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IPRS AND BIOLOGICAL RESOURCES:

IMPLICATIONS FOR DEVELOPING COUNTRIES

 

by Cecilia Oh


 

INTRODUCTION

The 'patenting of life' is a topic of current debate and controversy worldwide. It refers to the grant of intellectual property rights over living organisms and biological resources. Several factors have led to the emergence of the debate. First, the ability to isolate and manipulate genes that has resulted in the growth and expansion of the biotechnology industry. Secondly, the growing market for biological or genetic resources - due to their demand in the biotechnology, pharmaceutical, cosmetics, agriculture and other industries - has led to a rise in bioprospecting activities in developing countries. And finally, a provision in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which requires member countries of the World Trade Organisation (WTO) to patent living organisms.

As developing countries formulate their policy and legal responses to address the implications of biotechnology and the need for biosafety, the regulation of access to genetic resources to ensure benefit sharing, and the implementation of the TRIPS Agreement, they are faced with the question: should they allow for the grant of intellectual property rights over biological resources?

In order to provide some answers to this question, the following factors should be considered:

  • recent developments in the 'life sciences' industry and the WTO-TRIPS Agreement;

  • the needs of developing countries in fostering technological, economic and social development, and the role of the IPR system in the promotion of these development objectives; and

  • the implications of IPRs over biological resources for developing countries.

1. DEVELOPMENTS IN THE LIFE SCIENCES INDUSTRY AND THE WTO-TRIPS AGREEMENT

The question of life patenting must be considered within the context of the developments in the international trading system and the so-called 'life sciences' industry. There are two key factors:

  • the role of the corporations, predominantly from developed countries, in the development and marketing of modern biotechnology and its products; and

  • the developments in the World Trade Organisation (WTO), in particular the Agreement on Trade-Related Intellectual Property Rights (TRIPS).

 

1.1 The life sciences industry: Biotechnology and patenting of life

During the past decade, significant investments were made in the research and development of biotechnology; the results of which are now being employed commercially in various sectors, such as the pharmaceutical, chemicals, agriculture and food industries (collectively referred to as the "life sciences" industry). The investments were made largely by the private sector in the developed countries, which have now become the major developers and users of biotechnologies. To maximise the returns from their investments, the private sector use IPRs as the means to establish monopolistic ownership over the technologies, thus allowing them to control their market share.

The use of IPRs (particularly patents) in the context of biological resources and living organisms is a relatively new phenomenon. The patent system was intended only for mechanical and non-living inventions. Even then, strict IPR regimes, especially patents, were not legislated in many developed countries until the 1970s. It was in the mid-1990s that many developed countries began to move beyond the original tenets of patent law by allowing patents on living organisms, although there were numerous differences in the extent of patentability in each country.

This move was a direct response to 'life sciences' industry’s demands, which led to the political decision in developed countries to accommodate the biotechnology industry within the patent system. Seen as a key sector for future industrial growth, the industry has been in a strong position to persuade governments of the need to provide IPR protection on par with other industrial products (Byström, 1999). This was also one of the reasons which led to the initiation of the TRIPS Agreement in the WTO. In fact, the framework and initial drafts of TRIPS were drawn up by a coalition of industry organisations from the USA, Europe and Japan, led by the US pharmaceutical industry (The Economist magazine, 1992).

 1.2 The WTO-TRIPS Agreement

It has been observed that the developed countries forced the negotiation of the TRIPS Agreement (against the objections from many developing countries) with the aim of universalising the standards of IPR protection that they had already incorporated within their legal systems (Correa, 1998). One reason for this was the gradual erosion of the developed countries' supremacy in manufacture and technology due to the rise of Japan and other Asian countries as aggressive competitors. The industrial lobbies, particularly in the US, convinced the government about the need to link trade and IPRs in order to increase the returns on research and development and to prevent imitation. The monopoly rights granted by IPRs were regarded as an instrument to avoid further catching up based in imitative paths of industrialisation; that is, as a tool to freeze the comparative advantages that had ensured so far US technological supremacy (Correa, 1998).

