| Module 4 Provisions of the TRIPS Agreement Relevant to Agriculture (Part II)R. Silva Repetto and M. Cavalcanti Legal Office |
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.
4.1 Introduction
4.2 Patents: Articles 27-34
4.3 Analytical view of Article 27.3(b): terminology
Under the TRIPS Agreement Member countries are obliged to provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof (Article 27.3(b)).
According to Article 27 of the Agreement, patents have to be available for any inventions, whether products or processes, in all fields of technology. This includes biotechnology. Article 27.3 is a derogation clause in accordance with which Members may exclude from patentability plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes.
The patent system is the best established intellectual property (IP) protection instrument world-wide. Nevertheless, the TRIPS Agreement establishes, inter alia, a "pioneer" patent regime applied to sectors related to biological materials and life forms. As a legally and ethically sensitive subject, this issue is highly controversial. The implications and opinions related thereto differ substantially between countries with different levels of development and industrialization. This gives rise to contrasting interests being raised within the implementation and negotiation processes.
The main principle behind the patent system is the substantial encouragement, through IP protection, for industry to invest in research and development. Neither creative individuals nor research investors can afford to commit major resources to work without expecting to be rewarded in case of success. IPR are deemed effective and therefore necessary to recover invested capital and to stimulate technology transfer among countries. This would eventually reduce developing countries' dependence on foreign technology suppliers.
Conflicting views on patentability
This opinion, however, is not shared by all TRIPS Members. Developing countries, in particular, consider the patent system a restriction on their ability to obtain and exploit foreign sophisticated technology where they are being required to recognize internationally claimable rights to foreign technology suppliers. This would award power over technological development to a small number of highly developed countries. Additionally, the patent regime implies discrimination against farmers compared to commercial breeders by omitting means of recognition and compensation for efforts and contributions by farmers and indigenous communities.
Developing countries also insist that living material related to food and pharmaceutical industry remain outside the patent field. Studies conducted on the general implications of introducing or reinforcing IP protection in developing countries raised concern with regard to the prices and the availability of medicines and main food crops after product patents are introduced in compliance with the TRIPS Agreement2.
Recognizing these contrasting attitudes dependent on the level of development in the affected countries, the TRIPS Agreement provides for a wide range of options for implementation at the national level. Hence, it is not likely to produce a global harmonization of domestic patent laws. However, the relevant provisions have given rise to disputes between countries on how to interpret and review the Agreement. In the light of the diverging interests and opinions, it remains unclear how the TRIPS objectives should be pursued.
Patent examiners are having difficulties adjusting to the new biotechnologies3 and the TRIPS wording mirrors these circumstances. No aid is given by the Agreement as it contains no definition of "invention" and therefore leaves contracting parties relatively free to draw the line between non-patentable "discoveries" and actual "inventions" in the biological field4 . The lack of consensus concerning biological patents allows countries considerable leeway in fashioning their policy options5 . Yet, besides offering the alternative to Members to exclude from patentability certain products and processes, Members are granted the option of limiting patent protection by implementing restrictive interpretation of criteria for patentability.
Patentability standards and biotechnology
In fact, most of the defined requirements for patentability are supplied without further delineation, e.g. the Agreement's text requires "novelty", "usefulness" (capacity of industrial application), "inventiveness" (non-obviousness) and "disclosure" as necessary for patentability, yet avoids any further definition of the terms. As to the standards for such terminology, domestic laws apply different approaches. Hence, depending on the country's interests, the enacted legislation will be more or less restrictive. This will eventually give rise to discussions concerning the implementation of patentability standards.
Diversity-poor countries will seek a broad understanding of the "novelty" criterion in order to cover a wide range of industrial biological products, which may differ only insignificantly from their natural precursors, thus ensuring widespread ownership of living material deriving from other countries.
Diversity-rich countries will conversely seek restrictive applicability of patent protection through a narrow definition of the "novelty" criterion, thus trying to retain the determining power over their resources and the exploitation thereof, and pursuing a share of the resulting economic and financial benefits. Similar arguments will apply to the criteria of "usefulness" and "inventiveness".
As to disclosure, problems have arisen with regard to biological inventions because interested parties sometimes need access to the physical product and not just a description of it6 . That means domestic legislation must determine where such materials should be deposited, the conditions for maintenance of such samples, and the terms of access to the products in question. Depending on whether the implementing parties retain a broad potential of biological resources or have a substantial need of them, the adopted legislation will either restrict or facilitate access to the materials in question depending on which policy best provides economic advantages.
