Appendices: International Development Research Centre

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Appendices

Document(s) 8 of 12

1: A BRIEF CHRONOLOGY OF THE PATENT DEBATE IN THE NORTH

7th century BC	Greeks permit a 1-year monopoly over cooking recipes
1474	First Patent Law established (Venice)
1623	Statute of Monopolies creates patent provisions for England
1790	First US Patent Act passed in compliance with American Constitution
1790–1850	Industrial patent laws established in many European states
1850–1873	Patent laws revoked are monopoly restricted in several European states
1873	Patent Congress at the Vienna World's Fair adopts compulsory licence compromise to overcome opposition to the industrial patent system
1883	A global patent system is established in the Paris Union
1900	Paris Union is amended and strengthened at Brussels meeting
1911	Paris Union is strengthened again at Washington meeting
1922	Germany accepts a process patent on a bacterium and a meeting of patent lawyers in London moots the possibility of protection for plant varieties
1925	Paris Union is amended and strengthened again in The Hague
1930	USA adopts the Plant Patent Act for fruits and ornamentals
1934	Paris Union is strengthened at its London meeting and definition of patentable material is extended to include flowers and flour
1961	Union for the Protection of New Varieties of Plants (UPOV) is established at Paris meeting
1969	Germany accepts process patents for the breeding of animals
1970	Patent Cooperation Treaty approved by 35 countries at Washington meeting
1972	UPOV Convention is modified and strengthened
1978	UPOV Convention strengthened again
1980	US Supreme Court accepts the patenting of microorganisms
1987	US Patent Office expresses willingness to consider patents on animals
1991	UPOV Convention strengthened to,, among other things,, stop farmers from replanting protected varieties
1992	"Species" patent granted in the USA on genetically modified cotton
1993	US Government applies for patent rights over human cell lines of citizens of Panama,, Papua New Guinea,, and the Solomon Islands
1993	GATT Agreement includes stipulation that all signatory states must have an IP system for plant varieties and for microorganisms

2. THE BIODIVERSITY CONVENTION

Aim (Article 1)

Conservation of biological diversity
Sustainable use of variability within and among species and ecosystems
Fair and equitable sharing of benefits arising out of the utilization of genetic resources, including appropriate access to genetic resources and transfer of relevant technologies and appropriate funding

Partnership

Between the developed country parties that have biotechnology (Article 16) and finance (Article 20) and the developing country parties that have biodiversity (Articles 3 and 15)

Obligations

The development of national strategies, plans or programs for the conservation and sustainable use of biodiversity (Article 6)
The identification and monitoring of biodiversity (Article 7)
In situ conservation (of biodiversity) (Article 8) and ex situ conservation (Article 9)
Research and training (Article 12) and public education (Article 13)
Assessment of impact on biodiversity of development projects (Article 14)
Respect of IP rights, wherever they are nationally recognized, which must, however, conform to the objectives of the
Convention (Article 16)
Information exchange (Article 17)
Technical and scientific cooperation (Article 18)

3. TRIPS — TRADE-RELATED IP

The objective of TRIPS is to provide minimum standards for member countries in most forms of IP. Here we consider mainly patents and Plant Variety Protection (PVP).

TRIPS lays down basic principles, specific rules for various rights, and rules on enforcement of rights, on maintaining rights, and on transitional arrangements.

Principles

All member countries must treat nationals of other member countries as they treat their own, without any discrimination. Intellectual property should contribute to innovation; to transfer of technology, to social and economic welfare and to a balance of rights and obligations.

Patents

What must be protected?

Inventions in all fields of technology, except:
- methods for curing humans and animals
- plants and animals, and essentially biological processes for producing them
Microorganisms and microbiological processes must be protected
Plant varieties must also be protected, either by patents or by "an effective sui generis system."

The term "an effective sui generis system" is not very clear. No doubt it includes UPOV-style protection, but it may also allow more innovative alternatives. What "effective" means will probably in the end be judged by the council of TRIPS.

Countries may also exclude patents on inventions whose exploitation it is necessary to prevent: provided such exploitation would injure public order or morality; or human, animal, or plant life; or seriously damage the environment. However, excluding inventions from patenting because rights over them are considered immoral is not provided for.

Patent Rights

Minimum rights for patentees are laid down. Exceptions must be limited, and not unreasonably conflict with normal exploitation or prejudice the patentee's interests. Compulsory licencing is regulated in detail. The minimum term of patent protection is to be 20 years from filing. For process patents, the burden of proof must be shifted to accused infringers in at least one of two cases:

If the product of the process is new or
If the owner of the patent cannot show what process was actually used, but it is likely that the patented process was used.

Patent Enforcement

Detailed provisions are intended to make it easier to enforce IP rights. Remedies must include damages and injunctions against further infringement, including interim injunctions to preserve the patentee's rights until trial. However, criminal penalties are only required for serious trademark or copyright counterfeiting.