The outcome of those negotiations fell short of the original demand from the US; namely that industrial patents on all forms of life should be mandatory under the WTO. But the resulting provision, Article 27.3(b), commits all member states to introduce patents for micro-organisms, and either patents or "an effective sui generis system" of protection for plant varieties.

Article 27.3(b) of the TRIPS Agreement has practical consequences almost exclusively for developing countries, because they typically retain exclusions for living organisms in their patent legislation, and usually do not have plant breeder’s rights (PBR)-type legislation for plant varieties.

1.3 Review of Article 27.3(b) and the Seattle WTO Ministerial Conference

Due to its controversial nature, Article 27.3(b) also stipulates that a review of the provision should be undertaken before the end of 1999. A review process was commenced in December 1998 under the TRIPS Council of the WTO. However, the scope of the review is not clearly defined within the provision. This has led to a debate within the TRIPS Council as to the nature of the review. The developed countries, led by the US, argue that the review should be one of implementation. The developing countries, on the other hand, are of the view that the review is one of substance and have called for substantive changes to the TRIPS agreement in connection with this review.

Although the review process commenced before 1999, it has not ended. In the midst of the review process, WTO country members also began preparations for the WTO's Third Ministerial Conference, which was held in Seattle on November 30 - December 3, 1999. Developing countries tabled proposals for the reform of the TRIPS Agreement in the WTO General Council. Of note was the proposal of the African Group of countries in the WTO seeking the freedom to exclude all living organisms from patenting. The African Group submitted a proposal to amend Article 27.3(b) so as to prohibit the patenting of life, and to allow for the protection of community knowledge. This proposal was supported by the like-minded group (LMG) of developing countries in the WTO. The like-minded group consists of Cuba, the Dominican Republic, Egypt, El Salvador, Honduras, India, Indonesia, Malaysia, Pakistan and Uganda.

These countries also highlighted the conflict between their commitments under the Convention on Biological Diversity (CBD) and under TRIPS, as the CBD stipulates that IPRs must be supportive of the Convention objectives, while TRIPS lacks reference to either conservation, sustainable use, or fair and equitable benefit sharing. There are also proposals to allow other related exclusions, for example 'essential drugs' according to the World Health Organisation (WHO) definition.

The Seattle Ministerial Conference came to an inconclusive end - without any agreement on where negotiations stood or how they would proceed. This means, therefore, that the status of proposals has yet to be ascertained or clarified.

In the meantime, the deadline for implementation of Article 27.3(b) has arrived, without any conclusions as to the review process or to the Seattle Ministerial Conference. Consultations on the Seattle issues are on-going and it was agreed during the December 1999 (post-Seattle) of the General Council meeting that member countries would exercise 'restraint' in dealing with the implementation deadlines in the meantime. The review of Article 27.3(b) remains uncompleted and is still on the agenda of the TRIPS Council.

2. PROMOTION OF TECHNOLOGICAL, ECONOMIC AND SOCIAL DEVELOPMENT IN DEVELOPING COUNTRIES: THE ROLE OF IPRS

How the international debate on life patents will be resolved, at this stage, remain unclear. What is clear is that the developing countries have shown clear opposition to the concept of IPRs over life.

It is against this backdrop that developing countries are now faced with implementing the obligations of the TRIPS Agreement (as of January 1, 2000), or run the risk of being taken to the dispute settlement body of the WTO, otherwise. The challenge therefore, is to find the means of implementation that is consistent with their developmental policy and objectives. In order to do this, it would be necessary to determine the actual role and the effect of a strict IPR regime in the case of developing countries.

