2015

Chapter 10: Intellectual Property, Public Health, Biotechnological Inventions and Food

Security

This constitutes a book chapter authored by Dr.P.MUREDZI and intended for inclusion in a book for Masters in Intellectual Property students (residential phase) run by Africa University, Mutare,

Zimbabwe in collaboration with WIPO and ARIPO, 2015

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Chapter 10 Intellectual Property, Public

Health, Biotechnological Inventions and Food Security

By

MUREDZI.P; MSc Eng; MIP; PhD (Dean –School of Industrial Sciences and Technology)

Introduction – Debating the role of Intellectual Property Rights in Development

Over the last twenty years or so there has been an unprecedented increase in the level, scope, territorial extent and role of IP right protection. Manifestations of this include:

The patenting of living things and materials found in nature, as opposed to man-made products and processes more readily recognisable to the layman as inventions

The modification of protection regimes to accommodate new technologies (particularly biotechnology and information technology), such as the EU Biotechnology Directive1 or the Digital Millennium Copyright Act (DMCA) in the United States (US)

The extension of protection into new areas such as software and business methods, and the adoption in some countries of new sui generis regimes for semiconductors and databases

A new emphasis on the protection of new knowledge and technologies produced in the public sector

The focus on the relationship between IP protection and traditional knowledge, folklore and genetic resources

The geographical extension of minimum standards for IP protection through the TRIPS agreement and of higher standards through bilateral and regional trade and investment agreements

The widening of exclusive rights, extension of the duration of protection, and strengthening of enforcement mechanisms.

The concerns about the operation of the intellectual property system and the extension of IPRs are not confined to their application to developing countries. There are currently two prominent enquiries in the US, one by the National Academies of Science and one by the Department of Justice and the Federal Trade Commission, looking at this important question. These concerns centre on the rapid increase in patent applications in the US in recent years (a more than 50% increase in the last five years), and the perception that many more patents of “low quality” and broad scope are being issued. A fear is commonly expressed that too many patents have been and may be granted in respect of developments of minor importance. For instance, in the pharmaceutical industry this can have the effect of prolonging monopolies on valuable therapies. Patents may also be granted in some jurisdictions over biological materials on the grounds that they have been isolated from nature, if a possible function or utility is identified. The extent to which such practices affect competition by making it more difficult for rival inventors to sell competing products, or more expensive for consumers to buy them, is a matter of concern and growing debate. Considerable debate also exists about their 1 Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions, Official Journal L 213, 30 July 1998, p.13-21. Source:http: //europa.eu.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc= 31998L0044 &model=guichett

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effect on research, particularly in software and biotechnology, where patents taken at an early stage in the research process may be an obstacle to downstream research and commercialisation. In a seminal article, the biologist Garrett Hardin coined the phrase “tragedy of the commons” to explain how common resources tended to be over utilised in the absence of rules for their use. The proliferation of IPRs, particularly in areas such as biomedical research, has suggested the possibility of “a different tragedy, an “anticommons” in which people underuse scarce resources because too many owners can block each other…more intellectual property rights may lead paradoxically to fewer useful products for improving human health.” Companies may now incur considerable costs, in time and money, determining how to do research without infringing other companies’ patent rights, or defending their own patent rights against other companies. This gives rise to a question as to whether the substantial costs involved in patent searching, analysis and litigation are a necessary price to pay for the incentives offered by the patent system, or whether ways can be found to reduce them. The issues are not confined to patents. In the US, the term of copyright has extended in the last century from 28 years (renewable for a further 28 years) under the 1909 Copyright Act to 70 years after the death of the author, or 95 years from publication (in line with European practice). The question is whether this extension of protection can credibly be regarded as enhancing the incentives for future creation, or whether it is more about enhancing the value of existing creations. In 1998, Congress passed the Digital Millennium Copyright Act (DMCA) which, inter alia, forbids the circumvention of technological protection (i.e. encryption). In Europe, the Database Directive requires all Member States to provide sui generis protection for any collection of data arranged in a systematic way, whether the data itself is original or not. So far the US has not followed this approach. Increasingly there is concern that protection, under the influence of commercial pressures insufficiently circumscribed by considerations of public interest, is being extended more for the purpose of protecting the value of investments than to stimulate invention or creation. Most developed countries have sophisticated systems of competition regulation to ensure that abuses of any monopoly rights cannot unduly affect the public interest. In the US and the EU, for example, these regimes are particularly strong and well-established. In most developing countries this is far from being case. This makes such countries particularly vulnerable to inappropriate intellectual property systems. It is considered that developing countries can seek to learn from the experience of developed countries in devising their own intellectual property systems suitable to their particular legal system and economic situation. Apart from the impact of local intellectual property rules internally in a developing country, there are also indirect impacts of the developed country intellectual property system on developing countries. In the digital age, restrictions on access to materials and data on the Internet affect everyone. Scientists in developing countries, for instance, may be prevented from gaining access to protected data, or have insufficient resources to do so. Research on important diseases or new crops affecting developing countries, but carried out in developed countries, may be hampered or promoted by the IP system. The IP regime in developed countries may provide powerful incentives to do research of particular kinds which mainly benefit people in developed countries, diverting intellectual resources from work on problems of global significance. Practice in developed countries may allow knowledge or genetic resources originating in developing countries to be patented without prior arrangements for sharing any benefits from commercialisation. In some cases developing country exports to developed countries may be restricted as a result of such protection. Equally important for developing countries is the continuing trend towards the global harmonisation of IP protection. The movement towards harmonisation is not new – it has been going on for over 100 years. However the TRIPS agreement that entered into force, subject to specified transitional periods, in 1995 has made minimum standards of IP protection mandatory for WTO members. But TRIPS is only one element of international harmonisation. There are continuing discussions in WIPO aimed at further harmonisation of the patent system, which may supersede TRIPS. Moreover, bilateral or regional trade and investment agreements between developed and developing countries often include mutual commitments to implement IP regimes that go beyond TRIPS minimum standards. Thus there is sustained pressure on developing countries to increase the levels of IP protection in their own regimes, based on standards in developed countries. The impact of IPRs is very often contingent on particular circumstances and context. Many academic observers, for this reason, remain determinedly ambivalent as to whether the social benefits of IPRs exceed their costs. Typical of these is the following example:

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“It is almost impossible to conceive of any existing social institution {the patent system} so faulty in so many ways. It survives only because there seems nothing better to do.”2

In the case of developing countries, several recent reports by international agencies have commented on the likely impact of the globalisation of IP protection on developing countries.3 All of these reports reflect to varying extents a concern that heavy costs may be incurred, but that the benefits for many countries are less easy to identify. Defining Public Health

Public health refers to all organized measures (whether public or private) to prevent disease, promote health, and prolong life among the population as a whole. Its activities aim to provide conditions in which people can be healthy and focus on entire populations, not on individual patients or diseases. Thus, public health is concerned with the total system and not only the eradication of a particular disease. The three main public health functions are:

The assessment and monitoring of the health of communities and populations at risk to identify health problems and priorities.

The formulation of public policies designed to solve identified local and national health problems and priorities.

To assure that all populations have access to appropriate and cost-effective care, including health promotion and disease prevention services.

Public health professionals monitor and diagnose the health concerns of entire communities and promote healthy practices and behaviours to ensure that populations stay healthy. One way to illustrate the breadth of public health is to look at some notable public health campaigns:

Vaccination and control of infectious diseases Motor-vehicle safety Safer workplaces Safer and healthier foods Safe drinking water Healthier mothers and babies and access to family planning Decline in deaths from coronary heart disease and stroke Recognition of tobacco use as a health hazard.

The term global public health recognizes that, as a result of globalization, forces that affect public health can and do come from outside state boundaries and that responding to public health issues now requires attention to cross-border health risks, including access to dangerous products and environmental change.

The Debate about Health Pindar recounts how the mythical pioneer of medical practice, Asclepius, was ‘struck off’ in an extreme fashion – by Zeus’s thunderbolt – for placing love of gold above a more selfless rationing of his medical skills. He was condemned for ‘playing god,’ presuming to confront the mysteries of mortality through intemperate, hubristic advances in medical knowledge – a charge with resonances for today’s medical researchers as they probe the essence of human genetic identity. And Plato’s unflinching utilitarian analysis of Asclepius’s clinical case management shows how ancient societies were confronted with tough choices about allocating scarce medical resources. These accounts of the archetypal medical practitioner illuminate a timeless dilemma: should medical resources go to those who can pay for them, to those who are most ‘entitled’ to them in some principled sense, or to those who will be most beneficial for society? These profound ethical questions - about fairness and social utility in the allocation of that most fundamental of medical resources, knowledge – remain unresolved today. A ‘right to health’ (or more strictly a ‘right to the highest attainable standard of health’) is

2 This is the current policy of the US Trade Representative, as reflected in the 2002 Trade Act. 3 Weekes, J. et al (2001) “A Study on Assistance and Representation of the Developing Countries without WTO Permanent Representation in Geneva”, Commonwealth Secretariat, London.

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acknowledged as a fundamental and universal human right, established within binding international law and elaborated through guidelines on its implementation. Equitable access to medication is highlighted as a particular aspect of this right; access to medicines is not a stand-alone human right in itself, but is plainly instrumental to assuring the highest attainable standard of health. The General Comment on the International Covenant accordingly recognizes as a ‘core obligation’ on States parties to “provide essential drugs, as from time to time defined under the WHO Action Programme on Essential Drugs.” But disease is not static and is unequally distributed, and medicines are not simple commodities like clean water, in the sense that water has essentially the same utility for all humanity. In medicine, innovative activity that benefits some populations may be little or no use to others which may be in greater need of life-saving medicines: thus, equitable and effective access to medicines arguably entails a fair distribution of the innovation effort, too, so that research and development must not be inequitably focused on the health needs of the wealthy, and must track and respond to the changing clinical environment and infrastructure needs of the poor; equally, making drugs available in the absence of broader clinical support can be ineffective, or in some cases actively counter-productive.3 A comprehensive and realistic view of access to medication must, therefore, take account of the innovation process itself and broader infrastructure needs. It cannot focus solely on distributive equity in the allocation of finished pharmaceutical products. Hence the international debate over a right to health and access to medicines has broadened to a full-fledged policy process about innovation to address neglected health needs. A Global Perspective on Health Issues and IPRs

A spur to much of the recent debate has been the HIV/AIDS pandemic, although the issue of access to medicines in developing countries goes much wider. It is particularly important not to allow the debate in this area to be influenced unduly by the HIV/AIDS experience, dramatic though it is. Apart from HIV/AIDS, which is the biggest single cause of mortality in developing countries, TB and malaria claim almost as many lives. Together all three diseases claimed nearly six million lives last year, and led to debilitating illness for millions more.4 In addition, there are a number of less common diseases which are collectively important. These include, for instance, measles, sleeping sickness, leishmaniasis and Chagas disease.5 Each group of diseases presents different problems in respect of the development of cures and treatments, and the economics of the R&D process. For diseases prevalent in the developed world as well as developing countries, such as HIV/AIDS, cancer or diabetes, research in the private or public sector in the developed world may produce treatments that are also appropriate to the developing world. For these diseases, one would expect that the promise of strong IP protection in the developed world would act as a major incentive for investment in R&D. But it should be noted that some strains of HIV/AIDS in Africa, for example, are different from those in developed countries, so different treatments may need to be devised. Where appropriate treatments already exist, access to them depends on affordability, and the availability of the health service infrastructure to support delivery. We regard the cost of pharmaceutical products as an important concern in developing countries because most poor people in developing countries pay for their own drugs, and state provision is normally selective and resource-constrained. This is generally not the case in the developed world where costs are mainly met by the state or through insurance schemes. Even so the cost of drugs is a controversial political issue in developed countries, for governments and for patients not covered by effective state or insurance schemes.8 In developing countries, inadequacy of the infrastructure is an important problem, and may mean that even inexpensive medicines are not used, or that they may be misused and contribute to the emergence of drug resistant pathogens or a virus. Again, HIV/AIDS provides a helpful illustration of the issues. The treatment of HIV with antiretrovirals

4 WHO (2002) “Infectious Disease Report 2002”, WHO, Geneva. Source: http://www.who.int/infectious-disease-report/2002/framesintro.html 5 Médecins sans Frontière (2001) “Fatal Imbalance: The Crisis in Research and Development for Drugs for Neglected Diseases”, MSF, Brussels. Source: http://www.msf.org/source/access/2001/fatal/fatal.pdf

