Author:	Katherine Weston Student, Murdoch University School of Law
Subjects:	Biotechnology law and legislation (Other articles) Intellectual Property International (Other articles) TRIPS (Other articles)
Issue:	Volume 10, Number 3 (September 2003)
Category:	Comment

Contents:

• Introduction
• Background to TRIPs
• Inequality at the Negotiating Table
• Values Embedded in TRIPs
• Entrenchment of Economic and Political Imbalance
• Encouragement of Monopolies
• Appropriating Third World Knowledge
• Inventions Not of Benefit to the South
• Flaws in Justifying IPRs in Biotechnology
• Conclusion
• Notes

Author's Note: The description of 'developing' and 'developed' are misnomers as descriptions squarely within western discourse, however they have been used for convenience and because they are recognisable. The terms 'North' (to describe the developed world), 'South' and 'Third World' have been used interchangeably with these terms even though they are often inaccurate.

"By legal sleight of hand, the living organisms themselves are deemed inventions of human intellect, and become the subject of monopoly patent claims."[1]

"By discounting time and the historically evolving nature of innovation, patenting institutionalises privilege - those left out of the loop ... fall progressively behind in the race for ring-fencing products for monopoly exploitation".[2]

Introduction

1. Gene technology[3] has led to its key components - genes - being increasingly seen as a valuable resource. As with other natural resources, there is conflict over ownership and control.[4] Many of the 'raw materials' for biotechnology are sourced from the developing world whilst most of the development occurs in the North leading to a divergence of the interests of the developed and the developing worlds - therefore the "politics of genetic resource control are...carried on at an international level".[5]

2. In order to increase enforcement of IPRs in developing countries, the Agreement on Trade Related Aspects of Intellectual Property (TRIPs) [6] was introduced. Infringement by the developing world of IPRs in agricultural products was not considered a major problem[7] however the impact of TRIPs in this area is likely to be significant for developing countries.

   Background to TRIPs

3. In the last few decades, scientists have developed the ability to modify the blueprint of life. In response, intellectual property laws have been adapted to encompass living organisms. Plant breeder's rights[8] (PBRs) and, more recently, patents have been used to create limited monopoly rights in organisms and in the processes by which they are modified.[9] To qualify for protection by PBRs, a variety must be new, distinct, uniform and stable.[10] However PBRs do not protect individual genes and biotechnology processes, therefore biotechnology firms have turned to the patent system as a means of protection.[11] Patents were not granted for living materials until recently[12] but have now taken over as the major form of protection for the products of biotechnology. A patentable 'invention' must be novel, non-obvious, and of practical use.[13]

4. Developed countries were concerned that the products protected by IPRs in the North could not be protected in the South where there was often no equivalent IPR system. In the area of biotechnology, agricultural companies were concerned that they would lose their competitive advantage as the knowledge behind the invention was utilised without profit to them.[14] The North responded by introducing TRIPs as a means of ensuring that the countries of the South provide an IPR system to complement their own. TRIPs mandates the development of strong intellectual property laws in member countries. TRIPs is said to be "probably the most significant development in international intellectual property law this century".[15] There are concerns that the Agreement is inequitable for the South as it is likely to result in an increased flow of income from South to North but a decreased flow of technological knowledge from North to South.[16] Stronger critics say that TRIPs amounts to "economic colonisation" of the developing world.[17]

   Inequality at the Negotiating Table

5. In 1995, at the completion of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), the World Trade Organisation (WTO) was established to administer and monitor GATT.[18] At the insistence of the United States, intellectual property was included in the GATT rather than being administered by the World Intellectual Property Organisation (WIPO), the international organisation created to administer intellectual property. This was because the cross-retaliatory measures, available under GATT but not under WIPO, would make any infringement of the Agreement easier to enforce.[19] The Agreement dealing with intellectual property (TRIPs) is annexed to the Marrakesh Agreement establishing the WTO. Countries reluctant to sign TRIPS were induced to sign as a prerequisite to membership of the WTO and the threat of exclusion from trade.[20] Undeniably developed countries had the upper hand in negotiations due to their economic power. Developing countries have unequal capabilities, resources and capacity to bargain in the market, and at the negotiating table.[21]