2.1 Benefits and costs of a strict IPR regime: A summary

Developing countries are concerned with promoting technological advancement as a means of economic development, which in turn contributes to social development. Foreign direct investment (FDI) and technology transfer have traditionally been regarded as the formula for the promotion of technological advancement and industrialisation. Strict protection of IPRs has been added as another ingredient to this formula, by the developed countries seeking to maintain their technological advantage. However, the experience of the last 30 years has resulted in another school of opinion, which cautions developing countries against the adoption of strict IPR standards as advocated by developed countries, particularly in the field of patents.

Arguments in favour of a strict IPR regime in developing countries highlight IPRs as one of the factors attracting FDI, bringing with it, technology transfer. The flows of FDI and technology into developing countries, it is asserted, will result in an increase in the resources for research and development (R&D) by local researchers and companies. The patents system will also promote domestic innovation, by providing incentives for local researchers and inventors. Increased domestic R&D will hopefully result in the development of new products and technologies suited to the country's own needs. Consequentially, there would be technological advancement and generally, an improvement in the welfare of the population. Another benefit would be the end of the 'brain drain' from developing to developed countries caused by the absence of protection for their inventions in their countries of origin.

The alternative view - increasingly voiced by some developing country governments and UN institutions such as UNCTAD, UNDP and the Commission for Sustainable Development - highlights the concern that strict IPR protection may not have the desired result of increased FDI and technology flows. On the contrary, strict IPR regimes could restrict domestic R&D. In fact, the lack of IPR protection in countries such as Switzerland, Japan and some Asian countries was a key factor that allowed for technological catching-up of these countries (Gerster, 1998). The initial absence of strict IPR protection in these countries provided the opportunity to progress and to acquire basic technology through imitation and reverse engineering. The advancements made were then followed by largely domestic investments in R&D.

Strict IPR regimes may also encourage foreign companies to simply export finished or semi-finished products, since only their patented products could legally be marketed, precluding production by domestic companies. This is particularly true in the case of production of non-labour intensive goods (one reason for FDI in developing countries is the comparative advantage of cheaper labour). There is therefore the potential for the concentration of such types of production in developed countries, thus reducing the need for FDI in developing countries.

The monopoly arising from the patent protection could also lead to increases in the prices of patented products, and the patent royalty payments, to the detriment of consumers. Pharmaceuticals is a case in point, as has been demonstrated in AIDS patients in South Africa being denied access to drug treatments due to the high cost of AIDS treatment. In another example, where agricultural land is needed for planting patented genetically engineered crops, developing countries risk being mere suppliers of land and their farmers, the contract workers of foreign patent-holders (as has happened to US farmers planting Monsanto seeds), while the bulk of the profits accrue to the patent-holders.

Section 3, below discusses some of the implications of life patenting in the agricultural and healthcare sectors.

2.2 Impact of IPRs on FDI and Technology transfer

Given the differing perspectives above, a closer analysis of the IPR system and the manner in which the system operates is required in order to assess the actual impact of IPRs on FDI, technology transfer and the incentives for the promotion of domestic R&D.

2.2.1 The patent system: Who patents?

Recent surveys show that the vast majority of 'world patents' are filed and held by companies based in North America, Western Europe or Japan. Only 3% of world patents are owned by inventors in the developing countries (UNDP, 1999). Specifically, the vast majority of biotech patents are in the name of companies originating in the developed countries. A survey of the biotechnology patents showed that between 1990-1995, around 25,000 patents were granted throughout the world. 37% of these originated in the US, a similar percentage from Japan, whilst 19% were from the European Union. The remaining 7% of patents came from the 'rest of the world', including all of the developing countries (Correa, 1999).

Given that the developed countries and their multinational corporations (MNCs) are the main users of patent protection, they will also be the major beneficiaries of the new, strict patent laws in developing countries. In addition, since the overwhelming proportion of patents originate in the developed world, patent protection is more likely to lead to a transfer of income from the less developed countries to the developed countries and thereby to widen income disparities between the two (Dasgupta, 1999).