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(ARVs), or drugs to treat opportunistic infections associated with the disease, raises the affordability issue acutely. The minimum annual costs of ARV therapies, even at deeply discounted or generic prices which do not cover R&D costs, far exceed the annual health expenditure per capita of most developing countries. Current per capita health expenditures in low income developing countries average $23 per year, but the most inexpensive ARV triple therapies are now just over $200 per year.9 Thus, without extra funding for medicines and health delivery services, treatment for all those requiring it will remain unaffordable even at the cheapest generic prices. The World Health Organisation (WHO) estimates that fewer than 5% of those who require treatment for HIV/AIDS are receiving ARVs. Only about 230,000 of the 6 million estimated to be in need of such treatment in the developing world actually receive it, and nearly half of these people live in Brazil.6 Similar questions about affordability arise for treatments of other diseases. For example, TB and malaria are for the most part prevalent in developing countries, although there is a resurgence of TB in the developed world. It also needs to be remembered that TB is the leading cause of death among HIV-infected people, and about one third of them are co-infected with TB.11 For these diseases, and for diseases exclusive to the developing world, the issue is both how to mobilise resources for R&D from the private and public sectors for new medicines, and having developed them to ensure access for those that need them. The latter point is one of the most crucial questions concerning healthcare in developing countries. How can the resources necessary to develop new drugs and vaccines for diseases that predominantly affect developing, rather than developed, countries be generated when the ability to pay for them is so limited? Even when there is a developed country market from which these resources can be recovered through high prices, how can the affordability of these drugs in developing countries be secured? How can conflicts between the two objectives – covering R&D costs and minimising consumer costs – be resolved? As with technological development more generally, does the IP system have a role to play in stimulating the capacity of developing countries themselves to develop and produce drugs that they or other developing countries need? This is the context in which we need to consider the role that IPRs could play in helping to address these dilemmas. It is not for us to consider in any depth the wide range of factors that affect the health of poor people or the quality of health services in developing countries. These have been discussed at some length in the recent report of the WHO Commission on Macroeconomics and Health (CMH).7

The CMH concluded that a large injection of additional public funds into health services, infrastructure and research was required to address the health needs of developing countries. It took the view that patent protection offered little incentive for research on developing country diseases, in the absence of a significant market.8 As regards access to medicines, it favoured coordinated action to establish a system of differential pricing in favour of developing countries backed up, if necessary, by the more extensive use of compulsory licensing.9 The following questions are critical in analysis of the role of IP in Public Health:

How does the intellectual property system contribute to the development of drugs and vaccines that are needed by poor people?

How does the intellectual property system affect the access of poor people to drugs and availability?

What does this imply for intellectual property rules and practices?

Health Innovation Structures in practice Innovation practices and structures developed to deliver public health outcomes typically do not correspond absolutely to one or other of the conventional antinomies of public vs private, or exclusive rights vs open innovation; just as the values driving innovation are more protean than a neat cleavage between open altruism and closed self-interest. Actual development and effective delivery to the public of life sciences products employ a blend of public, private but part publicly-funded, and strictly private inputs, with emphasis varying as to the preferred end of a diverse spectrum of inputs and structures. There is rarely a one-to-one correspondence between one patent, or one licensing model,

6 WHO Press Release (WHO/58), 9 July 2002. Source: www.who.int/inf/en/pr-2002-58.html 7 Commission on Macroeconomics and Health (2001) 8 Commission on Macroeconomics and Health (2001), p.77 9 Commission on Macroeconomics and Health (2001), pp.86-91

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or one genetic input, on the one hand, and an actual complex product such as a new drug or vaccine, which in its available and functional form will be a convergence of inputs: genetic material, knowhow, foreground inventions, platform technologies and test data. The necessary cluster of diverse technological inputs will be governed, licensed and made available in diverse ways ultimately to yield a practical product that draws together elements of each of these inputs. This makes it almost inevitable that a hybrid mix of forms of knowledge management will be employed along the full, extended pipeline of actual product development. As figure 1 below Illustrates, innovation structures make use of a range of options between fully open access and exclusivity, on one axis, and between different levels of engagement with the market on the other axis. The knowledge management task for the product innovator – whether public or private, or both – entails determining what position on this landscape is likely to achieve the practical outcomes desired, recognizing that at least some leverage over technology and some engagement with the market will likely be required. For the public-sector or public-interest knowledge manager, there will be a special responsibility to ensure that engagement with market dynamics and the exercise of exclusive leverage do not become ends in themselves, but remain strictly instrumental towards the overarching goals of the innovation project Figure 1: Innovation Structures

Market of Orientation Exclusivity / Leverage over Technology

Non-exclusive push or pull incentive mechanisms: prize funds, advance

purchase commitments

Commercial patent pools: based on pre-

competitive technology platforms

“Open Source” or public patent pool models with private sector

downstream development pipeline: Facilitated technology access upstream, strong commercial involvement in downstream

development and dissemination

Conventional commercial

collaboration – cross licensing, technology

partnerships, joint ventures, firms as

technology integrators

Conventional private sector pipeline – tight vertical integration,

close exclusivity within one firm and

affiliates

“Traditional” public sector research: non-commercial

orientation, public domain, no downstream leverage

Public- Private Partnership for neglected disease borders with cross subsidisation from market product: diverse approaches to leveraging exclusive rights

?

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Mapping the options for drug innovation structures according to the degree of market engagement to provide incentive to bring the product through the development pipeline and the degree to which exclusivity or leverage is exercised over the core technologies A bare dichotomy between public and private forms of management is likely to be insufficient to describe actual patterns of behaviour, or to guide future practical choices. A more comprehensive working typology of these innovation structures and mechanisms may, therefore, be constructed on the basis of different choices along the two axes of public/private resources engaged, and the degree of exclusivity or openness employed. A further factor that may inform such a typology is the manner in which the 'fuel of interest' is ignited – in other words, the incentive mechanism that is used to engage and direct any necessary private resources (including financial, capital and intellectual resources, but also the capacity of the private sector to manage risk and liability). The potential range of incentive mechanisms can be characterized, again, by the extent of reliance on the market as against direct grants or prizes, and the extent to which exclusivity is employed as an incentive. Thus the range of incentive options includes the conventional incentive of potential participation in the market based on defined exclusive rights over a technology or over a regulatory approval dossier, and transferred incentives in which interests based on a certain technology or a defined market are used to promote a guaranteed level of support for a neglected technology or patient group – such as using exclusivity in a wealthy market to subsidize access and distribution in a developing country, or a public sector/philanthropic market; or using a larger market to cross subsidize readiness for another area of need (such as paediatric formulations); or using exclusive rights over adaptive or secondary use technologies (when these are genuine inventions) to enable the development of an existing treatment for other defined needs. The options also include prize funds and direct grants for research, which may aim at creating strong incentives for innovation and investment in risky research, while not requiring the prospect of future exclusive rights to serve as the principal incentive – as it is presented in current debate, delinking the market for innovation from the market for pharmaceuticals. IP management is in principle technology-neutral; the same basic legal tools apply where the technology concerns public health or new construction techniques. However there are several fundamental considerations that set apart the life sciences and medical technology especially, which may influence the choice of IP management strategy and techniques.

These technologies are closely associated with human rights and fundamental human needs concerning health.

Medical technology attracts a higher than usual share of public or philanthropic funding, and other public resources (such as research facilities).

There are high expectations that the benefits from new technologies will flow directly to the public.

Ethical considerations may apply, bolstered by the human rights dimension, such as the ethical implications of too restrictive an approach to granting access to key technologies;

pharmaceuticals are developed and exercised within a complex regulatory environment, to ensure safety and efficacy; this can mean that the dynamics, required resources and incentive structures for the development and dissemination of new technologies can differ considerably from other technical fields. Even so, public sector/public interest philanthropic research and development aim at a range of different objectives, shaped by government policy, funding initiatives, institutional goals and objectives, and the specific aims of individual researchers and research programs. What is considered to be in the "public interest" will therefore differ considerably, and will in turn flavour IP management choices, depending on whether they aim, for example, to:

create new medical treatments and disseminate them as widely as possible; capture the benefits of indigenous research and development to promote local economic

growth and sustainable development, including using traditional medical knowledge as the basis of innovative industries;

secure additional resources through licensing and other commercial arrangements to support further research to promote the advancement of scientific knowledge;

create enabling tools and an enabling environment for more widely dispersed and broadly based medical innovation, to promote greater participation in the innovation process by its intended beneficiaries; or

create a viable research-based industry sector through the formation of new commercial entities.

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Each of these objectives represents a slightly different reading of what is the ‘public interest.’ While these objectives are not necessarily mutually exclusive, and indeed may overlap in practice, a strong emphasis on one or the other may well lead to different practical choices in how public sector/public interest IP management is conducted. Accordingly, no one model of IP management is likely to serve the public interest. The choice of IP management model should, therefore, follow policy guidance on what public interest objectives are to be pursued; this is more likely to lead to concrete public benefits than an approach that emphasizes the choice of management structure over the broader definition of objectives. Clearly, the practical impact and legal implications of different weightings of these various factors will differ dramatically, and no one model is likely to serve as an optimal choice for all technology development and diffusion requirements relating to neglected health needs. For example, the range of mechanisms reflecting different approaches to the deployment of exclusive patent rights include the following:

Patent pools: Definitions of patent pools vary greatly, but the essential idea is that participating patent holders agree to license their technologies to one another – some are termed a ‘joint licensing scheme’. Usually the technology is in a well-defined field, or specific patents may be identified. A closed patent pool would restrict access to technology, raising potential concerns about anticompetitive impact if it excludes legitimate competition by those not taking part in the pool. An open patent pool would enable access by any party to the technologies covered, provided they met the standard conditions and undertakings under the pool.

Patent commons: Generally broader in scope than patent pools, patent commons allow technology holders to pledge their patented technologies for widespread use for no royalty payment – usually subject to certain general conditions (for instance, agreement not to enforce rights over technologies resulting from access to the commons). Participants may, for instance, legally pledge or covenant not to assert their patent rights against those implementing the technology in certain humanitarian or other public interest domains.

License of right: In the patent law of some countries, a ‘license of right’ system provides for a reduction in official fees for patent holders who agree to make their patented technology available to anyone requesting a license, subject to terms that can be negotiated or determined by the authorities. The UK Patent Office, for instance, maintains a database of patented technology that is endorsed as available for a license of right.

Non-assertion pledge or covenant: Rather than cancelling or abandoning their patents, patent holders may choose to make their technology widely available by legally pledging not to assert their patent rights against anyone using the technology. This may be restricted to specific uses of the technology (such as for specific public health research and development activities), limited to certain geographical locations (such as countries below a certain average level of income), or conditional on the person who uses the technology making available improvements or derivative inventions on similar terms (in the spirit of a ‘commons’).

Humanitarian or preferential licensing: This type of licensing technology policy provides highly favourable or free terms to certain beneficiaries, for example, developing country recipients, social marketing programs, or public sector/philanthropic initiatives.

Public domain: Placing technologies directly in the public domain is one avenue for their transfer and dissemination. Often, technologies are patented in a relatively small number of countries, effectively placing them in the public domain in all other countries as soon as the patent applications are published. New technologies may be consigned to the public domain, so that anyone is free to use them without legal constraint (unless, of course, health and safety, environmental, ethical or other regulations apply), by the simple act of publishing or otherwise communicating them to the public. Special patent search tools can identify those technologies that have entered the public domain when patents lapse or expire.

Open innovation, open source, commons-based peer production and distributed innovation: This cluster of related concepts features in current discussions about innovation models that emphasize a collaborative or shared technological platform for innovation. The term ‘open source’ originated from a software development model that ensures access to the human-readable ‘source code,’ and permits others to use and adapt the software, and to redistribute it, whether or not it is modified. Open source is also now used as a metaphor or description for other fields of innovation in which a technological platform is left open to

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others to use and adapt, and, on the basis of which, innovations can in turn be shared, for instance, open source biotechnology 10.

‘Open innovation’ describes a similar but broader approach, emphasizing the interest of many firms in seeking synergies and collaboration with other actors working on related technologies, as opposed to closed innovation which would emphasize firm “combining internal and external ideas as well as internal and external paths to market to advance the development of new technologies.”

‘Commons-based peer production’ refers to the development of new products through widespread collaborative networks without a formal hierarchy, often brought about by a sense of collective purpose: the Wikipedia online encyclopedia is a good example. ‘Distributed innovation’ refers to the development of innovative products through collective efforts in networks spanning different organizations, institutions or individuals. In practice, these different models entail establishing a strategic framework and clear overall objectives to help guide and inform tactical choices over specific practical options:

Publication: what is published, and when, both in order to advance the diffusion of knowledge, and to safeguard freedom to operate by establishing unambiguous public domain status.

Partnerships: what relationships are envisaged with what external partners; to the extent that private sector resources are determined to be useful, what positive inducements can be offered to secure those resources, whether these are product development capital, capacity to manage liability and risk, product development know-how and infrastructure, needed background or manufacturing and delivery technologies, or regulatory dossiers; what guarantees are required to ensure that these resources and capacities will be available and effectively delivered; and what fullback options, march-in rights and other guarantees of access will apply in the event that one partner is unwilling or unable to meet expectations.

Obtaining IP (typically patents): for what specific inventions are patents to be sought; for what practical purpose; in what jurisdictions; in whose name; and with whose funds.