The Agreement leaves Members free to devise protection for plant varieties either by means of patents or by an "effective" sui generis system or a combination of both (Article 27.3(b)). The main concerns regarding the establishment of an IPR system merely based on patents correspond to what was previously stated in relation to concerns regarding the introduction of IP regimes in general. The patent rights are deemed too restrictive and discriminating as to the needs of non-industrial breeders, farmers and indigenous communities (mostly located in developing countries) relying on the unrestricted use and exploitation of plant materials.
Advantages of a sui generis system
The patenting of living materials or products thereto related is inevitably linked with substantial ambiguities, which warrant a sui generis system. A substantial improvement to the patent system is the extreme flexibility, which the sui generis approach would offer in designing a legal means of protection. Such a system could incorporate elements aimed at strengthening the conservation of biodiversity, recognizing the contribution made by farmers and indigenous communities to the improvement of non-commercial plant varieties, and would facilitate the introduction of a sharing of benefits mechanism.
Patent-related provisions under TRIPS should thus be cautiously regarded. The opinions and the implications to be considered are numerous and substantially divergent and have a high dispute-potential among countries. What the alternatives for implementation could be, and how equitable solutions may be achieved, is discussed below.
Provisions concerning IP protection within research and development intensive sectors related to biological materials and life forms are introducing patent law into new spheres. The wording of Article 27.3(b) creates substantial uncertainties as to its legal implications. The scientific and legal complexity of the subject matter calls for a detailed analysis of its terminology, which is fundamental for the implementation process.
Interpretation depends on the meaning of the terms used in the Article
These provisions have generated discussion as to the interpretation of the terminology used. The main concern is that the current terminology refers to a scientific subject matter, yet remains vague in the legal delimitation of the subject matter, i.e. some of the terms used to define the patentable subject matter are, apparently, scientifically imprecise, leading to legal interpretation problems.
The Agreement allows Member countries not to patent higher organisms, whether plants or animals, and "essentially biological processes for the production of plants and animals". However, Members must generally provide patent protection for micro-organisms and for "non-biological and micro-biological processes". Countries have to protect plant varieties by patents, by an effective sui generis system or by any combination thereof.
At first glance, this regulatory approach of exceptions, and exceptions to exceptions, is somewhat complicated. It reflects, however, the complexity of the issues governing intellectual property rights over living matter. To determine to what extent Members are actually obliged to introduce intellectual property rights on plants and plant varieties, the system of rules and exceptions must be examined7 .
Definition of plants
The use of the term "plants" in Article 27.3(b) suggests that the subject matter that may be excluded from patentability has to be understood broadly, including all parts of plants (genetic material, tissue, leaves, etc.). This interpretation conforms with the objective of Article 27.3(b) and is backed up by the rationale behind this Article8 .
Article 27.3(b) does not mention whether the sui generis system for the protection of plant varieties should be limited to a number of botanical genera and species. This means that the system should be applicable, in principle, to all genera and species. In the same line of interpretation, nothing in the Agreement precludes Members from granting protection under the sui generis system to subject matter that goes beyond plant varieties only (e.g. traditional or indigenous knowledge, Farmers' Rights, etc.).
While Members cannot consider an innovation unpatentable just because it is living material, they are free to refuse patents for mere discoveries of living material or for living material whose use is already known. Therefore, and considering that the patentability requirements (i.e. novelty, non-obviousness and industrial applicability) are not defined in the Agreement, the second requirement might constitute a hurdle for plant varieties bred with classical breeding techniques.
Definition of micro-organisms
Under Article 27.3(b), micro-organisms are mandatorily patentable. Micro-organisms are commonly defined as any microscopic organism, including bacteria, viruses, unicellular algae and protozoans, and microscopic fungi. They are considered to be a category of life different from the kingdoms of plants and animals. Cells and tissues from higher plants and animals are the subject of microbiology, but they are not micro-organisms.
An exclusion similar to the one contained in Article 27.3(b) was contained in Article 53(b) of the European Patent Convention. At the time of adopting the Convention, it was deemed necessary to clarify that the use of micro-organisms, i.e. fermentation processes, was patentable. Plant Breeder's Rights legislation in developing countries is therefore hardly affected by the obligation to provide patent protection for micro-organisms.
What is meant by "essentially biological processes"?
According to Article 27.3(b) Member States may exclude "essentially biological processes" from patentability. Within natural sciences a "biological process" would be any biological activity carried out by any living organism be it at the molecular, cellular or organism level. "Essentially" biological process not being a scientific term, demands further definition.
An "essentially" biological process could indicate each of the important biological activities, e.g. DNA replication, transcription and translation that occur within a cell and required for the perpetuation of living beings. At the organism level, physiological activities including respiration, photosynthesis, reproduction etc. are considered to be essentially biological processes.