2.2.2 Foreign Direct Investment and IPRs

A United Nations University survey on the current literature on FDI and technology transfer concluded that IPRs did not play a significant role in influencing the pattern of FDI and technology transfer (Kumar, 1996).

Several other factors, however, do play a role in determining the effect of IPRs on the flow of FDI into a country. These include the market size of the host country, the nature of the product itself, and whether or not the industry is export-based. The final point directly relates to the issue of IPR protection - where the products are to be exported, IPR protection in the host country is not as crucial. The investment of Boeing in China, despite lack of IPR protection in the country, is cited as an example of the other factors that influence FDI (Abbott, 1998).

There is concern that the use of IPRs may, in fact, adversely affect the flow of FDI. Analysis of the use of patents by foreign companies in developing countries have shown that such MNCs use patents as a 'defensive strategy' (Dasgupta, 1999). This refers to the use of patenting to preserve markets that were once captured through exports and are subsequently threatened by competitors and/or by the import-substituting strategies of the host countries.

In this context therefore, patents do not provide the stimulus for foreign investment. Instead, in this situation, patents are used as instruments to achieve control over foreign markets, even without direct investment (thus eliminating the need for FDI). For this reason, studies have shown that approximately two thirds of patented products are never produced. They are patented in order to keep rivals away from the field (Dasgupta, 1999). The patent systems of some countries recognise the need to prevent such use of patenting. One of the objectives of the Indian Patent Law, for example, is the need to prevent registration of patents merely to enable patentees to enjoy monopoly for the importation of the patented article.

There is a further concern that the investments in biotechnology may soon be reduced. Financial analysts have increasingly begun to question the viability of investments in the new biotechnology fields. The over-expansion of Monsanto, a leading player in this field, through a series of takeovers, coupled with problems related to their products has shaken investor confidence. In the past year, the growing worldwide controversy surrounding genetically modified products has led to a fall in share prices of biotechnology companies. A 1999 Deutsche Bank report has warned investors to treat with caution the shares in companies involved in genetic engineering, including giants like Monsanto and Novartis. The report specifically advised the selling of Pioneer Hi-Breed shares.

2.2.3 Technology transfer

On balance, does the existence of strict IPR protection in FDI recipient countries facilitate, hinder or have no effect on transfer of technologies?

Technology transfer basically means the technological development by large companies in host countries, with the companies making available for use and sharing their technology in those countries. The Director-General of UNCTAD has acknowledged that FDI has not resulted in technology transfer to developing countries, based on this definition (Raghavan, 1999).

During the launch of the World Investment Report 1999 (WIR99), the UNCTAD Director-General disputed the findings of WIR99 (a report originating from the UN agency which he heads), stating that the report's analyses indicating the link between FDI and technology transfer are based on a flawed definition of technology transfer. There have been payments for technology and patent licensing fees remitted abroad between a subsidiary company in a host country to the parent MNC. These licence fees, royalties and other fees remitted to parent MNCs have been taken as a measure for technology transfer. There is technology transfer between parent and subsidiary MNC but there is no evidence of diffusion of technology within the host country.

Where protective patents are concerned, these help preserve the core industrial property rights against infringement - this explains why most patents are never used in commercial applications and why they are not a good indicator of technological innovation, especially in the case of patents taken in developing countries (Nadal, 1999)

This view is also supported by the findings of another UNCTAD report on Trade and Development, 1999 (TDR99). In effect, the availability of patent protection allows for the outward flow of profits from developing countries to developed countries (where the parent companies are based). TDR99 stated that the TRIPS Agreement required urgent consideration to address specific issues, as developing countries are concerned that the cost of implementation of TRIPS will outweigh its benefits. These included, amongst others: a comprehensive assessment of links between IPRs and economic development, making technology transfer and dissemination a central objective in the new IPR systems, measures to bring TRIPS Agreement into conformity with the Convention on Biological Diversity, and the protection of traditional and indigenous knowledge (UNCTAD, 1999)

The trend of mergers of biotechnology and life industry companies have also led to the concentration of technology ownership. This translates into the concentration of high-value IPR protected technologies in the hands of a small number of conglomerates. Given the economic power of these companies, it may lead to difficulties for developing countries to negotiate favourable terms for technology acquisition. (Dutfield, 1999).