6. TRIPS signatories agree to provide a certain level of IPR protection within their country. In relation to agriculture, signatories are required to implement a system of IPRs for the products and processes of biotechnology[22] with the exception of medical methods and non-microorganism new life forms.[23] Patents must be introduced to protect new varieties of artificially developed microorganisms.[24] New plant varieties must be protected either by patents or an effective sui generis regime or a combination of both.[25] TRIPs sets the minimum patent term at 20 years[26] and requires member countries to adopt extensive enforcement procedures.[27]

7. Also impacting on agriculture in developing countries is the limitations placed by TRIPs on compulsory licensing, including the requirement of adequate compensation.[28] Signatories must implement immediate protection of agricultural chemical inventions by providing a mechanism for applications to be filed at the time of signing.[29] The Agreement also makes it possible to obtain exclusive marketing rights for 5 yeas prior to obtaining patent approval or rejection for an agricultural chemical invention.[30] This can occur where a patent or marketing approval exists in another member country and a patent application has been filed.[31]

8. Countries had until 1st January 2000 to make their intellectual property laws conform to TRIPs. The least developed countries have an extra 5 years. All countries have until 2005 to provide laws to cover biotechnology.[32] After that, a state not complying may be treated as having an 'unfair' trade barrier and have sanctions imposed.[33] The cross-retaliatory regime means non-compliance in one area (for example failing to provide adequate protection of IPRs in agriculture) can lead to the imposition of retaliatory trade measures in an area covered by another agreement.[34] Implementation of the Agreement is dependent on international institutions and is therefore often ineffective except against nations dependent on financial aid.[35]

   Values Embedded in TRIPs

9. Patenting life raises questions of the morality of conceptualising living organisms and their components as commodities. Although the appropriateness of creating IPRs in genes and organisms has been questioned[36] TRIPs discounts any question of propriety of IPRs in biotechnology. States are explicitly required to adopt stringent domestic intellectual property legislation creating monopolies over living organisms and processes.[37] The Agreement reduces state sovereignty to adopt internal policies with respect to ethical aspects of biotechnology.[38]

10. TRIPs has been criticised for what it does not address - the broader social issues such as access to resources.[39] TRIPs has been pursued as a mechanism to protect the economic interests of biotechnology companies in the North.[40] Arguments have been put that it is in the interests of developing countries to implement stringent intellectual property regimes in their countries, but most acknowledge that the short-term effect on developing countries will be that more money goes out of their economies.[41] TRIPs does not acknowledge that countries have unequal capabilities in the market and in providing institutions for the state to regulate the market.[42] The extended time period granted as a 'concession' to the South is thought to be inadequate for developing countries to catch up with the wealthier, infrastructurally complex nations.[43] By reducing the ability of national governments to protect their local market, TRIPs further erodes state sovereignty.[44]

11. Globalisation of intellectual property is also significant for reasons not tied to differences in economic strength, but to differences in beliefs about rightful ownership of ideas. TRIPS is based in the discourse of proprietarian IPRs, the Western individualistic view of ownership.[45] There are fundamental differences between indigenous and Western conceptions of rights in knowledge and nature.[46] For example, the South Korean delegation at the Uruguay Round argued that copyright protection was not culturally appropriate for Korea where copying of an artist's work was seen as a form of flattery. Korea also has a different tradition in the treatment of discoveries and inventions as 'public goods' which are freely shared and where the incentive for creativity is cultural esteem rather than material profit.[47] Moreover there is no provision in TRIPs for the recognition of communal intellectual property interests thereby excluding knowledge held by village farmers and by indigenous peoples.[48] By placing TRIPs solely within a Western property rights discourse, it discounts other systems of ownership and provides another example of hegemony of other cultures by Western society.