Exercising IP: should patents be successfully obtained, who is to administer the patent estate; and again for what purpose, potentially distinguished according to jurisdiction (for instance whether developed or developing countries), market (public sector, philanthropic, or private), field of medical application (diseases of affluence or lifestyle diseases, as against neglected diseases or diseases endemic in the developing world); who is to fund and to enforce patents, again, potentially broken down by jurisdiction;

Licensing and sharing IP: in line with overall objectives, what licensing models are to be pursued, and to what end: maximising leverage in order to secure additional resources or background technologies; maintaining leverage over the application of key technologies so as to ensure continuing openness of access; bolstering local research and development, including building up necessary capital investment, infrastructure and product development know-how; focusing on specific interventions in the form of precise research and development outcomes, such as a new vaccine or treatment for a neglected disease.

Patents and Pricing for Developing Countries Developing countries can limit the costs of the patent system for their population by facilitating generic entry and generic competition. But in most cases their options are severely limited by the small size of their markets and lack of indigenous technological, productive and regulatory capacity. It is this lack of capacity to create a competitive environment for both patented and generic products that makes the existence of patents more contentious than in developed markets with greater capacity to enforce a strongly pro-competitive regulatory environment. International comparisons show that copies of drugs patented elsewhere are much cheaper in markets which do not offer patent protection. The Indian market, where there is no product protection, is the lowest priced in the world. One of our studies indicated that or 12 drugs covering a range of conditions US prices range from four to 56 times the price of equivalent formulations in India, and yet still a large number of people in India cannot obtain access to them.11 However, studies of multinational company pricing policies (mainly for ARVs) 10 With the assumption that intangible knowledge products are not economically significant: note Smith’s reference to the intangible or ephemeral product of “players, opera-singers, opera-dancers, etc.” as producing “nothing which could afterwards purchase or procure an equal quantity of labour. Like the declamation of the actor, the harangue of the orator, or the tune of the musician, the work of all of them perishes in the very instant of its production.” Adam Smith, An Inquiry into The Nature and Causes of the Wealth of Nations 119 (Henry Frowde ed., Oxford Univ. Press 1909) (1776). 11 Kumar, N. (2002), p.28.

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indicate that until recently there was remarkably little correlation between the price of the same drug and a country’s per capita income. This correlation is expected on theoretical grounds because companies should be able to make more profits by charging low prices in low income markets and high prices in high income markets (known as differential pricing), than by charging a uniform global price. But prices have appeared to vary more or less randomly between countries. Some developing countries paid more than US prices and some less. At best there was a very weak relationship between wholesale drug prices and per capita income. The actual price to the patient is complicated by import duties, local tariffs, taxes and wholesaler profits. In the last two years this situation may have changed somewhat as some companies have drastically lowered prices offered in response to international pressure, principally from NGOs, and potential competition from generic manufacturers, particularly from India. For instance, between July 2000 and April 2002 the annual cost of a branded triple therapy ARV combination fell from over $10000 to just over $700 for selected groups of consumers. By then the lowest generic price for this combination had fallen to $209. But to estimate the impact of introducing patent regimes anew in developing countries, it is necessary to use econometric models. There is a small but growing literature that relates almost entirely to lower and middle income developing countries which already have significant pharmaceutical industries. This literature demonstrates that the introduction of patent regimes into such developing countries has, or is predicted to have, the effect of raising prices. The estimates range widely depending on the drugs and countries being considered – from 12% to over 200%, but even the lower estimates imply very substantial costs for consumers. The range of estimates is indicative of the degree of uncertainty about the dynamic effect of introducing patents, and suggests that the outcome will be very much determined by market structure and demand, in particular the degree of competition. There is also considerable evidence that consumption of medicines is sensitive to price. One study in Uganda estimated that reducing the price of an ARV triple therapy from $6000 per annum to $600 per annum would increase the demand for treatment from 1000 to 50000 patients if associated with relatively modest investments in treatment infrastructure (of $4-6 million). Another study, also in Uganda, indicated that price cuts arising from discounts by brand name companies, further lowered by the import of generic equivalents, increased the number of patients being treated threefold between 2000 and 2001. A global econometric study estimated that the effect of eliminating patents in a cross-section of developing countries would be to increase access to ARVs by 30%, albeit from the very low existing level. The impact of introducing patent systems is likely to be most strongly felt in the group of countries that have developed strong generic industries, with a degree of competition that has kept prices low. There is evidence from some countries that the introduction of patents (for example in Italy in 1978) or strengthening the regime, as in Canada in the 1990s, by increasing the market power of foreign multinationals, will result in the consolidation and restructuring of the domestic industry. This may entail significant costs to the consumer by reducing the degree of competition in the market and increasing imports. Whether these costs may be offset by other benefits (for example, a boost to local research) is much debated. In Italy and Canada, two developed countries, the evidence is mixed.55 In Italy multinational companies took over many local companies, exports of generic drugs declined and imports of patented drugs increased. There was little evidence of increased R&D. In Canada, there is evidence of a significant rise in R&D, partly as a result of a deal struck with the multinational manufacturers and tax credits allowed under the Income Tax Act (1987), but R&D is focused on preclinical and clinical trials and improvement of manufacturing processes rather than on the development of new molecules.56 In both countries price controls were used to limit price increases on patented products. In developing countries with strong generic industries, the outlook is also uncertain. On the one hand, manufacturers of mainly generic drugs are likely to be adversely affected by the introduction of patent protection, and also consumers and governments who will need to pay more for drugs that receive patent protection. On the other hand, producers who are developing a research capability, or who may be able to obtain licences from multinational companies, may perceive benefits from patent protection. These conflicting impacts explain why the introduction of patent protection in India is so controversial. Sections of the Indian pharmaceutical industry support the introduction of patent protection, and are gearing up their research in anticipation of its introduction, while other sections strongly oppose it. And, of course, it is controversial with consumer groups and NGOs. More generally, as the TRIPS agreement is implemented, the supply of generic copies of new drugs will be

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prevented. At present, the threat of international competition from generic suppliers of copies of patented drugs is a restraining factor on the prices that can be charged in countries with no patent regimes, and to a lesser extent in countries with patent regimes where there is a credible threat of compulsory licensing. When all producer countries have patent laws, generics will increasingly be limited to older off-patent drugs. This will be no different from the current situation in developed countries, but developing countries will still find it difficult to afford new on-patent medicines. Means will need to be found, within the patent system and outside it, to generate the competitive environment that will help to offset the adverse price effect of patents on developing country consumers. We consider below some of the measures that need to be considered to ensure that the patent system supports a country’s right to protect human health and to promote access to medicines, in line with the Doha Declaration on TRIPS and Public Health Compulsory Licensing Although TRIPS allows compulsory licensing (as clarified in the Doha Declaration), subject to certain procedures and conditions, developing countries have yet to use it. Ironically, it is the developed countries that have been the most active users of compulsory licensing (not only in the pharmaceutical field) for a number of purposes, including importantly in anti-trust cases in the US. Canada used compulsory licensing extensively in the pharmaceutical field from 1969 until the late 1980s. This resulted in prices of licensed drugs being 47% lower than in the US in 1982.68 The UK also used compulsory licensing until the 1970’s, including for important drugs such as Librium and Valium. More recently in 2001, the US Secretary for Health and Human Services (HHS), publicly envisaged the possibility of procuring generic equivalents prior to his negotiations with Bayer (the patentee) on the purchase of the drug Cipro to deal with the consequences of anthrax attacks although, in the end, agreement was reached with Bayer. Developing countries have not used the system for a number of reasons. First, it requires an administrative and legal infrastructure that is absent in many developing countries. Secondly, developing countries have feared that sanctions might be threatened, bilaterally or multilaterally. Thirdly, compulsory licensing has to be “predominantly for the domestic market”. Fourthly, the word compulsory refers to the legitimate limitation of patent owner rights by a government. The actual producer of the licensed drug manufactures voluntarily and for profit (at least in the case of a private sector licensee). Thus the licensee must have the know-how to reverse engineer and manufacture the drug without the cooperation of the patent owner, and must also foresee a sufficiently large market to justify the costs of investment and manufacture and adequate remuneration to the patentee. If these conditions are not fulfilled, the threat of a compulsory licence will not be credible. The threat of compulsory licensing has been successfully used by Brazil in the pursuit of its National STD/AIDS Programme. As a result of its research capability, and the development of public sector manufacturing capacity, Brazil has been able to use the threat of compulsory licensing in negotiations with pharmaceutical companies. This includes an ability to use estimates of its own production costs under compulsory licensing when negotiating prices with patentees. But there are relatively few developing countries which are in the same position as Brazil, so the threat will lack credibility in most developing countries unless they are able to rely on imports from countries with the requisite capacity.

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Box 10.1 An Example of Compulsory Licencing Compulsory licensing in Thailand In November 2006 and January 2007, the Thai Government announced that it would issue three compulsory licenses for the following pharmaceutical products: - Efavirenz (HIV), patented by Merck; - Kaletra (HIV), patented by Abbott; - Plavix (heart disease), patented by Bristol-Myers Squibb & Sanofi-Aventis. The reason for the authorization of these licenses was the Government’s perception that the respective drugs were not made available at affordable prices by the patent holders. According to Thai health officials, the grant of the compulsory license on Efavirenz

Box 10.1 An Example of Compulsory Licencing Compulsory licensing in Thailand In November 2006 and January 2007, the Thai Government announced that it would issue three compulsory licenses for the following pharmaceutical products: - Efavirenz (HIV), patented by Merck; - Kaletra (HIV), patented by Abbott; - Plavix (heart disease), patented by Bristol-Myers Squibb & Sanofi-Aventis. The reason for the authorization of these licenses was the Government’s perception that the respective drugs were not made available at affordable prices by the patent holders. According to Thai health officials, the grant of the compulsory license on Efavirenz has resulted in important price decreases for the patented medicine, from 58 baht/month (price of the patented drug before the compulsory license was granted) to 24 baht/month (price of the patented drug after the compulsory license was granted). The compulsory license also enabled the introduction of a generic version of Efavirenz, at only 7.5 baht/month. The patent holders receive a remuneration of 0.5 per cent of the total sales value of the generic copies. Unlike most other cases, the compulsory license on Plavix covers a non-communicable disease. Governments have heretofore generally focused on using compulsory licenses to promote competition and reduced prices for drugs needed to treat epidemics, such as HIV/AIDS and tuberculosis. However, neither the TRIPS Agreement nor the Doha Declaration on TRIPS and Public Health restrict the use of compulsory licenses to epidemics. The affected pharmaceutical companies criticized the Thai Government for not respecting the obligation provided under Article 31, TRIPS Agreement to enter into negotiations for voluntary licenses prior to the issuance of the compulsory licenses. According to the Thai Government, however, the generic drugs obtained under the licenses are being used for its non-commercial public health programmes. Under Article 31 (b), TRIPS Agreement, the prior negotiations requirement may be waived by a member, inter alia, in case of public non-commercial use. While the Thai Government in January 2008 announced the granting of another series of compulsory licenses for medicines to treat various forms of cancer (i.e. Letrozole of Novartis for breast cancer; Docetaxel of Sanofi-Aventis for breast and lung cancer; Erlotinib of Roche for lung, pancreatic and ovarian cancer; and Imatinib of Novartis for leukemia), it has at the same time indicated its willingness to collaborate with the pharmaceutical companies, provided the latter lower the prices of a number of the drugs in question. As of December 2008, the compulsory licenses had resulted in price decreases for patented Docetaxel (400 baht/month after the grant, as compared to 900 baht/month before the grant) and the availability of a generic version for 37 baht/month, as well as a decrease in the price for patented Letrozole (from 7 baht/month pre-grant to 2 baht/month post-grant) and a generic version for 0.1 baht/month. After announcing the grant of the compulsory licenses, Thailand was placed on the Office of the United States Trade Representative’s (USTR) Priority Watch List, which leaves it subject to trade reprisals

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Box 10.2: Comparative legal analysis of exportation/importation of pharmaceutical products patented in both the exporting and the importing member

Situation under Article 31, TRIPS Agreement

Exporting member: Compulsory license required > up to 49 per cent of production admitted for export (Article 31 (f)).

Importing member: Compulsory license also required. Re-exportation: up to 49 per cent of imported medicines > with each re-export, the amount of exportable products is more than halved.>Situation under the “System” of draft Article 31bis, TRIPS Agreement

No LDC trade agreement

(i) Exporting member: ~ Compulsory license required > 100 per cent of production required for export (Article 31bis (1)). ~ Notification of export to WTO (Annex, para. 2 (c)): export to one or several members designated in notification > pooled procurement potential for beneficiary members. Producer is subject to limitations in quantity (Annex, para. 2 (b) (i)) and requirements on labelling (Annex, para. 2 (b) (ii)) and publishing information (Annex, para. 2 (b) (iii)).

(ii) . Importing member: ~Need for import notification to WTO (Annex, para 2 (a)) ~Compulsory license required. Covers any third party action such as importation, use, and sale of product without authorization of owner of domestic patent. ~ But: re-exportation to countries not designated in original export notification is nevertheless prohibited (Annex, paragraph 3), unless original importing country issues new export notification to WTO (Annex, para 2 (c)) > only designated importing countries benefit.