2.3 Impact of IPRs on domestic R&D

By ensuring the inventor a monopoly on the returns, IPRs are said to create incentives for investment that may not have taken place without the IPR protection, and thereby promote technological development. This may be true in the developed countries, where most of the rapid developments in genetic engineering over the last two decades would not have taken place if the results could not have been patented. On the other hand, whether this means new net benefits for society depends very much on how one regards this controversial technology (Byström, et al, 1999).

Controversy aside, where the vast majority of the patents in the country are held by foreign inventors or corporations, it may lead to a situation where the local research and development is stifled. The monopoly rights conferred by patents could restrict the research by local researchers. Strict IPR protection, by its apparent bias, may actually slow the pace of innovation in developing countries, and increase the knowledge gap between industrial and developing countries. In such situations, the IPR system favours those who are producers of proprietary knowledge, vesting them with greater bargaining powers over the users.

The World Bank recently voiced this same concern, stating that stronger intellectual property regimes, often covering fundamental research tools, as well as marketable products, may lead to a higher cost of acquiring knowledge, and could erect barriers to participation of new firms and researchers in the developing countries (World Development Report 1999).

3. IMPLICATIONS OF IPRS OVER BIOLOGICAL RESOURCES

The preceding discussion highlights some of the impacts of IPR protection generally on FDI and technology flows, as well as its potential impact on domestic R&D and local researchers. The application of IPRs to biological resources; i.e., patenting of life, will raise these issues, and the additional ethical, religious, economic and political concerns. To assess the implications of patenting of life, some of these patents which have already been granted are examined.

3.1 Agriculture and the food system

70% of food supply comes from a few plants. The patent systems in many countries prohibit the patenting of plants and plant varieties. The rationale is that these form the backbone of crop production, plant breeding, and ultimately food security. This raises the fundamental question of whether or not there should be private ownership of plants or their genes, through the use of patents. However, before such fundamental, ethical and moral questions are resolved, biotechnology corporations are trying to establish private ownership rights over plants and their components. This is done through establishing new plant breeders' rights (which are almost as strong as patents) through in the International Union for the Protection of New Plant Varieties (UPOV 91) or through the patenting of genes or cells.

3.1.1 Bt crops

The gene of the soil bacterium, Bacillus thuringiensis (Bt) has been patented by a number of companies. Bt-maize, Bt-cotton and Bt-potato are some of the crops which have been patented in the US. In 1996, there were more than 400 patents granted or pending worldwide, related to Bt, with 60% of these patents originating from just 10 companies (GRAIN, 1996). This means the technology is concentrated in, and controlled by, a small number of companies. There are also other patents, which are much broader, including the US patent granted for 'all transgenic plants containing Bt'. This raises the issue of control of the patent holders over the technology. The patenting of the Bt gene also raises the issue of biopiracy - since Bt had already been used by farmers as a biological pesticide since the 1940s. The appropriation by the companies of property rights over the Bt gene was enabled through the patent system, thus securing profits for a small number of companies.

The Bt crops, however, have been at the centre of much controversy. Numerous recent studies have documented growing evidence of the harmful effects of the Bt crops, ranging from the accidental transfers of the Bt gene to non-target species to the health effects of consuming food from Bt crops. This has raised serious concerns in many countries, which have banned or are considering banning transgenic crops and food containing genetically modified organisms.

The patenting of such transgenic crops by MNCs speeds up both the time period and geographical spread of the problems, as MNCs have global marketing reach. This additional dimension should be taken into account. In addition, the safety issue raises the question of the patentability of such technology; whether it would be public interest to allow for such patenting.

