Patents and Biodiversity Conservation

1. Patents and Biodiversity Conservation Charles Lawson Australian Centre for Intellectual Property in Agriculture Griffith University 12 October 2009

2. Overview • Nature of biodiversity and its regulation • Patents over biodiversity • International patent framework • International biodiversity conservation framework • Incentive theory and biodiversity • Craig Venter Institute contract • Griffith University and AstraZeneca Partnership • Evolving policy dissonance …

3. What is biodiversity? Biodiversity exists at three main levels: • Genetic diversity • The variety of genetic materials and information that is contained in all living things and that varies within and between the populations of organisms making up single species or wider groups • Species diversity • The variety of species on earth • Ecosystem diversity • The variety of the earth’s habitats, ecosystems and ecological processes

4. Why does biodiversity matter? • Healthy ecosystems support life on earth for present and future generations • Ecosystem services provide life-sustaining benefits and maintain the conditions for life on earth • Green plants produce oxygen and remove carbon dioxide from the atmosphere • Biodiversity supports economies: • Basis of our primary production industries, such as agriculture, forestry and fisheries • Provides services to those industries, for example by pollinating plants, contributing to soil health and recycling nutrients • Basis for the production of many important human services, such as medicines

5. Why does Australianbiodiversity matter? • Ecosystem services that support the economy • $$$ … lots and lost and lots … • Australia is home to between 600 000 and 700 000 species, and many are found only in Australia (endemic to Australia) • About 84% of plant species • About 83% of mammal species • About 45% of bird species • Only about 25% of Australian species have been formally described

6. Domestic biodiscovery legislation • Commonwealth • Environment Protection and Biodiversity Conservation Act 1999 (Cth) • Queensland • Biodiscovery Act 2004 (Qld); Nature Conservation Act 1992 (Qld) • New South Wales • Marine Parks Act 1997 (NSW); Fisheries Management Act 1994 (NSW); National Parks and Wildlife Act 1974 (NSW) • Victoria • Parks Victoria Act 1998 (Vic); Fisheries Act 1995 (Vic); Flora and Fauna Guarantee Act 1988 (Vic); National Parks Act 1975 (Vic); Wildlife Act 1975 (Vic) • South Australia • Fisheries Management Act 2007 (SA); Wilderness Protection Act 1992 (SA); Native Vegetation Act 1991 (SA); National Parks and Wildlife Act 1972 (SA) • Western Australia • Fish Resources Management Act 1994 (WA); Conservation and Land Management Act 1984 (WA) • Tasmania • National Parks and Reserves Management Act 2002 (Tas); Nature Conservation Act 2002 (Tas); Threatened Species Protection Act 1995 (Tas); Living Marine Resources Management Act 1995 (Tas) • Northern Territory • Biological Resources Act 2006 (NT); Territory Parks and Wildlife Conservation Act 2001 (NT) • Australian Capital Territory • Nature Conservation Act 1980 (ACT)

7. What have patents got to do with biodiversity conservation? CBD’s 3 “objectives”: • “the conservation of biological diversity” • “the sustainable use of its components” • “the fair and equitable sharing of the benefits arising out of the utilisation of genetic resources, including by appropriate access to genetic resources and by appropriate transfer of relevant technologies, taking into account all rights over those resources and to technologies”

8. Key biodiversity and intellectual property regulatory moments 1993 – UN’s Convention on Biological Diversity (CBD) • – WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) – Commonwealth’s Patents (World Trade Organisation) Amendment Act 1994 (Cth) 1996 – CoAG’ National Strategy on the Conservation of Australia’s Biological Diversity 1999 – Commonwealth’s Environment Protection and Biodiversity Conservation Act 1999 (Cth) 2000 – Commonwealth’s Australian Biotechnology: A National Strategy 2002 – UN’s Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of the Benefits Arising out of their Utilization – Natural Resource Management Ministerial Council’s Nationally Consistent Approach for Access to and the Utilisation of Australia's Native Genetic and Biochemical Resources 2004 – FAO’s International Treaty on Plant Genetic Resources for Food and Agriculture – Queensland’s Biodiscovery Act 2004 (Qld) – Commonwealth’s Australia-United States Free Trade Agreement • – Commonwealth’s Environment Protection and Biodiversity Conservation Regulations 2000 (Cth) Part 8A – Commonwealth’sAustralia-United States Free Trade Agreement – WHO’s Health Regulations 2005 2006 – Northern Territory’s Biological Resources Act 2006 (NT) 2009 – Commonwealth’s DRAFT National Strategy on the Conservation of Australia’s Biological Diversity