LDC trade agreement (i) Exporting member: (ii) Compulsory license required >100 per cent of production required for export (Article 31bis (1)). (iii)If exporting member is outside LDC trade agreement: Notification of export to WTO (Annex, para. 2 (c)): export to one or several members designated in notification pooled procurement potential for beneficiary members. Producer is subject to limitations in quantity (Annex, para. 2 (b) (i)) and requirements on labelling (Annex, para. 2 (b) (ii)) and publishing information (Annex, para. 2 (b) (iii)).

If exporting member is part of the LDC trade agreement: Obligation to notify export to WTO does not apply (no reference to notification requirement in special LDC provision, draft Article 31bis.3) > Shipment to any of the other trade agreement members > pooled procurement potential for beneficiary members. In addition: producer is NOT subject to limitations in quantity, requirements on labelling, and publishing information > incentive for regional producers

Importing member: ~Obligation to notify import to WTO does not apply, to the extent that imports sourced from within LDC trade agreement (no reference to notification requirement in special LDC provision). ~ If sourced from outside LDC trade agreement, obligation to notify does apply. May be made jointly by regional organization on behalf of member states. ~Re-exports possible to other trade agreements parties sharing same health

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Observations: Under the draft Article 31bis (3), TRIPS Agreement system (i.e. LDC-dominated

trade agreement), the exporting WTO member may be Outside the LDC trade agreement (example: India exports to the United Republic

of Tanzania; the United Republic of Tanzania re-exports to Burundi, Kenya, Rwanda, and Uganda)

Party to the LDC trade agreement (example: the United Republic of Tanzania produces itself and exports to Burundi, Kenya, Rwanda, and Uganda)

A WTO notification of export is only needed for those shipments coming from outside the LDC trade agreement. Likewise, a WTO notification of import is only needed to the extent that the shipments come from outside the LDC trade agreement.

Conditions regarding necessary amount of production, labelling and web posting do not apply to producers exporting within the LDC trade agreement.

The above analysis is based on the assumption that the exported medicine is patented in both the exporting and the importing country. If the exported medicine is not patented in the exporting country, there is no need for the draft Article 31bis system, as there are no patent law-related limitations to the exportation of the medicine. The importing country will still need to issue a compulsory license.

If the exported medicine is not patented in the importing country (or granted patents are not enforced, following the extension of the LDC transition period, such as in the case of Rwanda, box 8, below), the draft Article 31bis system is still required (except the granting of a compulsory license in the importing country), as its main purpose is to facilitate exports of patented products produced under a compulsory license. The importing country only needs to notify the WTO (of the names and quantities of the products needed) if it is not party to an LDC-dominated trade agreement, or if imports into the region come from outside of that region. It only has to confirm its insufficient manufacturing capacity for pharmaceuticals if it is no LDC.

Conclusion: the effect of Article 31bis (3), TRIPS Agreement on a regional trade agreement (RTA) is that:

Producers within the RTA are not subject to limitations of quantity, labelling and web posting requirements;

No additional WTO notification is needed on top of original export notification from exporting country outside LDC trade agreement;

No WTO notification at all is needed for exports originating in a member of the LDC trade agreement destined to other members of this trade agreement;

No WTO notification at all is needed for imports coming from a member of the LDC trade agreement;

The prohibition of re-exports does not apply.

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Box 10.3: Rwanda invokes paragraph 6 system for the importation of a fixed-dose Anti-retroviral drug made by the Canadian pharmaceutical company Apotex Inc.

In July 2007, only one week after the European Parliament delayed its ratification of the Paragraph 6 Decision, the Rwandan Government as the first and only country so far, notified the WTO to make use of the Paragraph 6 mechanism. Referring to the 2016 transition period for LDCs, the Government announced that it would no longer enforce patent rights that could have previously been granted on the triple combined fixed-dose anti-retroviral drug TriAvir. Between September 2008 and September 2009, Rwanda imported 260,000 packs of TriAvir as manufactured in Canada by Apotex Inc. As an LDC, Rwanda did not have to prove its lack of manufacturing capacity. The triple combined drug is patented in Canada by Glaxo Group Ltd., Welcome Foundation Ltd., Boehringer Ingelheim Pharmaceuticals Inc. and Shire Biochem Inc. Based on a compulsory license, the Canadian manufacturer Apotex was authorized to produce the medicament and export it to Rwanda under Canada’s Access to Medicines Regime (CAMR) implemented in Canadian law in May 2004, and the regulation for the Use of Patented Product for International Humanitarian Purposes. Under this regime, Apotex could only start producing upon formal request from a would-be importing country. Furthermore, Apotex was obliged to negotiate with the patentees voluntary licenses for 30 days. As Apotex and the patentees did not reach voluntary licensing agreements, the Canadian Government became the first country to notify the WTO of the grant of a compulsory license for the manufacture of a total of 15.6 million tablets of ApoTriAvir for the export to Rwanda. Information on each shipment, including quantities, was posted on the company’s website. This first use of the Paragraph 6 system has, however, not been suited to calm down public criticism of the system as being too burdensome, due to its onerous reporting rules.. Despite the fact that Apotex reportedly offered lower prices than its Indian competitors, the company stated that it would not be ready to use the system again. According to the same sources, Apotex blamed the procedural requirements under the Canadian Paragraph 6 implementation legislation (i.e. CAMR) to represent a major disincentive for developing countries and generic producers to use the Paragraph 6 system. In response to such criticism, current efforts to reform CAMR have resulted in a Bill (C-393) before the Canadian House of Commons. An important question in this context is to what extent the current requirement, under CAMR, for separate negotiations with the patent owner for each purchasing country and each order of medicines may be amended and simplified, along the lines of a “one-license solution”.

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Assignment 1 : Study Case1 Compulsory License in Thailand (partly reality, partly fictional) Thailand's government has issued compulsory licences for two medicines, one for HIV/AIDS and the other for heart disease, in order to reduce healthcare costs by allowing the production and import of cheaper generic versions of the patented drugs. Confirming the government's decision on 29 January 2007, Public Health Minister Mongkol na Songkhla said that suspending patent protections on the drugs was necessary to enable the country's universal healthcare scheme to provide treatment to those who need it. "We have to do this because we don't have enough money to buy safe and necessary drugs," he explained. The drugs in question are Kaletra (K), an advanced HIV/AIDS treatment patented by US-based Abbott Laboratories (AL), and Plavix (P), a blood thinner jointly marketed by Bristol-Myers Squibb (BMS), also of the US, and France's Sanofi-Aventis. The move comes two months after the military installed regime in Bangkok issued a compulsory licence for another HIV/AIDS drug, Merck's efavirenz. Public health officials have indicated that the country will import generics from India until domestic production by the state-owned Government Pharmaceutical Organisation comes on line, according to Thai press reports. Particularly notable is the fact that Plavix is used to treat a non-communicable heart disease. Governments have generally focused on using compulsory licences to promote competition and reduced prices for drugs used to treat epidemics such as HIV/AIDS and tuberculosis, even though the World Health Organisation says that non-communicable conditions such as heart disease and diabetes cause far more deaths in many countries. Thai health officials say that only 20 percent of the200, 000 patients that need Plavix currently receive it, reports the Associated Press. Generic production would cut the price per tablet more than ten-fold from 70 baht (about USD 2.06) to less than six baht (18 cents), making it affordable to extend treatment to more people. Switching to generic copies of Kaletra is expected to more than halve the monthly cost of treatment to the 20,000 people who no longer respond to 'first-line' HIV/AIDS drugs, and need the more advanced treatment to survive. Although Abbott Laboratories already sells Kaletra to the Thai government at a substantially discounted rate of USD 2200 per patient per year, generic equivalents could cost USD 1080 or less. Industry groups have been critical, warning that it could lead to decreased investment in the country and weakened incentives for research. They also expressed anger that the government had not adequately negotiated with them before issuing the compulsory licences. Abbott Laboratories went so far as to a statement saying "we do not view [the decision] as legal or in the best interests of patients” (excerpt from Bridges News, February 2007). Assume the right holders AL and BMS object the issuance of a compulsory license and consider lobbying their respective governments to take the case to the WTO dispute resolution. They think that key provisions of TRIPS have been violated by the procedure adopted by the Thai Government. In particular they argue

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that the Thai government cannot issue a compulsory license for ‘no epidemic’ diseases as they are not covered by the Doha Declaration on TRIPS and Public Health

that the government had not sufficiently negotiated a license with them before moving to issue a compulsory license and

that any imports of generic drugs (consisting of the patented medication) from India violate their patent rights under Art.28 TRIPS and further the newly established mechanism of Art.31 bis and the Annex to TRIPS

Question: Advise the Thai Government on their chances of winning a potential dispute in the WTO! Assignment 2: Study Case 2 Bird Flu Outbreak in the UK (partly reality, partly fictional) LONDON, Feb. 3 2007 — British authorities confirmed Saturday that an outbreak of bird flu discovered among turkeys at a poultry farm in eastern Britain had been caused by the deadly A(H5N1) strain, which has killed humans in other parts of the world. The disease has killed 2,500 turkeys near Lowestoft since Thursday, making it the biggest outbreak of the strain reported in Britain since concern about its global spread began to take root in 2003 (excerpt from NY Times, Sunday, 4th February 2007). Assume that the situation worsens and some farmers in the regions show signs of being infected by the deadly virus. Further, there are now indications that the disease is transferring from humans directly to other humans. The British health authorities realise that they do not have sufficient medication in stock to secure the vaccination of all residents in the affected area. Also the producer of the only available vaccination (which holds a patent on its drug in the UK and all other countries with large manufacturing capacity in the Pharmaceutical sector) cannot provide sufficient quantities and is further asking for a rather high price per unit. Therefore, the Health Authorities plan

to issue a compulsory license to domestic producers in the UK to produce more vaccination as soon as possible

to request other EU member countries, the US and India (all countries where the vaccination is under patent) to authorise a compulsory license to produce large quantities to be exported to the UK The holder of the patent for the vaccination does not object to a compulsory license in principle but thinks that the procedure under Art.31 TRIPS has been violated. The company further considers any imports into the UK as violations of WTO law and points to the fact that the UK has opted out to use the ‘paragraph 6 solution’ as an importer (as it is stated in the chairman’s statement related to the recent Art.31 TRIPS amendment).

Question: Examine the legality of the actions of the UK government under TRIPS, including the recently agreed amendment to TRIPS! Rights under a compulsory license – Doha developments The licensee is authorized by the government to use the patented invention without the authorization of the patent holder. However, as the license is non-exclusive, the compulsory licensee may face competition in the market from the patent holder and other licensees. This limitation may dampen the generic suppliers’ interest in the market, unless the economic prospects are otherwise favourable, as could occur if countries coordinated their procurement strategies and, where necessary, pooled the relevant compulsory licenses. Another important qualification concerns the exportation of products manufactured under compulsory license: while the patent holder is free to export the entirety of her/his production, the TRIPS Agreement requires the compulsory licensee to use her/his production predominantly for the supply of the domestic market (Article 31 (f)). This requirement has been waived, however, for exports to countries with insufficient pharmaceutical manufacturing capacities, as these countries would otherwise be unable to make effective use of compulsory licensing. The waiver, as included in the 2003 WTO Paragraph 6 Decision and the 2005 TRIPS Amendment Decision (draft Article 31bis), enables a compulsory licensee to export the entirety of her/his production to a country in need of certain drugs that it cannot produce itself. In order for this waiver to apply, a particular system has been set up, which distinguishes between requirements for importing