3.1.2 Patented soybeans

Another case of patents on agricultural crops is the European patent on transgenic soybean, awarded to the company, Agracetus. The patent is a very broad one, claiming 'a soybean seed which will yield upon cultivation a soybean plant comprising in its genome a foreign gene effective to cause the expression of a foreign gene product in the cells of the soybean plant". This means that the patent covers all transgenic soybeans. In fact, the grant of this patent was initially challenged by Monsanto as being too wide, and therefore unfair, until Monsanto later acquired Agracetus and thus, the ownership of the patent. Such broad, species patents, (also being applied for on cotton and rice), are a distortion of the patent system in order to secure the market for the patent holder and to prevent competition, with the effect of stifling research.

Farmers who use the patented soybean seed are prohibited from saving the seeds for replanting. The patent system has been used to create dependence on the companies for seeds, and numerous cases are emerging in the US involving disputes, rooted in IPRs, between Monsanto and farmers contracted to plant the company’s transgenic seeds. The private ‘policing’ measures by Monsanto to safeguard their profits protected by IPRs are also creating social problems. Where developing countries are concerned, there are additional adverse implications for food security and farmers' rights.

3.2 Health care and drugs

Genetic resources and biochemical compounds are the basis of most pharmaceutical and natural medicinal products. Thus, the great interest in bioprospecting in developing countries, the source of rich biodiversity. Most leads on the effectiveness of biological resources come from indigenous and local communities who have rich medicinal knowledge. The patent system has been used to exercise proprietary rights over the biological or genetic resources in the South, which have long been used by the indigenous or local communities. Some of the better known examples of such biopiracy are the cases of tumeric, neem and mustard patenting.

3.2.1 The tumeric patent

The case of the tumeric patent is well-known. A US patent was granted to scientists from the University of Mississippi on its use as a healing agent. The patent was successfully challenged by the Indian Government, on the ground that tumeric's use as a healing agent was not an invention, it had been developed and used in India for centuries. If it had not be rejected the tumeric patent would have had the effect of preventing Indian companies from marketing tumeric for healing in the US. If there had been patent protection for biological resources in India, the same patent could have also been registered in India, thus rendering illegal the use, marketing and sale of tumeric in India as a healing agent.

3.2.2 Ayurvedic medicine

Biopiracy of genetic resources and traditional knowledge is on the increase. A survey conducted by the Indian Drug Manufacturers' Association (IDMA) found 668 pharmaceutical patents filed during 1997 (Shiva, 1999). Most of the applications related to the use of ayurvedic knowledge; i.e., the traditional Indian medicinal system. Many of these claims - with minor modifications in methods of extraction and processing - could amount to biopiracy of the centuries old traditional knowledge. Since 70% of Indian health care is provided by herbal medicine, the patents based on biopiracy could potentially deprive the poorer two-thirds of the Indian population of their right to health care (Shiva, 1999).

3.2.3 AIDS treatment

A World Health Organisation (WHO) study on the implications for access to drugs, linked to strengthened IPR protection and the implementation of the TRIPS Agreement in developing countries, had warned that the monopoly granted by patents on pharmaceutical products could lead to increase in the price of drugs (WHO, 1997).

A case in point is the rising cost of AIDS treatment drugs, which have been patented by the US pharmaceutical companies. The dispute between South Africa and the US over the patent protection of drug treatments for AIDS has brought out the impact of patenting on access to such drugs. Patenting of drug treatments for AIDS had raised prices beyond the reach of many HIV-positive people in the developing countries. The South African government sought to restrict patent rights, through the use of measures such as parallel imports and compulsory licensing, so as to reduce the price of the drugs. Compulsory licensing would have lowered the price of the drugs by 75% or more. The US government, on the lobbying of the pharmaceutical industry, had opposed such measures, and were pressuring South Africa to abandon this policy. The US government recently announced its decision to step back from its investigation that would have led to trade sanctions against South Africa, largely due to the public pressure and the campaign by AIDS activists.