    Entrenchment of Economic and Political Imbalance

12. In the last few decades the pattern of the world economy has shifted to production that is knowledge intensive.[49] This has led to competition being based on control of knowledge, particularly in the biotechnology industry. Gene technology has been predicted to "dwarf the changes that resulted from use of petrochemical products".[50] In this setting it seems likely that IPRs in gene technologies are likely to create a further divide in those that have and those that do not have access to the world's resources.[51] TRIPs may be instrumental in contributing to the structural integration of the global economy. It will become more difficult for national governments to manage their domestic economies as global markets swallow domestic markets.[52] As is often the case in global negotiations, it is likely that the "gains (will) go to the countries who have participated most actively in setting the rules".[53]

13. Most of the world's biological diversity occurs in the South, whereas most of the development utilising it occurs in the North. Developing countries are suppliers of almost all original germplasm used in research but do not have the resources to develop along the line of IPRs. Recent statistics indicate that the North owns 95% of the world's patents and the vast majority of patents in the developing world.[54] As the South contains most of the world's biological diversity, it has the most to gain or lose in the global race to control and profit from these biological resources.[55] This paradox resulted in the greatest controversy in the TRIPs negotiations being over seed varieties.[56]

14. It arose because TRIPs provides for wide property rights to be obtained in gene technology, profiting the IPR holder (usually in the North) and restricting the use of the product derived from the genetic material. It is thus said to reward bioprospecting by the North in developing countries.[57] There is a trend in agriculture towards private ownership of genetic material since the last century. However the patents currently granted provide more extensive ownership rights in biological materials than has existed previously. The boundaries on patentable subject matter have also widened. If the requirement of human inventiveness is met, an individual or corporate entity can gain monopoly rights on: any type of living being (except humans) and its products, cells, genes and DNA (including natural); the specific uses of a "biological agent (novel or pre-existing)"; and the processes of gene technology.[58]

15. A patent may be unlimited to a particular species[59] or cover broad groups of transgenic plants.[60] There are instances where the actual characteristics of an organism can be patented and the patent will not be restricted to cover only genetically modified organisms. For example a patent exists for sunflowers with high oleic acid content - whether they are the result of genetic engineering or naturally occurring.[61]

16. Therefore internationalising IPRs creates the capability to own the rights to a broad base of products. These products cannot be legally produced for the duration of the patent without permission from the patent owner. Prior to TRIPs many developing countries did not provide IPR protection on agricultural chemicals or plant varieties. This meant that they could produce them locally or import them at cheaper prices. Developing countries are now prevented from borrowing foreign technology[62] and agricultural companies are able to obtain higher prices for their products as other avenues for obtaining them are closed.[63]

17. It has been widely argued that it is in the interests of developing countries to have strong IPR regimes so as to encourage domestic development of technology and foreign investment.[64] Although strong IPR protection may provide an inducement to biotechnology firms to develop in a country, intellectual property on its own is unlikely to enable developing countries to reap the benefits of biotechnology.[65]

18. For example, Africa may have a higher level of patent protection due to its colonial history but has a lower level of research and development than middle-income countries with lower IPR protection. Strong IPRs are not a "necessary or sufficient" inducement of investment.[66] Increased IPRs is likely to create greater wealth in countries that have the internal environment to support their development and commercial exploitation.[67] IPRs may not be a priority for developing countries and can be detrimental to achieving the objectives of 'catching up' with the more industrialised nations.[68] TRIPs is also likely to be a burden to the developing world because of the costs associated with implementing and enforcing its provisions. Constructing an IPR system through the adoption of Westernised legal structures will be a further drain on resources.[69]

