Facilitated Access & Benefit Sharing Under the New FAO Treaty: The Interface of Open-source & Proprietary Agric

1. Facilitated Access & Benefit Sharing Under the New FAO Treaty: The Interface of Open-source & Proprietary Agricultural Innovation Charles R. McManis Washington University in St. Louis IPSC 2007

2. N.B. Save the date: April 4-5, 2008 • Interdisciplinary academic conference on the topic: Beyond Ideology re Open-source and Proprietary Models of Innovation How and when do the models work? How and when (and how well) do they work together? What does law have to do with it? Sponsored by the Center for Research on Innovation, Entrepreneurship & Law, Washington University in St. Louis

3. FAO International Treaty on Plant Genetic Resources for Food & Agriculture (PGRFA) Part IV: Multilateral System of Access & Benefit-sharing Articles 11 & 12: The Multilateral System of Facilitated Access—the open-source feature of the PGRFA Treaty. Article 13: Benefit-sharing in the Multilateral System--including sharing of monetary and other benefits of commercialization (which implicitly recognizes a role for proprietary PGRFA innovation).

4. I. Facilitated Access Article 11—the “Multilateral System” (MLS) covers PGRFAs listed in Annex I, which includes 64 food crops & forages (w/ some notable exclusions, e.g. soy, tomatoes & maca, the “natural viagra”) that are “under the management and control of the Contracting Parties and in the public domain.” MLS will also include the extensive international ex situ collections of the International Agricultural Research Centres of the CGIAR.

5. Article 12—“facilitated access” is to be provided all legal and natural persons under the jurisdiction of Contracting Parties (subject to an upcoming review of continuing facilitated access for those persons who hold PGRFAs that they don’t include in the MLS). • Facilitated access is to be “solely for the purpose of utilization and conservation for research, breeding and training for food and agriculture” but not for chemical, pharmaceutical and/or other non-food/feed uses.

6. “Facilitated Access” means inter alia-- • Access is to be accorded expeditiously, w/out need to track individual accessions and free of charge or for a fee not exceeding the minimal cost involved (Art. 12.3(b)); • Recipients are not to claim any IP or other rights that “limit” the facilitated access to PGRFAs “or their genetic parts or components, in the form received from the Multilateral System” (Art. 12.3(d)); • Access is to be provided pursuant to a standard MTA adopted by the Treaty’s Governing Body and containing the foregoing provisions.

7. The clause, “genetic parts or components” was demanded by developing countries, and the clause “in the form received” was demanded by developed countries, in an apparent “agreement to disagree” over the precise scope of Art. 12.3(d). • But Article 12.3(d) contains two legal ambiguities/issues:

8. Ambiguity/Issue # 1—How much improvement or modification is required before a genetic component of a PGRFA is no longer “in the form received” under the MLS? (N.B.: W/out some modification, there would be no IPRs to claim, as the PGRFAs of the MLS are presumably in the public domain) • Ambiguity/Issue # 2—Under what circumstances do IPRs “limit” facilitated access to PGRFAs?

9. Ambiguity/Issue # 1: • Because Preamble states that “nothing in this Treaty shall be interpreted as implying in any way a change in the rights and obligations of the Contracting Parties under other international agreements,” the scope of Article 12.3(d) will be influenced by the interpretation of TRIPS Article 27.1 re patents for “inventions” (vs. “discoveries”) and Article 27.3(b) re exception for plants & animals, w/ its accompanying proviso requiring protection for plant varieties either by patents or an effective sui generis system of protection or by any combination thereof.

10. Under FAO and WTO dispute settlement procedures: • Developed countries will likely argue that genetic components that are “inventions” w/in the meaning of TRIPS are not genetic parts or components in the form received under the MLS. • Developing countries will likely argue that genetic components of PGRFAs are not “inventions” w/in the meaning of TRIPS and thus fall within the MLS. • Neither completely resolves the meaning of Article 12.3(d), which seems to require recipients not to claim IPRs that they would otherwise be entitled to, but only if to do so would “limit” facilitated access under the MLS.

11. Legal Ambiguity/Issue # 2: Under what circumstances do IPRs “limit” facilitated access to IPRs? • Facilitated access, it will be recalled, is “solely for the purpose of utilization and conservation for research, breeding and training for food and agriculture.” • If an IPR is subject to a broad enough research, breeding & training exemption, it arguably would not “limit” facilitated access.

