advantage of the lack of protection to exploit indigenous knowledge and biodiversity, in most cases without remuneration for the affected communities. Furthermore, many developed countries have already granted IP protection under national law to domestic or foreign industries for knowledge and products substantially based on "informal innovation". Recognizing only the known and established IPR at the international level bears the further risk of indigenous communities having in future to buy the products of these companies at high prices or farmers having to pay royalties for using products which they had originally developed, improved, used and protected for centuries.
As a result, local knowledge is being devalued and local rights are being displaced. The cultural and intellectual contribution of indigenous knowledge risks being erased and lost forever. The implications for global biodiversity, food security and the environment in general are unpredictable in detail, but could eventually be detrimental.
Need for new mechanisms to protect Farmers' Rights
Under these circumstances, the global community has recognized the need for, and importance of, the protection of indigenous knowledge through the establishment of Farmers' Rights. However, the concepts addressing "formal innovation" and therefore prevailing in existing IP law are mainly based on the idea that innovation is the product of individuals. Such people, by sharing the fruits of their genius with society, are deemed to deserve the rights granted by the State on behalf of society. This concept is impractical in indigenous communities. The recognition of their rights needs the creation of special regimes. In fact, legal complication arises from the fact that the contributions are often made by entire communities and therefore cannot be attributed to distinct groups or even individuals. When a particular knowledge, critical to the success of a new product, has its origin in different areas or communities, it is impossible to determine priority in recognition and reward, to identify a right holder and to confer exclusive rights of use of knowledge which has already been shared and which is public.
A further concern is that acquiring and defending IPR protection within the currently established regimes require access to information, good legal advice and financial resources. The legal means of protection, as they now exist, may frequently be beyond the reach of many indigenous peoples.
Given that current IPR mechanisms are inherently unsuitable for indigenous peoples, indigenous peoples and local farmers in developing countries have therefore advanced their wish to be recognized as having unique rights, based on their distinct indigenous status. The global community is thus committed to develop new legal structures, at the national and international levels, through which the aforementioned peculiarities be considered and equitably settled.
Among established IPR, the option of geographical indications as a possible mechanism for the recognition and protection of "informal innovation" has been raised by different countries.
Geographical indications are one way of protecting informal innovation
In fact, the definition of certain products is frequently interlaced with its geographical or ethnical origin. Particularly, indigenous products derived from long established traditional methods are frequently attributed names of the region where they have been developed, or of the communities that have habitually used them. These names are established in the local language and are rarely known in the whole country or abroad. Provided the definition given to a certain product implies specific traits or quality standards exclusively bound to the product in question, recognition as a geographical indication as defined under the TRIPS Agreement could be applied.
The main advantage of geographical indications as a means of protection for informal innovation is the "relative impersonality" of the right, i.e. the protected subject matter is related to the product itself (its attribute or definition) and is therefore not dependent on a specific right holder. In fact, while other IPR are necessarily attached to a single or clearly distinguishable right holder, geographical indications are not.
There are deficiencies , however, in the range of applicability of protection. Since only certain products rely on customarily used indications, especially new products will fail to comply with the demands of IP law for accrediting protection.
The TRIPS Agreement seeks to impose international minimum standards for IP protection. These are largely based on the concepts prevailing within already existing IPR regimes which were developed in countries where broad economic structures brought the need for IP protection on a legal basis.
As seen above, established IPR mechanisms are unsuitable for the effective protection of indigenous peoples and "Farmers' Rights"3 and do not satisfy the exigencies which in this field have arisen within the national and international contexts.
Alternatives to patent systems for plant variety protection are permitted in the TRIPS Agreement
The TRIPS Agreement, although tending towards established regimes, provides in Article 27.3(b) the option for Member States to develop a sui generis system for plant variety protection as an alternative or supplement to a patent system.