    Encouragement of Monopolies

19. In the last century the private sector became an increasingly dominant force in the plant breeding industry.[70] Before the first hybrid was developed in the 1920s, farmers would only buy seed to gain new varieties of crop plants.[71] Hybrids, with the advantage of 'dwarfing characteristics', need to be purchased each season because successive generations lose the desirable trait, creating the opportunity to profit from developing seed. The example is telling. Firstly seed companies pursued the path of producing hybrids, despite the availability of other avenues, reflecting the profit incentives of the seed suppliers rather than the interests of farmers or efficiency. Secondly these companies began lobbying the US government for protection of their products through intellectual property legislation.[72] They succeeded in gaining protection in the form of plant breeder's rights. Now, in the post-Green Revolution with the advent of biotechnology, developers of agricultural seed can gain even more complete control in the form of patents.[73]

20. Transnational corporations (TNCs) hold the majority of patents in developed countries.[74] One of the consequences of this is that there has been a shift from research being in the public to in the private sector.[75] There has also been a trend in such companies adding (often a small amount of the total) to the foundations of public research and then patenting the final result.[76] The trend of increasing privatisation is coupled with an increasing level of IPRs.[77] Through TRIPs this is now being translated to the international level.[78]

21. In the agricultural business a mere few companies own a significant proportion of agricultural patents worldwide.[79] Collaboration and mergers between multinational firms for research and development has become a standard method of operation.[80] However "international collaboration in development of new biotechnologies has bypassed firms in developing countries".[81] Smaller companies are often unable to compete against such powerful competitors especially when forced to pay licensing fees for the use of patented technologies.[82] Patents act as a further barrier to entry into the industry because of the need for a staff of patent specialists[83] and sufficient funds to acquire and possibly defend patents on biotechnology.[84] IPRs have helped to create a climate in biotechnology where only the huge agricultural conglomerates can afford the costs of research and patenting. By requiring developing countries to institute a strict IPR regime, TRIPs creates an environment that will allow TNCs to dominate the agricultural industry. It will effectively exclude developing countries from participating in the new biotechnologies whilst they are increasingly being forced to compete with their presence.

22. One of the direct costs of the 'biopatents' is that they can decrease the independence of farmers.[85] Prompted to keep up with the production of high yield varieties, farmers that buy genetically modified organisms (GMOs) for production are then locked into a relationship of dependence with the patent owner-supplier. They are not legally entitled to save and use seed, or keep the offspring from their livestock without paying royalties to the patent owner.[86] This pattern of production moves farmers further away from sustainable farming practices and increases their vulnerability to the vagaries of the market.

23. At the same time the biopatents increase the power and wealth of the multinational 'agribusinesses' - usually conglomerates of the petrochemical and pharmaceutical industries.[87] Many of the new herbicide and pesticide resistant varieties of crops are designed solely for use with a particular pesticide or herbicide - usually produced and supplied by the same company that holds the patent on the seed. The profits of the agricultural firm are secured through the farmer's need to repurchase seed each year, from royalties paid on offspring and from the integration of products 'matched' to the GMO.

24. If the prediction of the significance of gene technology is correct,[88] then the question arises as to whether it is desirable to have the interests of corporate profits dictate the direction the technology takes. In particular, will the interests of the developing world be reflected in the path taken by agricultural conglomerates? This question is addressed further below, but it should be noted that the guardianship of 'big business' in the past has not reflected the interests of those that do not play a significant role in the market such as the poor and the environment.[89]

    Appropriating Third World Knowledge

25. It has been said that IPRs have arrogated the benefit of many Southern developments in agriculture.[90] Patents deny the evolution of knowledge through time. They may protect the result of a long process where the ultimate owner of the patent has only contributed to the final stages of the development.[91] In this way IPRs serve to appropriate the knowledge of indigenous farming communities who have bred plants and domestic animals over centuries to develop new varieties. The Western discourse of IPRs excludes knowledge held and produced by marginalised groups as unscientific whereas it is often used as a basis for science and technology.[92]