Extending the optional exclusion of the patentable subject?matter to "essentially biological processes", the TRIPS Agreement reflects the exclusion clause in Article 53(b) of the European Patent Convention. It must, however, be borne in mind that Article 53(b) of the European Patent Convention pursues a quite different objective, i.e. to entirely rule out patentability of certain subject matter, whereas Article 27.3(b) of the TRIPS Agreement is rather a door?opener, leaving certain issues to the discretion of the Members.
However, for the purpose of legislation, the scope of "essentially biological processes" has been interpreted narrowly, basically in order to extend the patenting process. The Technical Board of the European Patent Office (TBEPC) gives a negative definition of what does not constitute an "essentially biological process", i.e. a process for production of plants comprising at least one essential technical step which cannot be carried out without human intervention and which has a decisive impact on the final result. In this sense the term "essentially biological" is being taken to be understood as a process which is performed without the application of any external technical skills by humans. The decisive criterion therefore becomes human intervention. However, a "biological process" by definition excludes manipulation; i.e. as soon as human technology interferes with an independent natural process, it deletes its biological nature to make it artificial. Human intervention as a criterion therefore seems to fail in the distinction between an "essentially biological process" and a "biological process".
It is doubtful, however, whether the interpretation of Article 53(b) of the European Patent Convention may really provide guidance for the interpretation of Article 27.3(b) of the TRIPS Agreement. If "essentially biological" under the TRIPS meant "not technical", it would not have made sense to expressly state the patentability of two processes which are clearly technical as regards means and methods, i.e. microbiological and non?biological processes. The expression "essentially biological" must be somewhat narrower than the realm of biology, otherwise it would not have made sense using the word "essentially". The dividing line between essentially biological and other processes will most likely be related to the extent to which application of technology is involved in the process. It seems hardly possible to fix a clear?cut threshold at which the application of technology renders a process not essentially biological under the TRIPS. Rather the assumption is that the TRIPS reflects the different opinions on the scope of Article 53(b) of the European Patent Convention when using similar wording and leaves it to Members to define "essentially biological" in the particular context.
Notwithstanding these facts, defining a "biological process" as done above would add a further qualification, namely the criterion to be "essential", to the given exception to patentability. No matter how "essential" will be defined in this context, the legal implications would eventually be a substantial narrowing of the range of action for Members as to the implementation of these provisions. The alternatives would be reduced to such an extent that the intended exemption from patentability would be practically undermined. Hence, from a legal point of view, it seems preferable to work on the basis of the definition supplied by the TBEPC and endeavour to further clarify the subject matter as to the range of possible exceptions.
A further problem concerning legal clarification arises in various biotechnological fields (i.e. genetic engineering) where multi-step processes, in which natural processes and technical manipulation are intrinsically linked, are inherent traits. The question arises as to which of the steps carried out in an experiment is an essential biological process or, in interlinked multiphase processes, where to establish the decisive step to determine patentability. In defining the criteria for "essentially biological process", Members should seek consideration of modern technology peculiarities and provide for a clear distinction of patentable subject matter to avoid divergent and eventually contradictory implementation among countries.
Non-biological and microbiological processes are mandatorily patentable under Article 27.3(b). The general rule under this Article is that plants may be excluded from patentability. The exception to this rule is that certain processes are mandatorily patentable. If such processes would be defined as covering also the entire plant being produced through the application, at some stage, of microbiological techniques, the exception would be extended and render the general rule partly meaningless by subjecting plants to patentability by the backdoor. As such an assumption is not backed by the wording of Article 27.3(b), a microbiological process is presumably only the step that actually applies microbiological techniques using plant cells or micro-organisms.
Product-by-process protection
It needs to be considered now which is the product directly obtained by the protected process, i.e. the extent of product-by-process protection under the TRIPS Agreement. Article 28.1(b) provides product-by-process protection for products "directly" obtained by the patented process. The use of the expression "directly" rather than "products obtained" implies that product-by-process protection applies only to the immediate result of the patented process, i.e. for instance the modified cell. As the protected process does not include the regeneration of the entire plant from, for instance, a modified cell produced by a protected process, the product-by-process protection does not extend to the entire plant either but is limited to the plant cell which is the latest step involving microbiological techniques. Subject to mandatory patentability are therefore cells, cell lines or genetic sequences, which are produced applying microbiological techniques.