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and exporting members, as explained in the following sections. Attached to both the 2003 Paragraph 6 Decision and draft Article 31bis, TRIPS Agreement is a note from the Chairman of the Council for TRIPS, which elaborates on some of the issues contained in the waiver. National Arrangements for Compulsory Licensing An important barrier to compulsory licensing in developing countries is the absence of straightforward legislative and administrative procedures to put it into effect. Because legal systems in most developing countries are overburdened, it would be most appropriate to legislate for a quasi-judicial and independent administrative system for implementation of compulsory licensing. The essential elements would include:

straightforward, transparent and fast procedures procedures for appeals that do not suspend the execution of the licence legislation that fully exploits the flexibilities in TRIPS for determining the grounds for

compulsory licensing, as well as for non-commercial use by government, including production for export (see below)

clear, easy to apply, and transparent guidelines for setting royalty rates (which may vary). There is much to be learnt from the experience of developed countries, particularly Canada, which seems to have had the most comprehensive programme. Canada set a more or less universal royalty rate of 4%, for which an early precedent was set in an important test case. US practice has varied considerably from very low rates to quite high, depending on court judgements. Developing countries will need to develop rules and procedures adapted to their own circumstances for setting royalty rates, but the implication of other countries’ experience is that royalty rates need not be very high. Developing countries also need to consider adopting in this context strong provisions on government and non-commercial use. This is different from compulsory licensing but has a similar effect in the public health sector. Again, many developed (and developing) countries have such provisions in their laws. In Commonwealth countries these derive from the British 1883 Act, which has been retained in current law.12 These powers are quite sweeping and do not specify closely particular circumstances in which they can be used. For instance, in New Zealand: “…any Government Department …may make, use, exercise and vend any patented invention for the services of the Crown and anything done by virtue of this subsection shall not amount to an infringement of the patent concerned.”13 Developing countries should establish workable laws and procedures to give effect to compulsory licensing, and provide appropriate provisions for government use. Compulsory Licensing for Countries with Insufficient Manufacturing Capacity Paragraph six of the Doha Declaration directs the TRIPS Council to develop an expeditious solution to the problem faced by certain countries not having sufficient manufacturing capacity in the pharmaceutical sector. It defines the problem as the inability of these countries to use compulsory licensing to obtain needed pharmaceuticals from a producer located in their territory. A compulsory licence ordinarily could be used for this purpose - the country could authorise through a compulsory licence a domestic producer to produce the product within its territory, or an importer to procure from elsewhere. The countries identified as having this problem, however, cannot turn to a domestic producer for products under this approach, and would need to rely on a producer from another country. We agree that it is important to get the interpretation or amendment of TRIPS right, bearing in mind the longer term scenario when patent protection will apply to countries that can currently produce and export generic copies of patented drugs. The ultimate need is to create a precompetitive solution for the market in patented drugs in developing countries after TRIPS is fully in force which allows expeditious procurement of drugs in a sustainable manner at the lowest possible cost. This applies whether we are considering the direct procurement of patented drugs where there are a range of therapeutic substitutes, or about procurement under compulsory licensing. Compulsory licensing needs to be viewed as a means to an end. The end in this case is to help achieve the lowest possible 12 Presentation by Christopher Garrison, Legal Advisor to MSF, at MSF, CPTech, OXFAM and HAI conference, “Implementation of the Doha Declaration on the TRIPS Agreement and Public Health: Technical Assistance – How to Get it Right”, Geneva, 28 March 2002. 13 Section 55(1) of Patents Act. Source: http://www.piperpat.co.nz/patlaw/crown.html#s55

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cost of medicines in developing countries in order to facilitate access. The only point of compulsory licensing in this context is if it will help to achieve this. As noted above, aside from the legal and administrative aspects, compulsory licensing will only be effective if the compulsory licensee sees the possibility of a reasonable return from his investment while also supplying at a significantly lower price than the patentee (or his licensee). While there are now several countries, particularly those with significant domestic markets, with the capacity to produce copies of drugs cheaply, this will become more difficult after 2005. There will be no incentive, as now, for manufacturers in these countries to reverse engineer newly patented drugs and take the other steps necessary for manufacture and sale (including obtaining regulatory approval), because the domestic market would be closed. Thus the ready supply of generic substitutes for patented drugs now available will gradually disappear. Potential compulsory licensees would therefore have to charge a price closer to full economic cost (including start-up and manufacturing costs) as compared to the possibility of providing off-the-shelf generics at prices where start-up costs have already been amortised to some extent on the domestic market. Moreover, if the necessary investment is only triggered by the availability of a compulsory licence, there will inevitably be long delays before the drug actually reaches the intended patients.73 In addition, there is some evidence that reverse engineering of new medicines is intrinsically more difficult in biopharmaceuticals than in traditional process chemistry. This suggests that, without special arrangements, the possibility of compulsory licensing being a vehicle for price reductions will be more limited than at present, even in the few technologically advanced developing countries. For most countries, the only feasible supplier may be the patentee (or his licensee). We therefore see the problem identified at Doha as being as much economic as legal. A quasi-legal solution as may be identified in the TRIPS Council is necessary, but is by no means sufficient to solve the problem we have outlined. In particular the quasi-legal solution is less likely to be effective the more compulsory licensing is hedged around with restrictions. Such restrictions reduce the likelihood that such licensing can be an effective bargaining tool for developing countries negotiating prices with patentees – it can be effective only if the compulsory licensing alternative is a viable economic proposition. Arguments on Legal IP legislation Interpretation Countries with no or insufficient manufacturing capacity cannot issue a compulsory licence to a domestic manufacturer, or to one overseas because patents are territorial. At present they could issue a compulsory license to an importer, who could source the supply from a generic manufacturer in a country where the product is not patented. After 2005, this option will not be possible for drugs that are patented in the supplier country. The practical effect of this provision is to render the compulsory licensing provisions practically worthless for the very countries which are likely to need it most – namely the poorest. With limited domestic manufacturing capacity, there is no one to invoke those provisions in those countries. This is plainly unsatisfactory and the Doha Declaration rightly recognised that a swift solution should be found to this problem. There are a number of interpretative problems raised by the Doha Declaration, a few of which we note in passing. The Declaration notes that countries are free to determine the grounds on which compulsory licences are granted (paragraph 5b), and the right to determine what constitutes a “national emergency or other circumstances of extreme urgency” (paragraph 5c). The latter provision reflects the shortcut in procedures allowed in these circumstances in Article 31(b) of TRIPS. Thus paragraph six refers to procedures for compulsory licensing in the pharmaceutical sector needed to address “public health problems…especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics” (paragraph 1).74 It does not, as sometimes assumed, refer only to compulsory licensing in situations of emergency or urgency. Nor is it limited to a particular type of disease. It also needs to be clarified which countries have no or insufficient manufacturing capacity. Again we think this requires an economic interpretation. If production of a needed medicine is technically possible but extremely costly, there is no point in issuing a domestic compulsory licence. If the objective is affordable access to medicines of appropriate quality and quantity, then the solution should allow production in the most economically viable manner, whether domestically or overseas. Developing countries generally favour an interpretation of “manufacturing capacity”, that takes account of economic criteria (for example, whether the capacity is such that economic production is possible in the envisaged circumstances), and place emphasis on a country’s ability to decide the criteria on a product by product basis. Developed countries, with one exception, suggest that criteria for defining this should be drawn up, without defining what these might be. Since the Declaration also allows LDCs not to apply pharmaceutical patents until 2016, countries that take advantage of this provision will not be able to issue compulsory licences, nor will any country where a patent has not

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been taken out. At present, such countries may be able to import cheaper supplies from other countries without patents on the relevant products, but again this situation will change after 2005. Thus paragraph six, while referring specifically to compulsory licensing, is clearly intended to address this wider context of action to address the affordability and accessibility of medicines, particularly in developing and least developed countries. The Declaration does not specify which countries may act as suppliers to the countries in question. In order to maximise competition, and achieve the lowest prices possible, applying no restriction on which WTO members may act as suppliers would seem to be the logical market-based solution. For the same reasons, countries seeking a licence should logically seek out the most competitive compulsory licensee, wherever they might be located. Developing countries favour having the ability to import from suppliers in any country. One developed country favours the possibility of import from developed countries, but the EU has no fixed views and the US favours supply from developing countries only, as does the research-based pharmaceutical industry. Five main solutions have been proposed to the problem mentioned in paragraph six of the Declaration which we examine in turn. The Amendment of Article 31 of TRIPS. Article 31(f) could be deleted. However this may be regarded as altering the sense of the Agreement for compulsory licensing other than in relation to public health problems. The alternative is an amendment which would make a clearly demarcated exception to the restriction imposed by Article 31(f) covering compulsory licensing needed to address public health problems envisaged in the Declaration. Such an amendment to TRIPS would be very time-consuming and require ratification by national governments. An interim or provisional solution, such as a declaration of intent, and temporary waiver or moratorium on dispute settlement, could be provided to cover the period until any amendment is ratified. But many countries, both developed and developing may be reluctant to re-open TRIPS at all, because of the risk of other aspects of the agreement being opened up for renegotiation at the same time. Assuming a solution was found, it would then be necessary for a potential exporting country to delete the “predominantly” clause from its own legislation and to make sure that the grounds for compulsory licensing accorded with those envisaged in the Declaration. In the final stage compulsory licences would need to be invoked and paid for in both the importing and exporting countries, if there is a patent in both. The exporting country would need to be prepared, in any case, to issue a compulsory licence for the benefit of the importing country. Developing countries have suggested a number of options for resolving the problem including the revision of Article 31 or deletion of Article 31(f), so as to ensure Article 31(f) would not apply to any laws, measures and administrative regulations including compulsory licences, adopted to protect public health and in particular to ensure affordable access to pharmaceutical products. Other developing countries note that under Article 31(f) there would be a need to issue compulsory licences in both the importing and exporting country which would be administratively burdensome. The EU favours the specific amendment to Article 31(f) described above. The US does not favour an amendment to 31(f), but a moratorium on dispute settlement proceedings to achieve the same effect. Interpretation of Article 30. Article 30 provides for limited exemptions to patent rights that do not conflict with the normal exploitation of the patent. Under this proposed solution no amendment is required to TRIPS, nor a compulsory licence in the exporting country. One claimed advantage is that it would allow exports to countries where no patents exist on the relevant medicine. All that would seem to be required is an “authoritative interpretation” under Article IX of the WTO agreement, adopted by three quarters of WTO Members. This would clarify that an exception under patent rights to allow export in the circumstances envisaged in the Declaration is legitimate. National legislation in the exporting country would then need to be amended to ensure that the envisaged exception is incorporated. One issue with this proposed solution is whether the “Doha exception” would be compatible with the conditions of Article 30. An interpretation of this Article in a recent Disputes Settlement Panel76 suggested that the “limited exceptions” should be interpreted narrowly. This was in the context of justifying Canada’s provision of an exception for early working by potential competitors for the purposes of obtaining regulatory approval. There is a case to be made that an exception, as suggested here, is “limited” to particular circumstances as defined in the Declaration. It could also be said that it does not “unreasonably conflict” with the normal exploitation of the patent, being for export at low prices, provided the “legitimate interests” of the patentee are safeguarded (for example, preventing diversion to other markets). Moreover, the legitimate interests of third parties (people suffering from diseases in developing countries) would need to be weighed appropriately against those of the patentee. For the most part

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the very different circumstances applying here, as contrasted to those in the Canada case, means this WTO case law is of limited relevance. Some developing countries particularly favour the Article 30 solution, noting that it solves the problem of double remuneration under Article 31, and removes the need for a compulsory licence in the exporting country. In terms of administrative procedures they feel it is the least burdensome option. It should also be noted that activist NGOs think the Article 30 option is preferable to other options. Moratorium or Waiver. An alternative is the proposal for a moratorium or waiver for exports in the “Doha circumstances”. Advocates argue that a waiver is the most expeditious solution noting that it could provide legal security and still avoid the need for either amendment or authoritative interpretation of the TRIPS agreement. The conditions for a waiver could be set out in advance to define the circumstances in which they would apply. Obviously there would be a need to set these out very clearly and unambiguously to the satisfaction of all WTO members. This has not yet been attempted and clarity may inevitably be compromised in negotiations on the criteria. The WTO Ministerial Council would have to agree the criteria under which Members may be exempted from complying with the provisions of the TRIPS Agreement. Both in the case of a moratorium and a waiver, however, interested parties may only invoke protection under the Agreement if national legislation has been changed to implement the exemption to the 31(f) requirement.77 If national legislation is not changed, a patentee may still make a case in national courts in spite of the fact that a WTO waiver or moratorium applies. It also needs to be remembered that a waiver requires regular review by the Ministerial Conference/General Council if granted for a period of more than one year. The EU have suggested that a waiver (or moratorium) might be necessary while the amendment they propose to 31(f) is agreed. Some developing countries have suggested that that a waiver (or moratorium) would not amount to a sustainable and legally predictable solution. By contrast the US has suggested that a waiver or moratorium is more likely to achieve an expeditious, workable, transparent, sustainable and legally certain solution. We also understand that the pharmaceutical industry supports a proposal on these lines. Non-Justifiability. The proposal for a non-justifiability option would achieve much of the Article 30 approach by a different means. It would operate in a similar manner to the position of TRIPS on the exhaustion of rights (paragraph six of TRIPS). By authoritative interpretation or amendment of the Agreement, it would be decided that settlement disputes under TRIPS would not be used to in relation to exports undertaken as envisaged in the Declaration. However, it is unclear exactly how this proposal would be implemented. Export by a Nation with a Compulsory Licence. A final option, which is not in the hands of the WTO, is that countries which have the capacity to reverse engineer and manufacture, and large local markets for the required medicines, may issue compulsory licences in accordance with their own legislation. In that case, a proportion of the supplies manufactured could be offered for export to countries in need (on the basis of a compulsory licence for import if necessary) in a manner that did not breach Article 31(f). A compulsory licence can also be granted to remedy anti-competitive practices (Article 31(k)), and in this case the restriction on exports would not apply. But this option depends on the supplying country having legitimate grounds for issuing a compulsory licence in the first place, on its having a large enough market that exports constitute less than half of total production, and on its willingness to export. Defining Biotechnology

Biotechnology generally concerns the application of cellular and molecular biology to make or modify products and processes for specific use. It includes scientific and industrial disciplines directed to understanding and manipulating living or biologically active material at the molecular level, often involving recombinant deoxyribonucleic acid (DNA) techniques and analysis of genetic information.

