Tit for tat: Agbiotech intellectual property and corporate social responsibility

22 October 2008

Intellectual property rules were originally established to balance private and public interest with regard to inventions. When it comes to the area of agbiotech, this balance can be influenced by certain regulatory or biological processes. While firms appeal for new approaches to extend/restore their rights, they would also do well in taking measures aimed at extending/restoring public benefits.

At the outset of civilization, inventions could be freely reproduced by anyone; secrecy was the inventor’s only form of protection. Eventually, however, the lack of compensation for the innovator, coupled with a lack of public access and subsequent innovation delayed technological development and curtailed societal benefits. As a result, a social contract was established: inventors would disclose the invention allowing future reproduction, and society would grant them a monopolist/market exclusivity position for a certain period of time (currently harmonised at 20 years) in order to benefit from the commercial exploitation of the invention.

More recently, health and safety regulations have introduced time-consuming assessment processes prior to the release of some products, including in the biotech sector. As a consequence, critics claimed that the effective patent period had been reduced, and that therefore, the “contract” was no longer being honoured – to the detriment of the patent holders. In addition, some “regulated” innovations cannot be patented according to the usual criteria, although they involve ingenious activities, major investment, and provide solutions for public health or productive activities.

So far, at least two general approaches for compensation in such situations have been developed: patent term restoration and test data exclusivity. Under patent term restoration, first introduced in US law, a novel product can receive a patent extension of up to half of the “regulatory delay.” Test data exclusivity - adopted in the US, EU and China, among other countries, and included in several Free Trade Agreement negotiations - implies that data submitted by a first product applicant cannot be used for similar products presented by other applicants, within a defined protection period, without the permission of the right holder.

These measures were introduced to compensate patent holders for alleged deviations from the original “contract”. However, an inversed situation now seems to emerge for some biotechnology inventions. Genetically modified (GM) crops, in particular, may become a “perishable technology” due to certain sanitary regulations and/or natural processes. As detailed below, this jeopardises the half of the contract in which society should benefit, since no one profits from the invention after patents have expired.

Regulatory constraints

Currently, it takes roughly a decade to develop a GM crop and obtain its approval in multiple countries for “worldwide” trade clearance. Under the present system, a European Community authorisation, for example, is granted for a period of ten years. As a consequence, by the time the first authorisation period is over, patents on the product have expired or are about to expire. This would be the right moment for breeders and small seed companies to perform incremental innovations by incorporating the transgenic event (event) in local varieties, given that it is entering the public domain. Moreover, local companies already commercialising the event under a licence would have legitimate interests in keeping their business running when no patent royalty is due.

This way, the final incorporation of transgenic events in the public domain could partly offset the alleged “imbalance” between patent protection of biotech inventions and the sui generis protection of germplasm and breeders´ work – an issue that has been repeatedly raised in the FAO Commission on Genetic Resources for Food and Agriculture, among other fora – since, in the end, the events would switch from “proprietary inventions” to “ordinary genetic resources”.

In turn, this would also lower the price of seeds containing older, yet useful technologies for farmers with limited resources, while more competitive farmers would still adopt the newest events. A seed price reduction in exporting countries would further benefit importing countries by lowering the cost of food, biofuels, and other agro-commodities.

Yet another lively debate focuses on farmers´ right to save seeds from their harvest to reseed the next year, particularly in cases where the seed carries a transgenic event. Although countries hold diverse positions on the topic, the issue would become irrelevant after the patent expires. Therefore, biotechnology in the public domain would also lower the production costs of agro-commodities in more restrictive countries.

Unfortunately, all these potential benefits to global society are lost if the original developer does not apply for an authorisation renewal (currently, when the first authorisation period expires only the original applicant is able to request an extension). This pattern might continue if the original developer launches a similar but new GM crop with enhanced characteristics - and covered by new patents.
In addition, due to mergers and acquisitions, the commercial development of biotech crops is mostly concentrated in a small number of companies based in a few developed countries. Therefore, patent expiration is an important asset to counter this concentration and the “genetic divide” it leads to. Nevertheless, under the scenario depicted above, the market will continue to be concentrated regardless of patent expiration. This, in turn, will keep seed and food prices artificially high and lower crop biodiversity, with the associated risks to food safety.