The objective of process patents is in the first place to protect processes; extending such protection to any plant, which contains the protected cell, would be an introduction of a product patent for plant cells by the backdoor. If such protection had been intended, it would have been regulated for instance by defining micro-organisms as including cells. To achieve product patents via product-by-process protection may be appropriate if such protection is the legislative objective. The rule under Article 27.3(b), however, is rather the opposite: Members may exclude plants from patentability. Expanding product-by-process patents would therefore not only be a backdoor approach but also an extension of the exception at the expense of the general rule. As such an approach is not supported by the wording of Article 27, the TRIPS Agreement presumably does not extend obligatory product-by-process protection to plant material obtained through the self?replication of the plant.
The same applies to non-biological processes, which can be described as technical in character. There is no clear dividing line between non-biological and microbiological processes. Generally any method of genetic engineering may be regarded as being "non-biological". As non-biological one may consider in the first place processes the product of which could not have been created naturally, thus not covering conventional breeding methods.
In Article 27.3(b), Members are provided the option to exclude plants and animals from being protected by IPR. However, there is a single exception. Members are obliged to provide protection for one particular classification, i.e. plant varieties, either by patents as laid down by the TRIPS Agreement, by an effective sui generis system, or by any combination thereof.
Absence of a common definition
The complications arising from this wording are caused by the deficiency of any classifications of plant varieties as races or species. Where a broad understanding of the term will be sought by highly industrialized countries to broaden the range of protection for biotechnological products, those countries relying on traditional agricultural economies will seek a narrow interpretation of the term to promote unrestricted availability of plant species. The main task therefore lies in mutually defining a "plant variety" to allow harmonious implementation among Members.
In the agricultural sector, traditionally a new plant variety is recognized by its distinctness, uniformity and stability (DUS). These plant varieties have been generated by classical breeding techniques by crossing interrelated varieties or races. However, when a plant is transformed with a gene from a totally unrelated species, the stable transgenic plant is distinctly different from its predecessor and uniformly expresses the newly introduced trait. Whether such transgenic plants should be termed as "new varieties" is a topic of much debate.
Should these genetically modified plants be deemed as such, they will eventually be eligible for plant varietal protection either by patents or an alternative system. Given the facility to alter the genetic codes entailed in living organisms by means of new biotechnological methods, industrial breeders would be able to establish monopolies over genetic information by manipulating minor genetic codes for the mere purpose of patenting. A threatening policy, which could be promoted by allowing protection of the entire genetic information, entailed in a "new" vegetal organism. Traditional farmers and breeders could thus become dependent on biotechnological products.
Arguments for a restricted definition
Hence, the only equitable solution lies in restricting the protectable range by narrowing the interpretation of the term "plant varieties" as used in the TRIPS Agreement. Where the main interests of agricultural industries is based on research and development of "market-relevant" plant traits, it is merely these results which should be object of IP protection. A selective patenting limited to a specific genetic manipulation, process, or trait resulting therefrom, should provide sufficient protection, omitting inequitable implications as described above.
Members should therefore negotiate towards a definition of "plant variety", which enhances a compromise solution between industrial biotechnology and traditional farmers interests.
FAO. 1994. Breeders' Rights legislation in developing countries in the light of the Biodiversity Convention and the GATT, by Burkhart Goebel. Rome.
Leskien, D. and Flitner, M. 1997. Intellectual Property Rights and Plant Genetic Resources: Options for a "sui Generis" System, Issues in Genetic Resources No. 6, p. 19. Editor Jan Engels. Rome, International Plant Genetic Resources Institute (IPGRI).
UNCTAD. 1996. The TRIPS Agreement and Developing Countries. New York, Geneva, UN.
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1 See also Module IV.2, section 2.3.3 e).
2 UNCTAD. 1996. The TRIPS Agreement and Developing Countries, p. 31. New York, Geneva, UN.
3 http://www.idrc.ca/books/725/chap4.html.
4 UNCTAD. 1996. The TRIPS Agreement and Developing Countries, p. 34. New York, Geneva, UN.
5 UNCTAD. 1996. The TRIPS Agreement and Developing Countries, p. 34. New York, Geneva, UN.
6 UNCTAD. 1996. The TRIPS Agreement and Developing Countries, p. 35. New York, Geneva, UN.
7 The presentation of this item has followed, in some points, a study on Breeders' Rights legislation in developing countries in the light of the Biodiversity Convention and the GATT, prepared in the FAO Legal Office, by Mr. Burkhart Goebel, 1994.
8 Leskien, Dan and Flitner, Michael. 1997. Intellectual Property Rights and Plant Genetic Resources: Options for a "sui Generis" System, Issues in Genetic Resources No. 6, p. 19. Editor: Jan Engels. Rome, International Plant Genetic Resources Institute (IPGRI).