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Modern biotechnology is expected to lead to important breakthroughs in many fields, such as health, food, energy and the environment.

While the patentability criteria prescribed in patent laws apply to inventions in all fields of technology in the same manner, the application of patent law to biotechnological inventions has to deal with a number of particularities that may not exist in the same way in other areas of technologies.

One area of issues relates to the scope and legal standards of patent protection. While in principle, in accordance with the Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), patents shall be available for any inventions in all fields of technology, the issue of patentability of biological materials isolated or derived from naturally occurring living organisms has triggered widespread discussions. Some argue that such biological materials are mere “discoveries”, and therefore not patentable, while some others argue that they are man made “inventions”.

With respect to industrial applicability (usefulness) and sufficiency of disclosure, the exclusive patent rights may be granted only where an appropriate level of concrete and practical use of the biotechnological invention is disclosed in the patent application. The debate addresses the importance of ensuring that claims are not broader than is justified by the invention disclosed in the patent application, in particular, where it is an early and fundamental stage of innovation (research tool) or a new gene with its future application still not determined. The application of the patentability criteria has further implications on licensing and other issues related to the exploitation of patents. In this context, exceptions and limitations to patent rights, in particular, research and experimental use exception has been considered important for down-stream innovation.

In addition, a number of typical issues relating to biotechnological inventions result from the fact that biological material is capable of reproducing itself. This specific characteristic requires determination of law as to the scope of legal protection of future generations, exhaustion regimes, special rules, if any, for plant and animal breeders or farmers, etc. Further, the development of genetic engineering resulted in the possibility of overlap between plant variety and patent protection even in countries where patent protection for plant varieties is excluded. While each of these systems provides a scope of protection and rights as well as limitations that are distinct from each other, the interplay between the two systems is at scrutiny. Other relevant issues, such as the conservation of biodiversity and ethical dimensions of the protection and commercialization of biotechnological inventions, have been discussed in many fora, for example, the World Trade Organization (WTO), Convention on Biological Diversity (CBD) and the Food and Agriculture Organization (FAO). As to biodiversity, reference is made to the issue of genetic resources, including “disclosure requirements” and prior art databases.

TRIPS and Patenting of Biotechnological Inventions

The agreement on Trade Related Intellectual Property Rights (TRIPS) was concluded when the W.T.O. Agreement replacing GATT was formally signed at Marrakesh on 15th April 1994 in order to reduce distortions and impediments to international trade and taking into account the need to promote effective and adequate protection of intellectual property rights.[1] This agreement is aimed to recognize the public policy objectives of national systems for the protection of intellectual property including developmental and technological objectives, also the special needs of the least developed country members in respect of maximum flexibility in the domestic implementation of laws and in order to enable them to create a sound and viable technological base.[2] The TRIPS agreement is to achieve the objectives that the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to the balance of rights and obligations.[3] In order to achieve the above objectives, members may adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, while formulating or amending their laws, provided that such measures are consistent with the provisions of this Agreement.[4] TRIPS agreement became operative from 1st January 1995 with the formation of the World Trade Organization (WTO) replacing

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GATT. It came into force from 1st January 1996, one year after the entry into force of the WTO i.e. 1st January 1995. Section 5 of the TRIPS deals with Patents. Main provisions relating to patentability of biotechnological inventions under the TRIPS agreement are as follows: Patentable Subject Matters:

It provides that patents shall be available for any invention, whether products or processes in all fields of technology provided that they are new, involve an inventive step and are capable of industrial applications.14 The terms "inventive step" and capable of industrial applications may be deemed to be synonymous with terms "non-obvious" and "useful" respectively. It further provides that "patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced".15 Thus, under the TRIPS agreement the member country has to grant patents to any invention in any field of technology without any discrimination, for products as well as process whether, the products are imported or locally produced. However, in order to be a patentable invention, following requirements have to be complied with.

(a)The inventions must be new, (b)They must involve an inventive step (non-obvious), (c)The inventions are capable of industrial application (useful).

These provisions do not establish any discrimination to the patentability of the invention in any field of technology including biotechnological inventions. However certain exceptions and conditions to patentability are provided. These provisions are more or less similar to the provisions provided in the patent laws of various developed countries and also the provisions under the European Patent Convention(EPC). Non-Patentable Subject Matters:

The TRIPS agreement has excluded certain inventions from the ambit of patentability. It provides that "members may exclude from patentability any invention, which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment provided that such exclusion is not made merely because the exploitation is prohibited by domestic law".16 It further provides that "members may also exclude from patentability (a) diagnostic, therapeutic and surgical methods for the treatment of human or animals, (b) plants and animal other than microorganism, and essentially biological processes for the production of plants and animals other than non-biological and micro-biological processes".17 Thus, TRIPS agreement allows discretion to members (Contracting States) to exclude certain kinds of inventions from patentability in order to protect public order and morality and also to protect human, animals and plant life to avoid serious prejudice to the environment. The notions of ordre public (public order), and morality are not defined in the Agreement. However it is clear that those inventions that cause injury to human, animal and plant life as well as the environment are excluded. Member countries are given flexibility to adjudicate such matters. Some countries may still provide patent protection for inventions that cause damage to the environment. Patenting of genetically engineered organisms and life forms is generally possible under these provisions. Further it is also possible for a state to provide patent protection to a gene or a whole organism.18

14 Article 27(1). 15 Ibid. 16 Article 27(2). 17 Article 27(3). 18 John Mugabe, "Intellectual Property Protection and Traditional Knowledge” 1998, p.11.

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The discretion has also been vested in members to exclude certain inventions from patentability

relating to the following matters, (a) diagnostic, therapeutic and surgical methods for treatment of human beings or animals; (b) plants, and animals and (c) essentially biological processes for the production of plant or animals. These provisions are similar to the provision as provided under European Patent Convention (EPC).19

Exception to Exclusion: Although certain kinds of inventions have been excluded from the patentability but patenting of microorganisms and non-biological processes is allowed. Therefore, in other words, microorganisms per se, process of their production and process of their use are made patentable, TRIPS agreement however, neither defines the term "microorganism" nor does it specify any parameters concerning the scope of protection to microorganism such as microorganism per se, whether found in nature or created artificially such as genetically modified organism (GMO) etc. However, the EC directives on microorganisms define it as "any micro biological entity, cellular or non-cellular, capable of replication or transferring genetic material. EC directives have also defined "biological material" as any material containing genetic information and capable of reproducing itself or being reproduced in a biological system.20 Term of Protection: The provisions under TRIPS agreement provide the term of patent protection for 20 years from the date of filing. Thus, the inventions relating to biotechnology or to any other fields of technology will have uniform term of protection without any discrimination or classification as to the field of technology unlike as was provided in Iranian Patent and Trademark Act, 1931.

Exclusive Marketing Rights (EMRS): The Patent and Trademark Act, 1931 does not allow the patent protection for pharmaceutical per se. However, the TRIPS agreement provides that "where a member does not make available as on the date of entry into force of the agreement, patent protection for pharmaceutical and agriculture chemical, products exclusive marketing rights shall be granted, for a period of five years from the date of such grant after obtaining market approval in that member or until a product patent is granted or rejected in that member whichever is shorter provided that a product patent application has been filed and a patent granted for that product in another member and marketing approval is obtained in such other member".21 Thus, the member country of WTO which does not grant product patent for the inventions relating to pharmaceuticals and agro-chemicals are required to provide exclusive marketing rights if the following requirements are fulfilled,

(a) an application for the grant of patent has been filed (b) Marketing approval has been obtained, (c) a patent has been granted for that product in another country and (d) marketing approval has been obtained in such other country.

Such EMRs will be granted for the period of five years after obtaining marketing approval or until a product patent is granted or rejected. The EMR may therefore be available for pharmaceutical

19 Daniel Gervais, “The TRIPS Agreement, Drafting History and Analysis”(2003, Sweet & Maxwell), p. 222.

20 Article 2 of EC Directive of 98/44/EC dated 6th July 1998. 21 Article 70(9), TRIPS Agreement.

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produced by using biotechnological process or methods. Therefore, in order to implement these provisions, the member country must accept the filing of applications for patents for pharmaceutical and agrochemical products from January 1, 1995, even if the member country delays the application of other provisions of TRIPS agreement, and after expiry of that delay, it must take a decision in respect of the application either to reject or grant a patent. But in doing so, it must apply the criteria of patentability as lays down in the TRIPS agreement retroactively. If the decision is to grant a patent, that patent will be available for the remainder period of term of patent.22

Product Patent for Inventions not Protectable: The Pharmaceutical, chemical products, agro-chemicals, microorganism, genetic engineering products etc., are currently excluded from patentability in many countries. In 1988 WIPO found that 49 countries, excluded pharmaceutical products, and 22 countries, chemical products from patentability. A majority of the countries provided process patents. In some of the countries, neither were patentable.23 Even in some developed and developing countries like India, the life of a patent is shorter in pharmaceuticals than in other sectors of technology.24 The exclusion of product patent for pharmaceuticals and chemicals is motivated by the concern for public health and availability of these products to the general public at a reasonable price. 25 The TRIPS agreement allows any developing country member to delay the application of provisions concerning patents for products, if the subject matter of invention falls in an area of technology not patentable in that member country when TRIPS came into effect. Pharmaceuticals, chemical microorganisms etc., are such areas. Such delay may be five years, (Art 65.4) added to the four years general delay granted to developing countries (Art. 65.2) and the one year delay granted to all members, for total of ten years.26 A least developed country is entitled to a general transitional period of 11 years. The TRIPS council shall, upon duly motivated request by a least developed country member, accord extensions of this period.27

Burden of Proof: According to the provisions under TRIPS agreement, the burden of proof has been shifted to defendant. It provides that "if the patent is granted for a process for obtaining a product, the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process".28 The burden of proof however shall be subject to following conditions: (a) if the product obtained by the patented process is new or (b) if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through reasonable efforts to determine the process actually used. However, a member country is free to provide only one of these two conditions for such presumption. Due to shifting of burden of proof, a manufacturer will be required to provide the details of the manufacturing process to rebut the infringement of a process patent.29 In such a case, the courts are required to take into account the legitimate interest of the defendant in adducing the evidence to the country.30 Sufficient Disclosure and Best Mode: TRIPS agreement provides that, "the applicant for patents shall disclose the invention in a manner

22 WIPO publication No. 464 (E), (1996) pp. 47-48, "Implication of the TRIPS Agreement".

23 WIPO doc. HUCE/IV/INF/Rev/in WO/INF/29, September 1998. 24 Term of Patent for pharmaceutical process patents in India is 7 years from the date of patent and 5 years from the date of

filing whichever is shorter.

25 S.K. Verma, TRIPS-Development and Transfer of Technology, 2,IIC, 1996, p. 347. 26 WIPO publication No. 464(E), 1996, p. 47. 27 Article 66(1), TRIPS Agreement 28 Article 34. 29 Supra note 16, p. 346 30 Article 34 (3) of the TRIPS Agreement

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sufficiently clear and complete for the invention to be carried by a person skilled in the art and may require the applicant to indicate the best mode for carrying out the invention known to the inventor at the filing date or where priority is claimed, at the priority date of the application."31 For all practical purposes, the same result is accomplished by the corresponding provision of Patent Cooperation Treaty(PCT), which includes describing the nucleotide sequences, deposition of microorganism to supplement the written description. The provisions as mentioned above also exist in the patent laws of almost all countries for the reason that when term of protection (patent) is over, the public should be able to take benefit of the invention. It is very difficult to describe the invention relating to biotechnology by written description as it involves the use of living material such as microorganism. Budapest Treaty provides facility to deposit the microorganism in any of the International Depository Authority (IDA) recognized by WIPO to supplement the written description to avoid deposition of such microorganism in each country where the applicant applies for grant of Patent. Rights of Patentee:

According to the provisions of Article 28, a patent shall confer on its owner the following exclusive rights:

(a) where the subject matter of patent is a product, to prevent third party from making, using, offering for sale, selling or importing that product for these purposes, and (b) where the subject matter of patent is a process, to prevent third party from using the process, offering for sale, selling or importing for these purposes at least the product obtained directly by that process.