Biological constraints

In addition to the situation described above, some GM crop technologies may expire due to biological evolution. Herbicide resistant crops, for instance, are useful as long as weeds do not evolve to also resist the herbicide; and insects can eventually evolve to resist the insect-control substances produced by some GM crops. Past experience with conventional and biotech crops suggests that the timescale for the spontaneous development of resistance to pesticides is around a decade. As in the previous case, when the time for an open market – and its implied benefits for global society – is approaching, the opportunity may be gone.

However, insect refugees, herbicide alternation/combination and other field management strategies have been developed to delay the emergence of resistant insects or weeds. Appropriately and continuously applied, such strategies can extend the lifetime of the relevant technologies for many decades.

A Role for Corporate Social Responsibility

Most of the revenues for society from the patent system are based on the disclosure of the invention and the subsequent possibility for anyone to exploit it. However, the disclosure of the invention - so far considered the only requisite to this end - is just not sufficient to fulfil the second half of the agreement (i.e. the later free commercial use of the invention) in the situations described above. Therefore, in order to balance their demands for test data protection and IP enforcement measures, companies should do their part to honour the “social agreement.” In particular, “corporate social responsibility” efforts could translate into actions to assure that the technology would really be available to the public after the exclusivity/monopolist period is over.

One line of action would be for the company to continue asking for renewals in “time limited” marketing approval systems, so the products could be marketed indefinitely by others with an interest in it (as long as the product was actually being marketed by others after the first renewal). This would not represent a huge expense since the new information requested is simple to produce; besides, due to its nature, this information is far easier to gather for the original developer than for other interested parties. Such a move need not preclude governments from reviewing their policies and allowing any interested party to apply for renewal, or to automatically grant a renewal following a decade free of incidents.

Another line of action for companies could be to encourage and support farmers in adopting strategies that delay the emergence of resistant weeds or insects, or any other avoidable threat to the lifetime of these technologies. Companies should effectively help combat the rise of adapted pests once they emerge in the field, even after they have lost commercial interest in the GM crops, herbicides, or insecticides involved.

An additional positive corporate policy might involve contributions to biotech “open source” initiatives, through providing genetic materials that have fallen in the public domain, test data, and information on expired patents. Since there is no unique International Patent Classification (IPC) code for identifying biotech products (a problem that is currently under study by the OECD), the identification of biotech patents is not straightforward. Of all the areas of biological innovation, agriculture is probably the most cross-sectorial field, as it affects food supply, the environment, health, energy, raw materials, and the general economy of most countries. Technologies applied to agriculture are also highly interdependent. Therefore, extraordinary efficacy would be expected when innovative tools are applied, and contributing to a “Biotech bazaar” would be another commendable endeavour for biotech companies.

Tools currently available to help keep a balance in the patent contract are applicable mostly during the patent extension period, and are not satisfactory to deal with the scenarios described. In contrast, corporate social responsibility policies like those proposed in this article would allow technologies to be more effectively incorporated into the public domain after patent expiration. In this way, the spirit of the original patent agreement would be fulfilled, which would be fair and beneficial for society worldwide.

Developing countries, which rely more on cheap technologies in the public domain, would derive most benefit from such corporate policies. In many cases, developing countries have adequately enforced international intellectual property agreements and they are sometimes under bilateral requests to incorporate additional enforcement measures. So far, however, they have received little reciprocity regarding technology transfer and genetic resources.

In addition, companies supporting the effective entry of agbiotech products into the public domain after patent expiration would also contribute to those developed countries that depend on developing countries for their food security, or those that seek to establish fair and healthy internal agricultural markets.

The authors are professors at the Argentine National Universities of Quilmes (Biotechnology School) and Buenos Aires (Centre of Interdisciplinary Studies on Industrial and Economic Law). They also serve as technical advisors at the Secretariat of Agriculture, Livestock, Fisheries and Food (Biotech Office and Markets Bureau). The information and views contained in this article are the sole responsibility of the authors and do not necessarily represent the opinions or policies of any organisation, institution or government.

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