9. International biodiversity access regulation… NON-PLANTS Public and private collections (zoos, nature parks, museums, and so on) Convention on Biological Diversity 29 December 1993 WHO Health Regulations 2005 Consultative Group on International Agricultural Research’s (CGIAR) system of International Agricultural Research Centres (IARCs) PLANTS Private collections (botanic gardens, herbariums, and so on) International Treaty on Plant Genetic Resources for Food and Agriculture 29 June 2004 Space Conventions Antarctica/Law of the Sea Conventions

10. CBD’s access regime • CBD requires: • Access must be from countries of origin or countries that have acquired the genetic resources according to the CBD • Mutually agreed terms • Prior informed consent • Recognising, at least, minimum standard intellectual property (IPPS) • In Australia this is TRIPS plus the AUSFTA • Bonn Guidelines • Commonwealth’s Environment Protection and Biodiversity Conservation Act 1999 (Cth) • Queensland’s Biodiscovery Act 2004 (Qld) • Northern Territory’s Biological Resources Act 2006 (NT)

11. Summary so far … • Complex array of: • International regulatory schemes • Domestic regulatory arrangements • Result is: • Contract between bioprospector and biodiversity owner addressing an exchange of access to biodiversity for “something” • Commonwealth, Queensland and Northern Territory require model contracts recognising IPPs as part of transaction (and the price of the exchange)

12. Patent grants • Patents Act 1990 (Cth) • Statutory scheme conferring time limited privileges • Commissioner of Patents exercises statutory powers • Privilege is an exemption from competition • A range of policy and guidance materials that contribute to the environment (a matrix of legalities) in which decisions are made: • Devolved management • Outcomes and outputs framework • Commissioner employed with “performance” incentives aligned with outcomes and outputs

13. Patents Act 1990 (Cth) basics • Threshold requirements: • “patentable invention” (almost any product or process) • “novel” • “involves an inventive step” • “describe the invention fully, including the best method known to the applicant of performing the invention” • Patent “exclusive right”: • “… the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention” • “The exclusive rights are personal property and are capable of assignment and of devolution by law”

14. Patent: what you get ... • “Exclusive rights” for 20-25 years to: • make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of these things • use the method or process or do any of the above with the method’s or process’s product • A right to dealings with the idea in the patent protected product or process, together with a statutory privilege to control how the patent protected product or process is used

15. Summary so far … • Accessing biodiversity subject to domestic regulatory arrangements that are consistent with international regulatory schemes • Accessing biodiversity is a “bargain” between biodiversity holder and biodiversity exploiter • Patents are a part of the “bargain” price: • Patents are a statutory time limited privileges granted by the Commissioner of Patents • Patent is: • A right to dealings with the idea in the patent protected product or process • Together with control over how the patent protected product or process is used

16. CBD and IPPs • IPP impasse: • Developed countries argue strong patents created incentives to conserve biodiversity by encouraging technology transfer, investment and development • Developing countries argue strong patents hinder technology transfer and disregard the contributions of family farmers • CBD Secretariat’s view: • Intellectual property rights reinforce the CBD’s objectives and are a favoured mechanism for achieving access and equitable sharing the benefits

17. Royalties and License Fee Export Earnings

18. Incentive theory and biodiversity • The benefits of biodiversity conservation accrue to society and cannot be sufficiently captured by those likely to undertake the conservation • The marginal private returns from conservation activities do not correspond with their marginal social returns so favouring biological diversity destruction and decline • A properly functioning competitive economy will not conserve biodiversity • A market failure for biodiversity conservation

19. Possible incentive schemes • Direct grants • Natural Resources Management (Financial Assistance) Act 1992 (Cth) • Landcare and so on • Direct funding for “achieving efficient, sustainable and equitable management of natural resources in Australia” • Tax • Income Tax Assessment Act 1997 (Cth) s 31-5 • Conservation covenanting programs • Tax deduction for gifts of property • Capital gains tax exemption for gifts of property • “… cost effective incentives for conservation and protection of the environment for the benefit of all Australians” • Patents • Patents Act 1990 (Cth) • Statutory monopoly • New inventions • Policy objective?