Thus, importation of patented product is allowed as one of the exclusive rights conferred on patentee under Article 28 of the TRIPS which will be considered equivalent to commercial working of patents. The provisions relating to compulsory license, enforcement etc., have been made stricter. Protection of Plant Varieties: The TRIPS agreement does not insist upon the members to follow a particular type of system for the protection of plant varieties. However it provides that "members shall provide for the protection of plant varieties either by patent or by an effective sui generis system or by any combination thereof.” 32 Thus, plant varieties can be protected either by patent or by any sui generis system. These provisions however should come into force at the end of year 2003. This provision has generated controversy and opportunity. Firstly, there is a controversy as to what is "an effective sui generis" system. The "effectiveness" of the sui generis system is not defined. However, the term sui generis, may offer a wide range of policy choice because it could presumably include any arrangement for plant varieties that offers recognition to innovations with or without monetary benefits or monopoly control.33 If there is any dispute on the nature and minimum standards of on "effective sui generis" system, the dispute can be adjudicated only by WTO. Secondly, it is to be noted that generally multinational companies and developed countries are likely to promote plant breeders right as "effective sui generis" system. The plant breeder's right may be used by developed countries as measure of effectiveness under TRIPS, thereby limiting the ability of developing countries to develop a system to properly reflect their own social and economic needs.34 TRIPS agreement, on the other hand, has provided new opportunities to develop alterative property rights regimes, which are ethically, socially and environmentally appropriate to the needs and conditions of indigenous and local people in developing countries. This is an opportunity, which developing countries should tap quickly by devising and promoting non-patent measures. Some developed countries particularly USA, are campaigning for its removal so that no restriction are imposed on patenting of life form. In some countries including India has already legislated legislation

31 Article 27(3). 32 Article 27(3) (b). 33 The Crucible Group Report 1994, p. 53.

34 Supra note 9, p.12.

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on plant variety known as "The Protection of Plant Varieties" and Farmers Rights Act 2001.35 The provisions of Article 27(3) (b) are to be reviewed four years after the date of entry of Agreement establishment WTO. Discussion about the review has already started. TRIPS council has already held its meeting at Doha in November, 2001.36 The review is also required to examine as to whether there is a possibility to amend TRIPS and to provide effective sui generis-system conforming UPOV 1978 or UPOV 1991. As granting of intellectual property rights on biological material has proven to be highly contentious issue internationally for cultural and ethical reasons and due to diverging economic interest, the WTO has all set to re-evaluate the obligations of member countries to protect plant material legally. This has resulted in biotechnology and seed industry to join hands to coordinate towards a more rigid protection of invention related to plant material and at the same time to recognize the rights of local farming communities and their contribution in selective areas such as plant, medicine of economic value. However, some NGOs have already started opposing grant of patents for life forms. Thammasat Resolutions1994 37 had called for revision of TRIPS agreement in order to allow countries to exclude life forms and biodiversity related intellectual property rights. The resolution also provides for recognition of sui generis system that exists independently from TRIPS agreement to protect the inalienable rights of farmers, local communities who drive their livelihood from diversity. Food Security – The Basics Food security can be understood at different levels, from the household to the international level.38 While the overall availability of food at a global level is not a major concern at present, food availability in specific regions of the world and access to food by specific individuals remains a major concern in most parts of the South. Further, population growth in countries where undernourishment is already a problem and diminishing arable land availability make food insecurity one of the most important policy challenges of coming years. Food security is not only dependent on the availability of food but also on effective access and appropriate distribution of existing foodstuffs. Unavailability of foodstuffs is not a major concern at present a worldwide level since the world produces enough food for its present population. Availability is a concern at present in the case of countries suffering from armed conflicts, in situations where sufficient arable land is not available or in the case of persistent drought. Food availability will also be an increasing concern in the future if food production does not keep pace with population growth. At present, however, the problem of under nourishment is often more linked to the problem of lack of access to food and misdistribution of foodstuffs than the problem of unavailability. In countries like India, overall food availability has been more than sufficient for a number of years but the numbers of undernourished keep rising.39 This indicates that food security must be analysed at different levels at the same time. The availability of sufficient food within the country does not indicate that each and every household and every individual has access to sufficient food, the latter being the ultimate measure of food security. Food security at an individual level implies that people must either have a sufficient income to purchase food or the capacity to feed themselves directly by growing their own food. There is therefore a direct link between poverty and food security.40 More specifically, food security is influenced by individuals’ capacity to work, individual and household access to land and their control over the land and other productive assets, including seeds. Further, food security is also influenced by policies concerning the management of the environment in general and agricultural biodiversity specifically. Diversity constitutes from an environmental point of view one of the ways in which resilience of agricultural systems can be ensured while from a socio-economic point of view, agro-biodiversity constitutes to a large extent one of the basic productive assets of poor farmers. Food Security and Intellectual Property Rights in Developing Countries

35 Act No 53 of 2001 published in Gazette of India, Part II, section I, dated 30th October 2001.

36 Peter Rott, “The Doha Declaration – Good News for Public Health?” Intellectual Property Quarterly No. 3, 2003, p. 285. 37 Thammasat Resolution, Thailand, December 1997. 38 On food security in the context of agricultural biotechnology, see generally Ian Scoones, Agricultural Biotechnology and Food Security: Exploring the debate (Brighton: Institute of Development Studies, Working Paper 145,2002) 39 See,e.g, FAO, The State of Food Insecurity in the World 2002 (Rome:FAO, 2002) 40See, e.g. Mahbub ul Haq Human development centre, supra note3 at 96

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Food security remains an overwhelming concern for developing countries even though some countries classified as developing countries have virtually eradicated hunger. In some parts of the world, undernourishment remains dramatic. Thus, 24% of the population of South Asia is undernourished and 33% in sub Saharan Africa. As often acknowledged, food security is a function of availability, access and distribution of food. A number of other links are also relevant such as the links between food security, property rights, agriculture and environmental management. The latter remain fundamental in a context where a majority of the active population is in the agricultural sector and where agriculture provides directly or indirectly the basic food needs of about 70% of poor and undernourished people. Intellectual Property Rights and Food Security Food insecurity is a major problem throughout the Sub Saharan Africa and most developing countries. It is a concern at all levels, from individuals to states. At a basic level, food security is about fulfilling each individual’s human right to food. Within the broad question of the human right to food security also relates more specifically to issues of agricultural policy, economic development and trade. This section of the chapter picks up on the specific link between food security and intellectual property right (IPRs), one – but only one – of the important perspectives from which food security must be analysed. IPRs have become increasingly important in the past couple of decades in a number of fields. This includes, for instance, agricultural biotechnology where IPRs provide a basic incentive for the development of the private sector in this area. The extension of IPRs to agriculture is of special significance because agriculture and food security are closely interlinked. In other words, the introduction of IPRs in agriculture is directly linked to the realization of basic food needs. The introduction and strengthening of IPRs in the agricultural sector of developing countries has been and remains contentious. On the whole, food security constitutes the central concern of all relevant actors. The introduction of IPRs in plant varieties is justified by the need to foster food security in the long-term. Similarly, arguments in favour of an open system where private IPRs are not enforced are also based on the premise that this will contribute to food security. At present, IPRs in agriculture have been and are being introduced in developing countries that are members of the World Trade Organisation (WTO). This is taking place in a context where food insecurity remains a central concern for a majority of developing countries where a large proportion of the population does not have access to sufficient good quality food. A host of conceptual and practical issues need to be addressed in the context of the paradigmatic shift from a system seeking to foster food security on the basis of the free exchange of knowledge to a system seeking to achieve the same goal on the basis of the private appropriation of knowledge. This is not only due to the fact that IPRs provide different kinds of incentives for inventiveness than a system based on the free sharing of knowledge but also because some of the new plant varieties are the product of genetic engineering. The latter bring in other environmental and socio-economic dimensions to the subject considered. TRIPS Related Patent Flexibilities and Food Security Exclusions from Patentability Food security may be negatively affected by the appropriation of plant genetic resources, as it may prevent further research and breeding or limit the possible sources of supply of seeds. Article 27.3(b) allows WTO Members considerable policy space to define national laws in this area. Some of the available options relate to the exclusion from patentability of:

a) Plants b) Essentially biological processes, and c) Plant varieties.

Plants Article 27.3(b) allows (but does not oblige) WTO Members to exclude plants from patent protection. However, it is important to note that, in the absence of any definition in TRIPS itself, the exclusion for plants can be interpreted in broad terms, inclusive of plants as such as well as plant varieties and species. In addition, countries that opt to implement this exception may exclude plants, whether obtained through conventional breeding processes or through the use of genetic engineering. A large number of national laws provide for the exclusion of plants in general, or plant varieties, with a variety

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of legal formulations. Some countries’ (such as Brazil, Cameroon, Colombia, Cuba and Guatemala) laws also exclude DNA sequences and amino acid sequences corresponding to the peptides or proteins produced by a naturally occurring organism. The TRIPS Agreement requires that microorganisms be granted patent protection. Under a literal interpretation of the Agreement, the obligation to protect microorganisms is limited to organisms that are not visible to the naked eye, such as bacteria, viruses or fungi, provided that they constitute an “invention” that meets the patentability requirements. The obligation does not extend to microorganisms found in nature, even if isolated. Also, it does not extend to cells or genes, which “are naturally occurring entities that are there to be discovered, like new species or new planets.” In some jurisdictions, such as Europe and the US, isolated genes for which a function has been identified have been deemed patentable. This approach has influenced patent legislation and practices in many countries. However, it has been increasingly questioned in recent years. In 2010, a US district court rejected claims on isolated DNA or complementary DNA (cDNA) on the grounds that genes are a product of nature and therefore not inventions, even if isolated from their natural environment. If finally confirmed, this decision may have a broad impact in different fields of biotechnology. An important question is whether the possibility of prohibiting patents on plants may be understood, under the TRIPS Agreement, as applicable also to plant cells, genes and other sub-cellular components. It could be argued that none of those components are “plants” and, therefore, that they are not covered by the exclusion provided for in Article 27.3(b). But patenting of such components (even if modified) may be equivalent to patenting the plant as such, since the patent owner may prevent commercial acts relating to any plant that contains the patented subject matter and thereby nullify, in practice, the exclusion relating to patents for plants. This might be the case even where one single modified gene or an artificial gene construct is incorporated into a plant (whose genotype may contain several thousands of coding genes). TRIPS-Related Patent Flexibilities and Food Security: Options for Developing Countries The possibility of broadly excluding plants and parts thereof from patentability is limited or completely ruled out in countries that have signed FTAs with the US, where there is an obligation to grant patents for plants or to make efforts to do so. Essentially Biological Processes TRIPS Article 27.3(b) allows the exclusion from patentability of “essentially biological processes” for the production of plants. The meaning of “essentially biological processes” – a concept drawn from the European Patent Convention (EPC) – has been examined in many European Patent Office (EPO) decisions and given a rather narrow interpretation. For instance, in Decision T320/87, Lubrizol (1990), the EPO held that “a novel combination of traditional plant breeding techniques that results in plants and seeds” is patentable. A growing number of applications claim IP protection over conventional breeding methods. According to one study, “in 2008 nearly 25 percent of all patent applications at the EPO related to plants developed by conventional breeding. Some years before, patent applications centred on conventional breeding processes had been the rare exception.” In 2010, about 200 patents on seeds with and without the use of genetic engineering were granted by the EPO, and 100 applications were received on plants bred without using genetic engineering. The use of marker-assisted selection (MAS) explains the rise in patent applications involving conventional breeding methods. A MA permits breeders to identify genes of particular interest in the plant genome. Then, by means of genetic markers, they can select the plant lines containing the desired trait. This method allows the expression of desired traits without the insertion of genes that are not naturally present in the plant’s genome, thereby avoiding the costly testing that is required for the approval and release of transgenic varieties. An important issue is whether the use of MAS can be considered an “essentially biological process” excludable from patent protection. In considering patents EP 1069819 relating to broccoli and EP 1211926 relating to tomatoes, the Enlarged Board of Appeal of the EPO ruled on 9 December 2010 that the mere use of molecular markers did not render the selection and breeding methods patentable. While this decision – still on appeal – seems to confirm the non-patentability of conventional breeding methods (even when based on modern techniques) under European law, it leaves open the possibility of patenting the obtained plants as such. Plant Varieties The TRIPS Agreement mandates the protection of plant varieties, allowing several options: “patents, an effective sui generis regime or a combination of both.” This was one of the most controversial provisions in the TRIPS negotiating process. The initial proposals by the US, Japan, the Nordic countries and Switzerland aimed at broad patent coverage for plants and living organisms. In