26. It is in developing countries that the majority of varieties related to commercial crops can be found. They are valuable as the origin of agricultural germplasm and as the source of resistance and other characteristics that may be valuable for future breeding.[93] It is said that "the gene pool that world agriculture must rely on is kept alive and developed by the daily work of small family farmers of the 'developing' countries..."[94] This realisation led to the establishment of 'genebanks' in the 1970s.[95] The free exchange of germplasm (often accompanied with local knowledge) was stressed to be in the interests of developing countries.[96] Many commercial varieties in the North have been developed from the utilisation of this germplasm. That is, indigenous knowledge (for example, of the most suitable conditions for cultivation) has been used to discover plant characteristics, but no recognition or reward has been given to the community of origin.[97]

27. There have been numerous recent examples of patents, granted in the North, stemming from knowledge held in the South. Indian farmers have used neem for generations as a pesticide and fungicide. There are now more than 35 patents from the neem tree in the United States and Europe. None of the profits from the patents are returning to the traditional owners and the increased market cost has resulted in decreased availability to local communities. Another example was a patent granted in 1995 to US scientists for the use of turmeric for healing wounds. They claimed its use to be novel whereas this had been a traditional use, amongst others, in India for centuries. The Indian government successfully challenged the patent. If it had remained, it would have prevented Indian suppliers from selling it overseas and, if a patent was permitted in India, from utilising it at home.[98]

    Inventions Not of Benefit to the South

28. The proponents of biotechnology have claimed that genetic engineering will assist the developing world. However privatisation of biotechnology results in the industry being geared towards the generation of maximum profits. The creation of a system of strong IPRs tends to promote the development of products suitable for the markets of developed countries where there are strong consumer markets. Research is diverted from the needs of developing countries where it is perceived that the market is inadequate to justify private investment.[99]

29. In developing countries the predominant focus of agriculture remains subsistence farming. The Green Revolution helped to create a market for its products - a class of farmers with sufficient capital and sophisticated technology to benefit from the monocultural high yield varieties.[100] The biotechnology era will further undermine organic farming and create reliance on chemical farming methods. IPRs lead to the production and proliferation of biotechnology products that do not meet needs of, and indeed that may negatively impact on, developing economies.[101] For example, when Cargill introduced hybrid sorghum into the Indian region of Karnataka in 1993, the income of farmers' declined. Although the average production per acre was Rs. 3600 per acre compared to Rs. 3200 per acre using traditional seed, the cost of production had risen from Rs. 370 per acre to Rs. 3230 per acre. Statistics such as these undermine Cargill's claim that IPR protection of its products is a social necessity because of the benefits to farmers.[102]

30. In terms of genetically engineered crops, there is significantly less emphasis on engineering products that are important for the developing world - such as nitrogen fixing or drought resistant plants - and that increase sustainable farming practices. These are left to the public sector - which is also influenced by patents and reliance on funding from industry.[103] Enforcing a patent regime in developing countries will result in a greater emphasis and proliferation of genetic engineered products.

31. Patents may indeed make the food supply more vulnerable - economically and ecologically. Patenting encourages monocultural production and is likely to increase this trend even beyond that of the Green Revolution. It is crucial to the method of monocultural agriculture that a diverse base of varieties is preserved so that entire varieties of crops are not destroyed.[104] It also threatens diversified control of the supply of food increasing the possibility of scarcity.[105] "A patent granting a single corporation monopoly control over one of the world's most important food crops is a threat to world food security."[106]

    Flaws in Justifying IPRs in Biotechnology

    "Intellectual property, unlike tangible property, is non-exclusive ... Thus, (it) faces a special burden of justification not shared by justifications for owning tangible property. It is prima facie irrational for society to grant monopoly rights to something that all could use at once".[107]