Transitional Arrangements

Equal treatment comes into effect everywhere on signing. Other provisions must be introduced within 1 year, except for developing countries (5 years). Developing countries may also delay the extension of patent rights to new areas of technology for a further 5 years. Least-developed countries need not change their laws for 10 years and may seek further extensions, if required.

Independently of the foregoing, the patentability of plants and animals is to be reviewed 4 years after the agreement comes into force.

Parties are required to provide incentives for transfer of technology to least-developed countries and to provide (when - requested and on agreed terms) technical and financial cooperation to developing countries on IP matters.

4. NATIONAL–INTERNATIONAL SEED ENTERPRISES:
PERSPECTIVE FROM THE PRIVATE SECTOR

To encourage development of the private seed industry, governments should first survey the state of agriculture, by crop and by socioeconomic region, to determine which crops and parts of their country can benefit from a private seed industry. For any crop, the existence of dependable markets, relatively large areas of cultivation, and desire on the farmers' part to increase yields through cultural and varietal changes could be signs that farmers might benefit from the presence of private seed firms. Additionally, profit to farmers should be great enough that they can afford to pay a higher price for seed. In brief, commercial seeds are best suited to profitable crops in favourable farming regions.

To attract seed firms, governments should be politically stable and the nation's infrastructure, particularly transportation, should be adequate for the delivery of goods and services to the farming community. There should also be evidence that markets for the crop are relatively stable, without undue interference from either government regulations or private-market manipulators. The presence of public plant-breeding research will be an asset to private seed firms. Farmers will have become accustomed to the introduction of improved varieties and to learning new ways of growing them. Small-scale seed firms, in particular, will depend on public plant-research institutions for advanced breeding materials or even new varieties, as well as for knowledge of new, improved agronomic techniques applied to the new varieties. All seed firms will benefit from germplasm enhancement efforts of the public plant-research institutions. In brief, a strong public plant-breeding research program is necessary for long-range success of the private seed industry.

National encouragement of a full line of improved agricultural practices (for seed cleaning, times and rates of sowing, harvest and storage of product, and efficient marketing) will set the stage for entrepreneurial, small-scale seed companies to add their product to the mix of increasingly sophisticated practices in the commercial farming community. (The understanding here is that shifting to commercial agriculture requires new kinds of sophistication.)

IP laws are not a first requirement for attracting the seed industry to a nation. Seed firms usually start out by dealing in hybrid crops, with built-in property protection, because the seeds must be bought fresh each season, and the parents can be kept as private property. They then may move into selling seeds of self- or open-pollinating crops that perform best when the seed comes from skilled seed producers able to provide weed-free seed with good germination, trueness to type, and a guarantee that the seed is the variety stated. Following this step, farmers and seed companies may be able to benefit from the introduction of fairly written and well-administered IP laws applied to plants. To attract development of local and international seed companies, governments could set up a national consultative group on agricultural research composed of representatives of farmers and both public and private institutions.

5. COMPARISON OF MAIN PROVISIONS OF PBR UNDER UPOV 1978 AND 1991,
AND PATENT LAW

Provisions	UPOV 1978	UPOV 1991	Patent law
Protection coverage	Plant varieties of nationally defined species	Plant varieties of all genera and species	Inventions
Requirements	Distinctness Uniformity Stability	Novelty Distinctness Uniformity Stability	Novelty Inventiveness Nonobviousness
Protection term	Min. 15 years	Min. 20 years	17–20 years (OECD)
Protection scope	Commercial use of reproductive material of the variety	Commercial use of all material of the variety	Commercial use of protected matter
Breeders' exemption	Yes	Not for essentially derived varieties	No
Farmers' "privilege"	Yes	No. Up to national laws	No
Prohibition of double protection	Any species eligible for PBR protection cannot be patented	—	—
Source: Derived from van Wijk and Junne (1992, p. 81).

6. PATENTS ON PLANTS

Description

Intellectual Property rights are justified, in part, as a human right and, in part, as a contract or bargain with the public. The originator gives to the public something new that it would not otherwise have had. In return, the public gives to the originator limited rights in the "new thing" for a limited period (such as 20 years). The originator is rewarded by exploiting these rights in person, or allowing others to exploit them, for a fee. If the public is not interested in buying the new article, or if its price is set too high, the inventor receives no reward. The reward is self-regulating — it is determined by public demand for the new product. No one has to judge what the invention is worth — the market does this.

For the system to work, however, several assumptions must be made. These include

A market economy,
Appropriate scope and term of rights awarded, and
Careful fulfilment of the conditions imposed on grant.

In the 1980s, developed countries began to grant patents on life forms and on constituents of life forms (such as DNA sequences, cells, and so forth). It is now proposed to extend this practice to all the members of GATT. The issue is to what extent, if at all, this is justified. What is currently happening, and how does it relate to classical patent law?