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contrast, most developing countries rejected such an approach. Meanwhile, EU countries wanted to preserve the freedom to exclude plant varieties (and animal races) from patentability, as provided for in the EPC. According to TRIPS, therefore, national laws may provide for patents, a combination of PVP with patents and/or sui generis forms of protection, whether or not modelled on the UPOV Convention. In choosing the modality of protection, patents can be excluded for plant varieties as currently is the case for a large number of countries that follow the EPC approach. The patentability requirements (particularly the inventive step) seem not only unsuited to plant varieties, but also, given the scope of rights generally granted under patents, they may deter further research and breeding on protected materials and erode the rights of farmers to save and reuse seeds. Ordre Public and Morality Article 27.2 of the TRIPS Agreement provides for the possibility of refusing patents for inventions the commercial exploitation of which is “necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law.” Ordre public or moral grounds to prevent the grant of patents relating to plants have been invoked in some circumstances in national courts, but not admitted so far. In Plant Genetic Proliferation of patents on plant materials Although the patenting of plant materials raises a number of concerns from the perspective of food security, many countries do allow such patenting. Patents are routinely granted in many developed and developing countries (such as China, Chile, India and South Africa) on genetically modified plants, plant cells, genes and other sub-cellular components as well as on enabling plant biotechnologies.43 In these cases, countries can use a number of flexibilities to limit the possible negative impact of patents on agriculture and food security. Multiplicity of Patent Claims The wide range of possible claims in connection with a single plant component or trait often leads to situations where a multiplicity of patents applies to one and the same plant. There may be a patent on promoters, another on terminator sequences and others on sequences used for “transportation” and “reporter genes” needed for the genetic transformation of a plant, and in the case of transgenic plants and agro biotechnology products, each of their numerous components and processes, each may be protected by an IPR. This leads to “the development of large patent portfolios of more or less overlapping claim files (‘patent thickets’).” The presence even of one single patented component in a plant or plant variety may create a barrier against the utilization of the latter, including for research and breeding. For instance, a patent on a peptide transit used in GA (a genetic construct that makes maize resistant to an herbicide) may prevent the incorporation of this construct in plants, even if the genetic construct as such is in the public domain. The proliferation of patents explains the difficulties that researchers face: “a web of proprietary claims now envelops the transfer and use of patented agricultural biotechnologies, thereby limiting the freedom to operate of public and private agencies alike.” A telling example is provided by the obstacles found for the use of agrobacterium – the most widely used tool to genetically transform plants – by researchers both in the private and public sectors, due to the complex set of patents relating to this technology. Even in cases where a patent (e.g. on a promoter gene) is not in force in the country where a research entity operates, if a product were developed containing patented components, exports to countries where the patent does exist could be prevented by the patent owner. The proliferation of patents is the result of a number of convergent factors, namely the erosion of the traditional distinction under patent law between “inventions” and “discoveries,” and the relaxation of the patentability requirements. Unintentional Infringement The presence of a trait in a plant protected by a patent may or may not be intentional, as a patented gene trait may disseminate by natural means and appear in plantations unintentionally. A telling example where the legal effects of this situation were considered was the Monsanto Canada Inc. v. Schmeiser case, where Monsanto sued Schmeiser, a Canadian canola breeder and grower, who had harvested and saved from one of his fields canola seed containing Monsanto’s patented transgene that conferred resistance to glyphosate. The Canadian Supreme Court ruled that Schmeiser had

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infringed Monsanto’s patent despite the fact that the presence of the patented gene in the defendant’s field was deemed to be unintentional. However, patent laws may exclude liability in cases of bona fide infringement, as stipulated in Article 44.1 of the TRIPS Agreement. Significantly, Article 9(f) the Swiss patent law, incorporated in 2007, stipulates that a patent does not extend to biological material that was obtained in the agricultural domain by chance (au hasard) or when it is technically inevitable. The Farmers’ Privilege A few patent laws clarify the rights conferred with regard to reproductive materials, such as seeds. French law, for instance, makes it clear that plant material can be multiplied or reproduced where it has been legally put on the market by the patent holder or with his or her consent, where this was the purpose for which the material has been marketed; the obtained material, however, cannot be subsequently used for further reproduction or multiplication. As noted above, under the UPOV system, a farmer can be allowed to save and reuse seed obtained from cultivation of a protected variety. However, under patent law, the protection of a component present in a plant variety (e.g. a gene construct that introduces resistance to an herbicide) may be sufficient to prevent such acts. Patent laws may include exceptions to allow farmers to save and reuse seeds, in a manner similar to the farmers’ privilege under PVP regimes. This is illustrated by Article 11 of the European Directive on the Protection of Biotechnological Inventions, under which those acts are admissible although subject to payment of remuneration to the breeders (small farmers do not have to pay such remuneration). The exception could be equally provided for without remuneration independently of the farms’ sizes. This would be a key component of a legal regime sensitive to food security policies, since it would reduce costs of production and promote the diversification of the sources of supply of seeds. Research and Breeding PVP regimes allow the use by breeders of a protected plant variety for research and breeding (the breeders’ exception). This is a mandatory exception under the UPOV Convention and a key feature of PVP regimes. This exception “optimizes variety improvement by ensuring that germplasm sources remain accessible to all the community of breeders.” Progress in agriculture is indeed based on the use and improvement of existing genetic materials. To encourage such progress, PVP permits a breeder to derive a new variety from a third party’s protected variety. Importantly, the new derived variety can be commercialized without the consent of the owner of the original variety, provided the repeated use of the variety is not necessary for the commercial production of another variety. Under UPOV 1991, however, if the variety is deemed to be an “essentially derived variety,” its commercialization may be subject to the authorization of the owner of the initial variety (Article 14). In principle, when patent protection exists, the patent owner can prohibit the use, production, sale or offer for sale of any biological material (including a plant variety) that contains the patented subject matter (e.g. a gene). Patent laws may, however, allow exceptions for research and breeding. In the US, for instance, the patent law is interpreted as meaning that a variety protected by a plant patent can be used by a third party without authorization as a parent in a commercial breeding program, since infringement will exist only when the accused variety was derived asexually from the protected variety. Article 22.V of the Mexican Law on Industrial Property includes a broadly worded exception allowing third parties, in the case of patents related to living material, the use of the patented product as an initial source of variation or propagation to obtain other products, except where such use is made in a repetitive manner. French Law stipulates that the exclusive rights conferred by a product or process patent on a biological material do not extend to the acts accomplished with a view to creating or discovering and developing other plant varieties. Similarly, Swiss law stipulates that the rights conferred by a patent do not extend to the use of a biological material for selection or discovery with the purpose of developing a plant variety. These exceptions to patent law may not be fully equivalent to the breeders’ exception under PVP. Although, arguably, selection, crossing, etc. of a variety could be legally done without the patent owner’s authorization, the commercialization of a newly obtained variety that contains the patented subject matter may be considered as infringing the patent. Of course, there might be little incentive for third parties to do research and breeding if the outcome thereof cannot be commercialized, unless the time of remaining protection is short. For this reason, the Dutch seeds association, Plantum NL, has suggested an exception, stipulating that the use and exploitation of plant varieties protected by patent rights “should be free, in line with the ‘breeders’ exemption of the UPOV Convention.” The compatibility of an exception under patent law – equivalent in its scope and effects to the breeders’ exception – with the TRIPS Agreement (Articles 28 and 30) has not been tested yet.

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Compulsory Licenses As an alternative to an uncompensated exception equivalent to the breeders’ exception, patent laws could provide for a remunerative exception based on a compulsory license: a breeder who might be prevented from legally commercializing a new plant variety because it contains one or more third parties’ patented components, may be entitled to obtain a compulsory license on the relevant patent/s. It is important to note in this connection that the TRIPS Agreement does not limit the grounds for the grant of compulsory licenses. Article 12 of the European Directive on the Protection of Biotechnological Inventions provides an example of compulsory licenses for situations of coexistence of patents and PVP, subject to a number of conditions:

The breeder has applied unsuccessfully to the holder of the patent for the right to obtain a contractual license;

The breeder can show that his variety “constitutes a significant technical progress of considerable economic interest” (Article 12.3(b)) with regard to the patented invention.

The owner of the relevant patent/s can obtain a “cross license” on the plant variety. The European Directive, conversely, allows a company owning patents on a gene or other components to obtain a compulsory license on a third party’s plant variety that incorporates such a gene or components (Article 12.2). Swiss patent law (Article 36a), as amended in 2007, also introduced the right of a breeder to request a compulsory license when he cannot obtain or exploit his title without infringing a patent under conditions similar to those established by the referred to European Directive. The burden of proof imposed on the breeder for obtaining a compulsory license under these provisions is problematic, since it relies on the comparison of subject matters of very different nature. A plant variety, as such, cannot represent “significant technical progress” with regard, for instance, to a patented gene; rather, the incorporation of the latter may improve a plant variety, for instance, by enhancing its resistance to pests, drought or herbicides. Compulsory licenses may be provided for in national laws subject to less stringent conditions, consistent with Article 31 of the TRIPS Agreement.

General Recommendations regards IPRs and Food Security:

It may be important for food security to exclude plants from patentability. Excluding plants or plant varieties from patentability is effectively circumvented if national laws allow parts or components of a plant to be patented, since control over the latter leads to control over the former. Countries should therefore consider excluding plants from patentability, whether or not they are genetically modified and excluding from patentability parts and components of plants, including genes, even if isolated.

Plant breeding methods must be available for unrestricted use to produce new varieties and ensure diversity in the field. National laws should not allow for the patentability of conventional methods for plant breeding, even where selection is assisted by genetic markers. The use of such markers should not be deemed a sufficient ground to grant patents on the products obtained as such.

Countries should assess the different options they have to provide protection for plant varieties in a manner that suits their national agriculture policy and food security objectives. Whether agricultural production in a particular country is essentially based on commercial or on farmers’ varieties, protection of plant varieties under patents is not advisable, as they may restrict further breeding and farmers’ saving and sharing of seeds. TRIPS-Related Patent Flexibilities and Food Security: Options For Developing Countries Systems, the Board of Appeal of the EPO found that the invention (a genetically modified plant) was not improperly used, and it had not had destructive effects. In 1999, a legal challenge was brought in the US against a patent granted to a US citizen on the “ayahuasca” vine, which is native to the Amazonian rainforest. The Coordinating Body of Indigenous Organizations of the Amazon Basin (COICA) and other indigenous and environmental groups objected to the patent because it purported to appropriate for a US citizen a plant that is not only well-known, but also sacred, to many indigenous peoples of the Amazon. The patent was objected to, not on ordre public or moral grounds, but because it allowed a US citizen to appropriate a plant that was considered sacred to many indigenous peoples of the Amazon. Although Article 27.2 is likely to be relevant in only a limited number of circumstances, it may be applied, for instance,

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when the diffusion of a certain plant technology, such as the sterilization of seeds, may have negative effects on agricultural production or the environment.

Patents should be denied based on ordre public or moral grounds in cases where food security or the environment are put at risk, for instance, when the dissemination of certain genes may negatively affect particular crops or ecosystems Allowing appropriation of plant materials found in nature through an IP right (even if the patent claimer has done work to isolate them or identify their properties) creates barriers that may negatively affect agricultural research. The TRIPS Agreement does not oblige WTO Members to confer patents on natural biological materials. National laws should establish a clear-cut distinction between “invention” and “discovery” and consider that an “invention” does not exist where a natural substance, such as a gene, has been isolated or the properties or a function thereof identified.

Allowing appropriation of plant materials found in nature through an IP right (even if the patent claimer has done work to isolate them or identify their properties) creates barriers that may negatively affect agricultural research. The TRIPS Agreement does not oblige WTO Members to confer patents on natural biological materials. National laws should establish a clear-cut distinction between “invention” and “discovery” and consider that an “invention” does not exist where a natural substance, such as a gene, has been isolated or the properties or a function thereof identified.

Maintaining access to genetic resources for use and improvement is crucial for agricultural development and food security. National laws should apply an absolute concept of novelty and consider that a substance found in nature is not “novel” even if its composition, properties or characteristics have not been previously described. It was used to prevent imports of the yellow bean from Mexico and subjected US production of that kind of bean to the patent owner’s control. A low level of inventive step may also lead to the grant of patents on minor variants of existing products, such as a change of amino acids in a gene construct to modify plants. If accepted by patent offices, this kind of applications may generate uncertainty and eventually restrict the availability of generic versions of genetically modified plant varieties after the expiry of the original patent. As noted by a report of the Centre for Genetic Resources (CGN), “Patents on genetic properties of plants are too easily granted through careless application of the criteria (the inventiveness test, in particular).” “DNA sequences for functional genes can still almost automatically be patented while the technique has meanwhile become state of the art and hardly contains innovative elements.”

A low standard of inventive step may reduce the sources of supply and limit research and breeding. Patent offices should apply rigorous criteria to establish inventive step in plant-related innovations, so as to grant patents only when the invention is not obvious for a person, or a team of persons, with high technical qualification and experience in the field.

Broad patent claims related to genetic materials may generate a disproportionate power for patent owners to prevent research or production based on functions/uses they have not discovered, thereby limiting the options for seed producers and farmers. If patents are allowed on genes, they should be limited to the function or use identified by the patent owner.

National laws should exempt from liability unintentional infringement caused by the dissemination of patented genetic materials.

National patent laws should, where plants and/or their components are patentable, introduce exceptions equivalent to the farmers’ privilege under PVP.

The continuous improvement of plant varieties requires freedom to undertake research and breeding where patented materials are involved. Exceptions to this effect should be adopted even where a country opts not to grant patents on plants (or plant varieties). Even if it opts not to do so, such exceptions should be included if the patentability of plant components is permitted. National laws may permit the commercialization of the newly obtained varieties, on the basis of non-remunerative exceptions. However, the compatibility of an exception of this kind with the TRIPS Agreement has not been tested.

National patent laws should provide for compulsory licenses in cases where the exploitation of a protected plant variety would infringe a patent. A cross-license may be granted to the patent owner with regard to the concerned variety.