12. Sui generis PVP, as envisioned in UPOV 1991, is subject to mandatory exceptions for: (i) acts done privately and for non-commercial purposes, (ii) acts done for experimental purposes and (iii) acts done for the purpose of breeding other varieties (other than “essentially derived” varieties—i.e. varieties “predominantly derived” from the initial variety but nevertheless clearly distinguishable from the initial variety). • UPOV 1991 members may also restrict PVP to permit farmers to use for propagating purposes on their own holdings the product of their own harvest of a protected variety • UPOV-compliant PVP arguably does not “limit” facilitated access to PGRFA.

13. Patent protection for plants and/or genetic components of same is more problematic, but • under Article 30 of TRIPS, WTO members may provide limited exceptions to the exclusive rights conferred by a patent—which could include an experimental use exception to make improvements on the patented invention; • under Article 31(l) WTO members may order compulsory cross-licensing on commercially reasonable terms to permit exploitation of a dependent patent which cannot be exploited without infringing a blocking patent. • These limitations on patent protection may (or may not) be sufficient to avoid limiting facilitated access to PGRFAs.

14. II. Benefit-sharing • Article 13.1 states that facilitated access itself constitutes a major benefit of the MLS. • Article 13.2 states that sharing benefits arising from the use, including commercial use, of PGRFAs are to take the form of 1) exchange of information; 2) access to & transfer of technology; 3) capacity-building; and 4) sharing of monetary & other benefits of commercialization.

15. Article 13.2(d)(ii) states that the standard MTA must include a requirement that the recipient who commercializes a product that is a PGRFA and that incorporates material accessed from the MLS is to pay into a mechanism, such as a Trust Account, an equitable share of the benefits arising from the commercialization of the product, except where such product is “available without restriction” to others for further research and breeding. • Benefits are to flow primarily, directly & indirectly, to farmers who conserve & sustainably use PGRFAs. • The Governing Body is to determine at its first meeting the level, form and manner of payment, in line with commercial practice.

16. In its 1st meeting (2006), the Governing Body adopted a standard MTA that: • Replicates word for word the language of Article 12.3(d), re not claiming IPRs that “limit” facilitated access; • Defines the Article 13.2(d)(ii) limitation re products “available w/out restriction” as products available for research and breeding w/out any legal or contractual obligations, or technological restrictions, that would preclude using the product in the manner specified in the Treaty; • Defines an “equitable share” as 1.1 % of the selling price, from which an additional 30% may be subtracted, thus allowing a reduction of the equitable share to 0.77 % of the selling price.

17. Legal ambiguity/issue # 3 in the FAO Treaty: • Does an IPR that does not “limit” facilitated access w/in the meaning of Article 12.3(d) render a product protected by that IPR “available without restriction to others for further research and breeding” w/in the meaning of Article 13.2(d)(ii), thus relieving the IPR holder of a legal obligation to share monetary benefits? • If so, there will be almost no legal obligation to share monetary benefits.

18. NGOs argue that it was clear during treaty negotiations that “available w/out restriction for research and breeding” was designed to distinguish between PVP protected products, that are subject to the mandatory UPOV “breeders exemption,” and patent protected products that may (or may not) be subject to a more limited research exemption, and that all patents on PGRFAs constitute a restriction on the access of breeders, thus triggering the benefit-sharing obligation.

19. NGOs also complain that setting the effective equitable share at 0.77% of the selling price is “practically a give-away for plant genetic resources with specific material characteristics,” and that in the end, very little benefit sharing money will flow back into the MLS, perhaps less than the cost of administering the Treaty. • It is also unclear how the standard MTA will be enforced.

20. However, Article 13.(d)(ii) authorizes the Governing Body to: • Review from time to time the levels of payment w/ a view to achieving fair and equitable sharing of benefits; • Assess w/in 5 years [i.e. before 2009] whether the mandatory payment requirement in the MTA shall apply also in cases where commercialized products are available w/out restriction to others for further research and breeding—i.e. PVP-protected and non-IPR protected products.

21. Even with its ambiguities and uncertainties, the FAO International Treaty for PGRFA does seem to represent a genuine international effort to bridge the divide between open-source and proprietary models of agricultural innovation. • Stay tuned . . . . • Thank you! • mcmanis@wulaw.wustl.edu