20. Incentive theory and biodiversity • The solution is to establish biodiversity as an object of transaction by regulating access and benefit sharing (clearly defining what is exchanged) • To allow part of the social value for individual economic activities to be appropriated, thus compensating those likely to undertake the conservation activities, and providing an incentive to undertake future conservation activities • The contract is the favoured instrument because it allows private actors to set the terms and conditions of their transaction that is best suited to their particular circumstances • Environment Protection and Biodiversity Conservation Act 1999 (Cth) • Biodiscovery Act 2004 (Qld) • Biological Resources Act 2006 (NT)

21. The contract … • Exchange of access to biodiversity for a “price” agreed between the parties • The “price” comprising: • Money • Transfer of technology • Training • Access to new information • Intellectual property • … and so on

22. Patents as incentives …? • Patents (and other forms of intellectual property) then take their place and role in delivering a part of the compensation (and incentive) contributing to the marginal private return • The particular patent contribution … … at least in theory, by capturing some of the value from innovative, creative and useful applications of the accessed biological resources and returning this as part of the price paid for access

23. The question …? Whether the marginal private returns from conservation activities are sufficient to at least correspond with their marginal social returns? • If the private returns are less, then the destruction and decline of Australia’s biological resource stock, rather than its conservation, can be expected

24. The question …? There are two aspects to the question: • The value of the property that can be transacted • The privately appropriatable value • The certainty of the property and use rights in the tangible accessed materials • The tradable privately appropriatable value

25. Some distinctions … • Distinguish between: • The property value established in the biological resources by controlling access through a contract • The value of the potential intellectual property from using that biological resource • Distinguish between: • Property rights over the accessed biological resources that deals with the tangible biological resources • Patents that relate to the intangible innovation and creativity in products and processes that result from using the biological resource

26. Unfortunately … A modern patent confounds both: • The right to deal with the biological resource as it is embodied in a tangible form • Such as a purified and isolated gene sequence, or a composition, per se • The right to prevent others from using the biological resource in other embodiments • Such as the same gene sequence in a diagnostic device

27. An analogy … • Consider a broadly claim invention disclosing the “invented” composition embodied as the letters NATURE used as a journal name • Other embodiments of this “invention” might include: • Related sequences using these letters, or some of these letter sequences, and their uses as journal names, such as related sequences like TURN, RATE, UREA, NAT-words, TUR-words, and so on • The uses of those words in names, sentences, paragraphs, chapters, articles, books, and so on

28. Broad sequence claims … • Claim P. hybrida flavonoid-3’,5’-hydroxylase – “at least 40% similar to all or part of the [DHK hydroxylating enzyme] sequence” set out in the patent application • H. sapiens Chromosome X clone bWXD501 • Cytochrome P450

29. Broad heterogeneous biological material claims … “1. A hybrid pepper plant grown from seed deposited with the ATCC under Accession No PTA-2275 2. Fruit harvested from the plant of claim 1 3. Hybrid seed which can be grown to yield a pepper plant of claim 1” This claim was: • “directed to a new pepper variety that bear fruit that are sweet, red and low-seeded and resemble a Jalapeno pepper in size and shape” • “a method for making the plants [is] also provided”

30. The consequence … • Uncertain property and use rights … • Past claims (and disclosures in the public domain) to compositions per se may limit the value of future uses of the same or similar compositions • This is likely even where those uses are entirely different, because the patent’s “exclusive rights” are attached to the composition per se rather than its many and varied useful applications • As a consequence, the problems posed by patents is: • The potential to undermine the value of the accessed biological resource and other in situ biological resources by creating uncertain property and use rights in the tangible accessed materials • A limitation on the uses of that material in innovative or creative and useful embodiments, including other innovative or creative and useful embodiments

31. Summary so far … • Whether the marginal private returns from conservation activities are sufficient to at least correspond with their marginal social returns? • … • Whether biodiversity as an object of transaction through regulating access and benefit sharing clearly defines what is exchanged? • Broad patent claims may be delivering uncertain property and use rights

32. Interesting arrangements • Biological resources access agreement • Commonwealth of Australia and the Craig J Venter Institute (2004) • Queensland Biodiscovery Collaboration • Griffith University and AstraZeneca Partnership for Natural Product Discovery (1993)

33. Craig Venter Institute contract Voyages of the Sorcerer II

34. Craig Venter Institute contract

35. Craig Venter Institute contract 5.1 – “All property rights in and in relation to the Materials and the Results, including Intellectual Property arising (directly or indirectly) from the Collaborator’s use of the Materials or the Results vests, or will vest, in Australia” 5.2 – “Without limiting clause 5.1, all Intellectual Property rights arising from use of the Materials, the Results or any Derivative other than for the Approved Research, or from any other breach of this agreement by the Recipient, will vest in Australia” “‘Materials’ means the materials described in the Schedule” “‘Results’ means all information and tangible objects arising from the Collaborator’s use of the Materials and any Derivatives, including information published in accordance with clause 6.2” 6.2 – “The Collaborator will publish or publicly disclose genomic sequence data, including a limited and reasonable description, of the Materials consistent with generally accepted database curation standards in accordance with the Publication Requirements specified in the Schedule”