The idea behind the penultimate sentence of Article 27.3(b) is to create an IPR mechanism which, while complying with the needs for sufficient protection, is as effective as a patent system. In fact, this provision primarily aims at protecting plant breeding technology and knowledge. Nevertheless, this provision allows a more flexible solution than patents to protect plant varieties, while at the same time permitting a broad use of plant biodiversity by local non-industrial farmers, plant breeders and indigenous communities, in such a way as to promote further contributions by these groups to the preservation and further improvement of plant genetic resources (PGR).
Role of UPOV
The International Union for the Protection of New Varieties of Plants (UPOV) has occasionally claimed to be the sui generis system addressed by the TRIPS Agreement. The argument is based on the fact that the Agreement was negotiated when UPOV already existed. On the other hand, if Members had deemed the UPOV Convention to be necessarily equivalent to the sui generis system referred to in the Agreement, since UPOV was already in existence, they could have included an explicit indication in the legal text making it mandatory to choose UPOV and exclude other alternatives. As this is not the case, UPOV must be considered as one alternative among others for a sui generis system. Furthermore, the UPOV Convention is designed to protect "formal" breeders; the recognition and remuneration of "informal innovation" is logically not included in its provisions. It has to be recalled here that, according to FAO Conference Resolution 4/89, "Plant Breeder's Rights, as provided for under UPOV are not incompatible with the International Undertaking on Plant Genetic Resources".
Recent initiatives to formulate protection of informal innovation
Several attempts have been made within the framework of other international agreements and negotiation rounds to introduce a system providing for the protection of farmers' and indigenous communities' rights. The Convention on Biological Diversity (CBD) recognizes the importance of the maintenance of indigenous knowledge and the role of farmers within the preservation and further development of biodiversity. Furthermore it recognizes the importance of a sharing of benefits mechanism to remunerate farmers and indigenous communities for the contributions they have given to the development of PGR. Likewise, Agenda 21 encourages States to reach these same objectives (see Module IV.5).
An encouraging initiative was recently taken within the Eighth Regular Session of the Commission on Genetic Resources for Food and Agriculture (CGRFA) for the revision of the International Undertaking on Plant Genetic Resources (IUPGR). The Parties mutually worded a concept for "Farmers' Rights" and agreed upon the text. Although means of enforcement and a concept for implementation have not yet been agreed, a path has been mapped out and movement towards more equitable legal solutions was envisaged.
The TRIPS Agreement does not exclude the introduction of a system providing for recognition of farmers' and indigenous communities' rights, nor a mechanism for benefit sharing, as long as sufficient protection is granted in respect of plant varieties. Members may wish to incorporate these elements into a national sui generis system.
National initiatives to develop protection of informal innovation
Many governments have started developing their own sui generis system to comply with the TRIPS Agreement while protecting both farmers' and breeders' rights as a way to promote technological research and development efforts on the one hand, and farm productivity and biodiversity on the other.
India has formulated a Plant Variety Act where Indian legislators contemplate Plant Breeder's Rights (PBR) and include specific clauses which explicitly state rights of farmers and farming communities. Particularly the right of farmers to sell and exchange their harvested products has been preserved in PBR. This was considered necessary to preserve the interregional small-scale marketing of seeds between farmers, which is a substantial factor in the country' economic structure and has substantial importance for the preservation and further development of the country's biodiversity.
The final version of India's draft Plant Variety Protection (PVP) Act before Parliament at the end of 1999 formalizes Farmers' Rights in the following terms: "Nothing contained in this Act shall affect a farmer's traditional right to save, use, exchange, share or sell his farm produce of a variety protected under this Act except where a sale is for the purpose of reproduction under a commercial marketing arrangement". The draft makes specific and detailed provision for communities to register collective rights.
