Developing Countries & Sustainable Development

1. Developing Countries & Sustainable Development Srividhya Ragavan Professor of Law University of Oklahoma Law Center

2. Move towards Sustainable Development • Development using the trade and intellectual property regime • Sustainable Development regime in the CBD

3. The presentation posits that CBD can be an effective tool for poorer countries to maximize the benefits from the trade and intellectual property agenda of the WTO.

4. The Trade and IP Agenda… • Article 27(3) (b) • “…members shall provide for the protection of plant varieties either by patents or an effective sui generis system or by any combination thereof”

5. Measuring “Effectiveness” • Article 7+8+ Doha: lends a definition that is flexible and dependent on member’s national requirements • For developing countries: • Stimulate R & D without compromising welfare goals • Food security. • Biodiversity protection • Sustainable development of indigenous communities, etc.

6. The International regime for plant variety protection is ineffective because: • Over protects hybrid varieties (Eligibility standards are lower than for utility patents) • Low threshold for eligibility requirements • Excessive scope for breeder’s rights • Inadequate limitations on breeder’s rights • In essence, the rights regime is similar to the utility patent system - creates an exaggerated private domain • Creates IP rights in a closed market – IP rights cannot yield benefit when the market is blocked by subsidies • Can potentially result in loss of genetic resources.

7. Achievement of the Trade and IP Agenda… • Posited the need for biodiversity assets to generate intellectual property assets • E.g., Biotechnology

8. Convention on Biological Diversity, 1992 • Provides access to genetic resources. • Trilogy of CBD’s Objectives: • Conservation of biological diversity • Sustainable development; and • Equitable sharing of benefits (transfer of technology) – links with intellectual property

9. Biodiversity’s Unique Position • Not an idea based property • Prioritized by both developing & developed countries • Creates access for the developed world • Links the developing world with: • Trade and TK • Trade and IP

10. Developed Nations Access – for biotechnology assets that are protected as IP Developing Countries Return for local resources What do countries want from biodiversity Problem area

11. Issues for Developing Countries • Protection of biodiversity • Generating value from biodiversity assets • CBD and hence, bio-prospecting are dependent on mutual agreement to generating value • Bargaining positions are central to determining equities. • Note: Qualifying by-products of bio-prospecting immediately generates a market value.

12. Protection of Biodiversity • Twin Goals: Biodiversity preservation and community development. • Mandated under art. 8 (g) • Countries should “[e]stablish or maintain the means to regulate, manage or control risks from biotechnology likely to adversely impact the environment.” • Related with value generation & bio-prospecting • Requires government commitment • Merck—InBio • Kani India agreement as lacking commitment – TBGRI & Aurveda pharmacy.

13. Valuation of Biodiversity Assets • Objective: generating a value that distributes the risks and benefits of biodiversity assets proportional to several factors: • Holding status; Potential market value; Need for access, etc • Crux for solving issues from bio-prospecting

14. Risk of disproportionately borne by holder Risk of capital (biodiversity) should be differentiated from risk of investment Bio Value Market Value Benefits disproportionately enjoyed by accessor

15. Models for valuing biodiversity • Prospect Model • Built on the need of biodiversity to prospector • Base Compensation+ future value depending on disclosures • Disclosure mechanisms need to be built into the agreement • Information Model • Prospector negotiates an initial rate based on prediction of success • Each further test would be like purchasing an option based on rate of success

16. Contract Based Model • Assumes any value determined before a product comes to market is bound to be low • Hence, the model creates a pre-determined risk v. need paradigm for every stage of research based on which further use of resource is negotiated. • The original contract precludes use of material and its by-products under some reasonable circumstances.

17. Generating a bio-value • Bio-value need not be connected with biodiversity’s status as an IP. • Value should be identified in need terms • Risk of bio-asset should be dissociated with risk of investment • Work towards generating continuous value • One requirement: ownership issues • For sharing IP rights; generating royalties; informed consent, etc.

18. Generating continuous bio-value • Mandatory terms in bio-diversity agreement: • Fund allocation towards biodiversity conservation • Fund allocation towards community development of the locals (TK and biodiversity paradigm) • Local manufacturing requirement. • IP sharing/ownership

19. Local Working Requirement • Bio-prospecting agreements can include: • training component • provision to set up local manufacturing or research facilities. • Can be used to attract foreign direct investments. • Counters the effects of TRIPS – which forbids the local working requirement.

20. The IP Clause • Use of the name as TM; as part of GI, etc. • Information provided by communities: • Akin to trade secret • Royalties relative to extent of involvement. • Worldwide royalties on sales: • X% for first million dollars of sale; • Y% for the next 50 million dollars of sale • Joint patent holders (for a percentage of royalty). • Infrastructural changes

21. Maximizing CBD’s benefits • CBD embodies flexible language in the narrative (unlike TRIPS) • Involvement: • National Government involvement • CBD and FAOs Governing Bodies

22. CBD & FAO Governing Bodies • Constitute an advisory body to assist countries to negotiate favorable bioprospecting agreements. • Formulate advisory opinions regarding the bio-prospecting negotiations. • Act or create a library of information, drawing lessons to facilitate fair exchange of genetic and technological resources • Market positioning of the product – Kani and AVP.