36. Craig Venter Institute contract “Approved Research Inventory the microorganisms that live in oceans within Australia’s jurisdiction, and in soils in some places within Australia or its Territories, to better understand overall species diversity, discover and characterize new bacterial and viral species, evaluate the ecological roles that dominant (but generally unculturable) microbes play in the ecosystem, and establish and publish a freely shared, global environmental genomics database that can be freely used by any person or entity”

37. Craig Venter Institute contract Community Cyberinfrastructure for Advanced Marine Microbial Ecology Research and Analysis database (CAMERA) “As a condition of my use of the CAMERA website, I acknowledge and agree that the genetic information available through the CAMERA website may be considered to be part of the genetic patrimony of the country from which the sample was obtained. As a user, I agree to: (1) acknowledge the country of origin in any publications where the genetic information is presented; (2) contact the CBD focal point identified on the CBD website if I intend to use the genetic information for commercial purposes”

38. Summary so far … • Has the Craig Venter Institute contract been successful? • Whether the marginal private returns from conservation activities are sufficient to at least correspond with their marginal social returns? • Not clear … and unsure whether patents are contributing to delivering

39. Griffith and AstraZeneca Partnership • Partnership established in response to Australian Government’s “Factor f” scheme • In return for investments in the research or manufacture of pharmaceuticals, the Australian Government would pay a higher price for a company’s drugs (some Queensland Department of State Development contributions were also made) • Contract between GU and AZ – confidential … • Sample collection – subcontracted to (predominantly): • Queensland Herbarium • Queensland Museum

40. Griffith and AstraZeneca Partnership “Griffith University retains ownership over the biota samples and compound libraries that resulted from the partnership. Intellectual property rights to commercial products developed from the partnership remain with AstraZeneca”

41. Griffith and AstraZeneca Partnership • AstraZeneca invested more than AUD$100 million • AUD$45 million to build the research unit at GU • AUD$9 million annually to running costs • AUD$9 million for the collection of samples by partner institutions • Monetary benefits • Fees for samples (or to cover the costs of an agreed-upon workplan) and royalties • Royalties may or may not materialize (none have yet) • Non-monetary benefits • Provision of vehicles, equipment, technology, training, building of a state-of-the-art natural product discovery unit, and increased knowledge of biodiversity

42. Summary so far … • Was the Griffith and AstraZeneca Partnership successful? • Whether the marginal private returns from conservation activities are sufficient to at least correspond with their marginal social returns? • Not clear … and unsure whether patents are contributing to delivering

43. Evolving policy dissonance Convention on Biological Diversity (CBD) • “that patents and other intellectual property rights may have an influence on the implementation of this [CBD]” • “that such rights are supportive of and do not run counter to its objectives”

44. Evolving policy dissonance … National Strategy for the Conservation of Australia’s Biological Diversity (1996) “The development of integrated policies for major uses of biological resources is necessary to coordinate activities within and between all levels of government, to ensure that the full social and environmental consequences, and the opportunity costs, of development activities are considered, and to ensure that the public interest is properly taken into account”

45. Evolving policy dissonance … Nationally Consistent Approach for Access to and the Utilisation of Australia’s Native Genetic and Biochemical Resources (2002) “… reassurance should be provided that arrangements do not alter existing property or intellectual property law”

46. Evolving policy dissonance … Genetic Resources Management in Commonwealth Areas: Sustainable Access > Shared Benefits (2005) “comparative advantage … a well-respected and long established system of commercial and intellectual property law that offers security to investors”

47. Evolving policy dissonance … Independent review of the Environment Protection and Biodiversity Conservation Act 1999, Interim Report (2009) “There appears to be little need for a change to the permitting system. From the information received, however, more compliance and enforcement action is required and the penalties for non-compliance should be strengthened”

48. Evolving policy dissonance … Australia’s Biodiversity Conservation Strategy 2010-2020, Consultation Draft (2009) … nothing

49. Summary • Patents are involved in the debates about biodiversity conservation • There is some useful thinking about the role of patents and effectiveness from an economic perspective • Patents as economic instruments might be confounding conservation objectives • Biodiversity policy appears to be directed towards maintaining patents irrespective of their consequences for biodiversity conservation