African countries have convened workshops to mutually develop legislation to recognize farmers' and indigenous communities' rights. In January 1999 in Lusaka, Zambia, the Heads of Government or State of the 62-member Organization of African Unit (OAU) reached an agreement to restrict patents on plant varieties until an Africa-wide system of IPR has been developed. This system aims at rewarding both plant breeders and indigenous communities that might have contributed to the conservation and improvement of early varieties (Farmers' Rights). In this connection, the OAU has prepared the comprehensive document African Model Legislation for the recognition and Protection of the Rights of Local Communities, Farmers and Breeders, and for the Regulation of Access to Biological Resources4.
The Brazilian Government is discussing a proposed law which is intended to protect and assure respect for indigenous peoples' social organization, customs, languages, beliefs and traditions, and rights over their territories and possessions. One section deals with intellectual property and indigenous peoples. Among the important provisions dealing with the rights of indigenous peoples are the following: the right to maintain the secrecy of traditional knowledge; the right to refuse access to traditional knowledge; the right to apply for IPR protection, which, in the case of collective knowledge, will be granted in the name of the community or society; the right to prior informed consent (to be given in writing) for access to, use of and application of traditional knowledge; the right to co-ownership of research data, patents and products derived from the research; and the right of communities to ask for the cancellation of patents illegally derived from their knowledge.
The Peruvian government has prepared and submitted for public discussion a working document containing legislative proposals to create a Regime for the Protection of Collective Knowledge of Indigenous Peoples and a Regime on Access to Genetic Resources. Both proposals grant intellectual value to the knowledge of thousands of communities existing in the country and to genetic resources, thereby creating the possibility to secure economic benefits from the commercial use of these resources. One of the objectives of the Project on Community Rights is the creation of new intellectual property rights in the framework of international treaties to which Peru is committed. Through these new rights, the traditional knowledge of thousands of indigenous peoples will be registered and therefore can be recognized whenever it is used commercially by researchers or pharmaceutical laboratories, be they national or foreign. Additionally, the creation of this new IPR registry will allow not only specifically entitled groups to benefit from the commercial use of their traditional knowledge, but all communities. For this, the document proposes the establishment of an Indigenous Peoples' Development Fund (FONDEPI). The Fund would be administered by the communities themselves under the supervision of the IPR's Office and will support the development of indigenous peoples by financing projects. A percentage of all sales resulting from the commercial use of traditional knowledge would go to the Fund5.
Some examples of the non-UPOV sui generis legislation that have been compiled by Genetic Resources Action International (GRAIN) are the following6.
In Nicaragua, a draft for deliberations was adopted by Parliament in July 1999. Among other provisions, it states that mere discoveries may not be protected; transgenic material shall be subject to separate biosafety legislation; the definition of breeder and breeding is wider in scope: it covers anyone making use of techniques of crop improvement; it recognizes that priority rights based on reciprocity under UPOV conflict with the WTO-TRIPS regime of national treatment and it therefore does not include them; it sets PVP apart from industrial property and expressly prohibits double protection; breeder's rights shall not extend to the variety when it is used for consumption or sowing directly by farmers or when it is used by tenants, cooperatives or other non landholding entities; registration requires: proof of compliance with the CBD's Articles 8(j) and 15 (in particular, compensation to countries and communities of origin) and scientific proof of the variety's superiority to cultivars grown in the country through at least two production cycles of comparative tests; wider compulsory licensing. According to its provisions, this law would be subordinate to the rights and obligations acquired through the Convention on Biological Diversity (CBD).