To get a patent of any kind, one must make an invention that is new, inventive (not obvious or routine), and be willing and able to describe to others how to make use of it. A patent must not stop people doing what they were doing before — this is fundamental to the bargain with the public. Patents are granted for inventions but not for discoveries. There is a clear distinction:

A discovery is new knowledge.
An invention is a new process or product.

Frequently, however, new knowledge will suggest a new thing. Thus many inventions are based on discoveries. The discovery that substance X cures ulcers suggests the invention of a stomach pill containing substance X. This invention is based on a discovery, but that will not mean that it may not be patented. Provided the discovery is new and unexpected, that will allow patenting the invention to which it gives rise.

This distinction is important to keep in mind when considering how genes may be patented. The sequence of a gene is a discovery, pure and simple. It is knowledge about something that already exists. However, it may enable new things to be produced, and these may in principle be patented.

There follows a list of what is currently being patented in Europe and the United States, and what might be patented under TRIPS. Only broad guidance can be given, and little is settled beyond all doubt.

Genes

Natural genes cannot be patented as such. They already exist, they are not new, they are discovered, not invented. (This does not apply to engineered genes. So far, these are much less common, and usually consist of two or three segments of natural genes linked together.) What then is "a patent on a gene"? Generally, what is claimed is not the gene as such but the gene isolated from its natural surroundings and products containing this isolated gene. (The claims are not always worded like that.) Gene inventions of this sort are patented in both Europe and the United States, and will be patented under TRIPS.

Plant Cells

New plant cells — containing transformed DNA, say, or being the product of cell fusion, or in the form of a cell culture — are patented in both Europe and the United States, and could be allowed under TRIPS.

Plants are considered patentable in the United States, and in Europe, although this is contentious. The European Patent Convention (EPC) (Section 53) excludes patents on plant varieties, but the European Patent Office interprets this narrowly. Patents are granted on plants, provided they do not meet the strict UPOV criteria for plant varieties (see below). TRIPS does not require patents on plants, provided plant varieties can be protected by "a sui generis system," for example, UPOV.

The EPC further provides that "essentially biological processes" and their products are not patentable. "Microbiological processes" (and their products), however, are patentable. The result of this is that plants obtained by conventional breeding are not patented, but plants modified by gene technology are. Either gene technology is not "essentially biological" — judged by the degree of human intervention in the process — or it is "microbiological" or maybe both. In the United States, there is no bar on patenting plants in any form, or breeding processes. In consequence, patents are granted on plant varieties produced by conventional breeding. A case could be made that such inventions are mostly obvious, but often such patents are accepted with little or no argument.

Increasingly, patents on such plants with new traits are granted in the United States. Similar patents may be granted in Europe, if the plants are the product of gene technology. This is a matter of considerable controversy, particularly where the new trait is obviously desirable and is also the only new feature. It is not usual to grant patents on machines or chemicals defined solely by novel properties (such as anticancer activity or fuel economy). Instead, the patent claims define the chemical structure that results in the improvement. Many believe that plants should be treated in the same way.

7. TRADE SECRETS AND MATERIAL TRANSFER AGREEMENTS

Most IP is protected by a formal system, based on specially enacted laws. Where such laws do not exist, it is still possible for an innovator to retain some protection against competitors — provided he can keep his invention secret. If he knows the best way of doing something, he is not generally obliged to tell others about it. A secret manufacturing process or formulation or recipe can give a commercial advantage, as long as others do not know of it.

An advantage of trade secrets to the innovator is that they can last a long time. The corresponding disadvantage is that they are increasingly difficult to keep — they may become public either by analysis of the product sold, disclosure by employees, or even by independent invention by someone else. The disadvantage is that the public loses the opportunity to use the innovator's knowledge in other ways. Licencing of trade secrets is possible, indeed common, though it risks the secret becoming known.

Despite its disadvantages, trade secrecy is still widely used, even where alternatives are available. It is particularly important in the case of biological materials that are not sold, but only used in production. For example, a particular strain of microorganism used to make a drug, or a parent maize line used to make a hybrid, can usually be kept as the secret property of the originator. In such cases, the inventor may prefer trade secrecy to patenting, as patenting requires the invention to be published.

How is trade secrecy maintained? In the first place, the innovator binds staff by contract not to disclose secrets, or use them independently, or pass them on to subsequent employers. However, the innovator cannot require staff to treat as secret what is not so in fact. If the secret becomes known, all can then use it.

Where the trade secret takes the form of a proprietary material (such as a microorganism, gene construct, or seed) it will be transferred (if at all) under a confidentiality or materials transfer agreement. Anglo-Saxon law, broadly, assumes that parties may make any agreement that suits them. If one party wants something badly enough, the other party may name a price. Hence, a party seeking access to the material may be asked to undertake various obligations. These may include not transferring the material.