4. CONCLUSIONS

Conclusions on the question of whether or not to allow IPRs over biological resources can be drawn from two perspectives; one, the international level, taking into account the developments relating to the TRIPS Agreement at the WTO; and two, the national level, taking into account the domestic situation and needs.

4.1 WTO developments: Review of Article 27.3(b) TRIPS Agreement

The differences between the developed and developing countries in the WTO, with regard the question of life patenting remain unresolved. However, the position adopted by the majority of the developing countries, is clear. They are opposed to the patenting of life, and seek a revision of Article 27.3(b) to that effect. They also regard the provision to be inconsistent or in conflict with, the provisions of the Convention on Biological Diversity and the FAO International Undertaking for Plant Genetic Resources; specifically, with regard to the protection of indigenous and local community knowledge, and farmers' rights. The developing countries propose that measures be taken to ensure that the TRIPS provision are consistent with, and supportive of, these international obligations.

Mindful that the TRIPS Agreement require implementation of Article 2.3(b) by the January 1, 2000 deadline, the developing countries had proposed that the deadline for implementation be extended by another five years. The developing countries had argued that the review would not be effective (or make sense) if it were carried out before the developing countries have had to implement the provision.

The review process has now extended into the year 2000. In addition, the status of the many proposals on Article 27.3(b) from developing countries for the Seattle Ministerial Conference remains unclear, and no decision has been made as to how these will be heard and discussed in the WTO. Developing countries now are faced with the prospect of having to implement Article 27.3(b) amidst this uncertainty.

In the meanwhile, it would be advisable for the developing countries to assess all available options for implementing Article 27.3(b). Such a process should be one, which allows developing countries option of developing appropriate national legislation that takes into account their national needs, concerns and interests.

4.2 National needs: Access to resources and commercialisation

The discussion above has shown that the existence of a strict IPR regime in developing countries is not necessarily a precondition for FDI and transfer of technology.

It does, however, constitute one of the several factors affecting the flow of FDI and technology into a country. On balance, it can be said that strict IPR protection may have negative implications for FDI and technology flows, and stifle domestic R&D, where IPR protection is used as a 'defensive strategy' by MNCs. This point is particularly pertinent with regards the biotechnology industry, a relatively new sector in which the more established 'life sciences' MNCs will be keen to ensure their market share. Patents over biological resources have already been used by MNCs to wrest market share away from the traditional producers (e.g., the case of basmati vs Texmati rice). Similarly, IPRs may be used to prevent new competitors (smaller firms and companies from developing countries) from entering into the field. The adoption of strict IPR protection in developing countries will increase the efficacy of the 'defensive strategy'.

The relationship between developing countries and MNCs is a complex one. Traditionally, MNCs were regarded as part of the 'development formula', that comprised the key elements of FDI and technology transfer. The issue of IPRs over biological resources has led to a new, multifaceted relationship between developing countries and the MNCs.

On the one level, developing countries are providers of the raw material (genetic resources and germplasm) to the MNCs. On another level, the developing countries are consumers of the technological and industrial products of these MNCs. However, on the third level, the developing countries are also becoming competitors, in terms of R&D but more importantly, with regard to the developing countries' rights and access to genetic resources. IPR protection displaces the developing countries as competitors, and transforms them into mere suppliers of raw materials. Patenting of biological resources will also deny or restrict developing countries' access to the biological resources over which they exercise sovereignty. The development of technologies such as the Terminator and Traitor technologies would also make farmers dependent on the MNCs for vital inputs such as seeds.