32. Patents and IPRs may be particularly inappropriate in the area of biotechnology, where they involve the grant of monopolies in living organisms and their parts, for reasons already discussed. In examining TRIPs and the imposition of an IPR regime on developing countries the justifications used become even more challenged. The 'natural entitlement' justification argument is flawed in the area of IPRs in biotechnology. [108] It may entitle a person to use the object created but not to exclude all others from using objects of the same type.[109]

33. This justification has been further criticised for its perception of invention in relation to organisms.[110] It ignores the value of nature and of the organism itself where the value added by the modifier is small in relation to the value of the entire organism or gene.[111] It also rewards isolation, not creation of genes.[112] It is commonly argued, especially by the developing world in opposition to the patenting of genetic material, that genes are part of the common heritage of mankind and that no-one should restrict their access.[113]

34. The most common justification used for IPR protection of biotechnology is an economic argument. It is said that it will benefit the economies of developing countries to introduce strong IPR protection by attracting foreign investors and that strong intellectual property protection is considered necessary to offset the costs and risks of developing biotechnology. In the negotiations for GATT, the US Trade Representative used the economic justification for IPRs to argue for their inclusion in TRIPs.[114] However there is no evidence that the introduction of a western IPR system will economically benefit the South. For instance, although a national environment with strong intellectual property protection is given as one of the four main reasons that firms choose to develop biotechnology in the US, it is not the only reason. The US and other developed countries that are attractive to biotechnology firms also have other advantages, such as a strong research base, that exist due to their economic and political status. "The idea that developing countries will only need to allow greater market freedom in order to absorb and benefit from technologies abroad is highly suspect."[115]

35. In contrast many countries that have adopted low levels of intellectual property protection have high levels of growth, such as Japan, Taiwan and Singapore. Indeed the US itself refused to adopt effective copyright protection until 1952 and this is seen as a significant factor in its development through the encouragement of technology transfer from Western Europe.[116]

36. Patents (and IPRs in general) are also sought to be justified with reference to their beneficial consequences for society. As noted above, the effectiveness of IPRs in biotechnology for stimulating innovation in the developing world is disputed and not an adequate justification of their use.[117] Their benefit is also said to be that they aid technology transfer and the disclosure of information.[118]

37. However it has been suggested that biopatents may undermine innovation by decreasing the sharing of ideas during the period of delay whilst a patent is pending.[119] Moreover two thirds of patented products are never placed on the market but the patent is used to prevent competitors gaining an advantage. For the developing world TRIPs may hinder the dissemination of biotechnology knowledge by creating monopoly prices for biotechnology innovations.[120] TRIPs has created greater restrictions on compulsory licensing making it more difficult for a country to compel a company that has not been working a patent to provide a licence for the technology.[121]

38. Even if IPRs could be shown to stimulate innovation, there is an assumption that it will be beneficial to society to have a "profusion of biotechnical products."[122] As advanced, this assumption is particularly shaky when applied to agriculture in the developing world. Patents on biotechnologies are likely to contribute to their introduction before their risks can be adequately defined. They create resistance to regulation in agricultural firms. Having spent large sums on the development and patenting of the biotechnology, the holder of the patent will resist the introduction of regulation as interference with their private property rights.[123]

    Conclusion

39. In 1987 more than 60 Indian farmers from Andhra Pradesh killed themselves by consuming pesticide, overwhelmed by debts they had incurred for pesticide purchases.[124] This is the human face of the people marginalised through integration into the global economic and legal system.

40. Biotechnology, reinforced with IPRs, will serve to destroy the independence and sustainability of rural farmers in the poor world to serve the interests of a narrow group of agricultural companies based in developed countries. It should never be a goal of international law to dominate and homogenise the world's ideologies and economic system. However, in negotiating TRIPs, it seems that humanistic interests were not on the table, but were overborn by commercial interests and a desire for profitable trade. Developing countries cannot afford to be outside of international trade and therefore will be forced to implement TRIPs even where it is against their national interest and the interests of their citizens to do so.