Costa Rica does not have a PVP law yet but plans to adopt one by the end of 1999 for the purpose of compliance with TRIPS. It is established that Costa Rica's PVP law will be subordinate to the country's compliance with the CBD, which was formalized through the enactment of Law No. 7788 entitled "Biodiversity Law" in May 1998. The Biodiversity Law decrees (Article 82) that communities are the holders of "sui generis" community intellectual rights which exist and are henceforth recognized and protected by the State owing to the mere existence of cultural practices or knowledge related to genetic resources and biochemicals. These rights, which cover "the knowledge, practices and innovations of the indigenous peoples and the local communities, related to the use of the components of biodiversity and associated knowledge," shall not be affected by Plant Breeder's Rights, patents or any other form of intellectual property applied to biodiversity and associated knowledge. Any application for PBR in Costa Rica must receive clearance from the Technical Office of the Commission administering the Biodiversity Law to ensure that the application does not contravene community intellectual rights, even though these need not be formally registered. The recognition of community intellectual rights in Costa Rica "oblige[s] the Technical Office to answer negatively any consultation related to the recognition of intellectual or industrial rights over the same component [of biodiversity] or knowledge" (Article 84).
The Zambian government has made it clear that in order to fulfill its rights and obligations under CBD, its "sui generis" PVP system must recognize and reward the innovation of indigenous peoples and local communities. For this, their law, which is being drawn up with full stakeholder participation, defines innovation to include "any inventive input done collectively, accretionally, inter-generationally and over a period of time, in relation to genetic resources".
Thailand's draft PVP Act, also before Parliament in 1999, defines various classes of plant varieties with specific rights and responsibilities attached to each: local domestic plant varieties, new plant varieties, general domestic plant varieties and wild plant varieties. Transgenic varieties are subject to special biosafety reviews. Exhaustion of the plant breeder's right in terms of farmers' cultivation practices is more ample (farmers get broad rights to use protected material). It creates a Plant Variety Protection Fund aimed at supporting research or conservation and development of plant varieties. It requires profit-sharing agreements in the case of general domestic and wild plant varieties, the revenue from which shall accrue to the Fund.
The Plant Varieties Act of Bangladesh, drawn up and approved by the National Committee on Plant Genetic Resources, is now under public debate. According to this draft, breeding alone is not sufficient to justify commercial privileges. The variety must have "immediate, direct and substantial benefit to the people of Bangladesh". Any variety which may lead to genetic or cultural erosion shall not be protected; transgenics are subject to further legislation. The country of origin of the material used to develop the variety shall be disclosed when applying for protection; where a community variety, indigenous plant variety or wild plant variety has been used in the development of a protected variety, 25 percent of the revenue accruing from its commercialization shall be shared. Community rights and Farmers' Rights are substantively provided for and a Plant Variety Development Fund shall be established to support communities in the conservation and development of plant varieties.
Particularly those countries with the advantages of strong agricultural structures and rich biodiversity to sustain their domestic economy should protect their farmers and farming communities with specific rights adjusted to the peculiarities of the subject matter. The TRIPS Agreement provides sufficient room for a plant variety protection system combined with farmers' and communities' protection.
2 See also Module IV.2, point 2.3.3 c).
3 See Module IV.6, section 6.3.6.
4 In February 1999, however, at a meeting of Patent Office officials from Member States of the African Intellectual Property Organization (OAPI), held in the Central African Republic, 15 French-speaking African countries - of which five are considered least developed countries - agreed to recommend the latest version of the UPOV Convention. This decision has been widely criticized since, according to the Lusaka agreement, the African Common Position should safeguard the vital interest of its local communities to protect, conserve and control access to and use of their biological diversity, including in particular the right of farmers to exchange seeds and save seed for replanting. Following declarations by authorities of the OAU, the decision adopted in Lusaka by the Organization's Heads of Government or State still stands. The problem in the Central African Republic was that details of this decision had not filtered down to Patent Offices yet.
5 Proposed Regime for the Protection of Traditional Knowledge, National Institute for the Defense of Competition and the Protection of Intellectual Property (Indecopi, Peru), Indecopi press notes, 21 October 1999 (http://www.indecopi.gob.pe/prensa/RecurGeneticos.html).
6 Beyond UPOV: Examples of developing countries preparing non-UPOV "sui generis" plant variety protection schemes for compliance with TRIPS, Genetic Resources Action International (GRAIN), July 1999 (http://www.grain.org/publications/reports).