One approach to deal with this new relationship between MNCs and developing countries has been joint ventures between MNCs and developing countries institutions or corporations. The rationale is that developing countries may be able to secure benefits by entering into such arrangements for R&D, and through joint patenting of innovations and inventions. However, it must be pointed that the benefits of such arrangements must be considered on a case-by-case basis, since each arrangement will reflect the respective bargaining powers of the individual parties. In such situations, it is generally the MNCs, which hold the balance bargaining power, in terms of advanced R&D, patented techniques and technologies, as well as, the ability to obtain biological resources from a number of sources.

It must also be noted that the overwhelming proportion of patent claims over biological resources are based on traditional uses, and not new discoveries. Many of these are biopiracy-based claims. Even in the case of joint patenting, patent protection will prevent other parties from making, using and marketing the patented product. In effect, the domestic commercialisation of traditionally-known products will be prohibited, and thus, have an adverse impact on the local production and manufacturing sectors.

In many developing countries, the absence of strict IPR protection has fostered a thriving industry in traditional medicines, pharmaceuticals, cosmetics and other products. Allowing for IPRs over biological resources would, in effect, prohibit the commercialisation of the product by all other parties save the patent holder or holders.

Not allowing for IPRs over biological resources at the domestic level would serve to protect the domestic sectors. However, the possibility of patenting in developed countries, and thus, biopiracy remains. A two-prong strategy has been suggested. International cooperation and initiatives will be required to strengthen the monitoring of biopiracy and to establish international mechanisms to ensure equitable sharing of benefits from the use of biological and genetic resources. Challenging biopiracy-based patent claims will also be an important component of international level measures, as India has demonstrated. However, these measures must be complemented by measures at the national level to ensure the recognition and protection of traditional or community knowledge.

Bibliography/References:

Abbott, F.M. (1998) The Enduring Enigma of TRIPS: A Challenge for the World Economic System (Editorial), Journal of International Economic Law (1998) 497-521

Byström, M., Einarsson, P., Nycander, G.A. (1999) Fair and Equitable: Sharing the benefits from use of genetic resources and traditional knowledge, Swedish Scientific Council on Biological Diversity

Correa, C. (1998) Implementing the TRIPS Agreement: General context and implications for developing countries, Third World Network

Cullet, P. (1999) Revision of the TRIPS Agreement concerning the protection of plant varieties: Lessons from India concerning the development of a sui generis system, The Journal of World Intellectual Property, Geneva

Dasgupta, B. (1999) Patent Lies and Latent Danger: A study of the political economy of patent in India, Economic and Political Weekly, April 17-24, 1999

Dutfield, G. (1999) Intellectual Property Rights, Trade and Biodiversity: The case of seeds and plant varieties, IUCN Project on Convention on Biological Diversity and the International Trade Regime

Gerster, R. (1998) Patents and Development: A NGO view prior to revision of the TRIPS Agreement, Swiss Coalition of Development Organisations, Berne

Kumar, N. (1996) Foreign Direct Investments and Technology Transfers in Development: A Perspective on Recent Literature, United Nations University, Institute for New Technologies

Nadal, A. (1999) World Investment Report flawed on many fronts, South-North Development Monitor (SUNS) # 4517, Geneva

Raghavan, C. (1999) No investment rules reducing flexibility, Ricupero, South-North Development Monitor (SUNS) # 4517, Geneva

Third World Network (1998) Options for Implementing the TRIPS Agreement in Developing Countries: Report of an Expert Group on the TRIPS Agreement and Developing Countries, Third World Network

United Nations Development Programme (UNDP) (1999) Human Development Report 1999

United Nations Conference on Trade and Development (UNCTAD) (1999) Trade and Development Report 1999

Shiva, V. (1999) India: Granting MNCs absolute monopolies, Third World Network Features

World Bank (1999) World Development Report 1999

World Health Organisation (1997) Globalisation and Access to Drugs - Implications of the WTO/TRIPS Agreement, (1997) WHO report

Cecilia Oh is a researcher with Third World Network.

 

 


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