Monday, December 16, 2013

Draft Trans-Pacific Partnership Treaty – Nagoya Protocol and Genetic Resources

The Nagoya Protocol to the Convention on Biological Diversity has been in the news lately as it is currently on its way to being enacted into European Union legislation (see IPKat posts here and here – and yes, I am the “Norman” who commented on those posts). So I’ve decided to post some observations on the leaked draft TPP treaty proposed provisions dealing with genetic resources, which I drafted in my spate of blogging on the TPP, but never got around to posting at the time.

Understanding these provisions requires some background on the Nagoya Protocol to the Convention on Biological Diversity. The Nagoya Protocol mandates a system in which the benefits of exploitation of genetic resources are shared with the party providing that resource. The basic idea is nothing novel. If company A wants access to a novel organism or compound X owned by company B, A would normally enter into a material transfer agreement with B, which might well require A to pay B royalties on any patented invention derived from X. The Nagoya Protocol contemplates that if company A wants to, for example, go bioprospecting in the Amazon rain forest, it would get prior consent from a competent national authority (Art 13) and enter into an access and benefit sharing (ABS) agreement to share any benefits on mutually agreed terms (Art 5). Traditional knowledge is treated in a similar way. In other words, the effect is that countries would be deemed to own the genetic resources within their territory, and company A seeking to exploit those would contract with the national authority over the terms of access in the same way that it would contract with company B. A great deal of the Nagoya Protocol describes the structure of this contracting process.

The difference between access to genetic resources under Nagoya and under an MTA with company B, is that under Nagoya the obligation to share the benefits is not contingent on signing the ABS agreement. Whenever a benefit is derived from genetic resources, there is an obligation to share those benefits with the party that was the origin of the resources: “benefits arising from the utilization of genetic resources as well as subsequent applications and commercialization shall be shared in a fair and equitable way with the Party providing such resources” (Art 5). For convenience, I will refer to this as the “ABS right.” While it is understandable that signatories would not want the ABS right to be avoided simply by getting access without having obtained prior consent, the difficulty arises because the scope of the ABS right is not clearly defined. If it is interpreted broadly, inadvertent utilization of genetic resources may be possible, or even likely. The problem is described by IPIC’s Submission to Environment Canada on Canada’s Possible Signature of the Nagoya Protocol (Oct 2011) (available here):

For example, suppose an anthropologist visits an indigenous tribe somewhere and is told that a certain plant, e.g. a particular species of yew, is used to treat a particular disease. The anthropologist reports this in an anthropology paper. Indirectly, this information (derived from the genetic resource) becomes known to a Canadian company. Because of the nature of transmission of knowledge, the Canadian company may not be aware of the anthropology paper itself and consequently may not be aware that the ultimate source was traditional knowledge. The Canadian company investigates a different species of yew that is native to Canada, and isolates a therapeutically important compound and patents and commercializes a derivative of that compound. After the world-wide success of the compound, the anthropologist becomes aware of the drug, and that it is based on yew, and makes the connection to her paper. It is subsequently established that the ultimate source of the biotech firm’s information that yew might be useful in the treatment of the disease is indeed the indigenous tribe. Could the tribe then have a claim to share in the profits, the terms being imposed ex post?

(Another important issue is hinted at by this example, namely that the remedy for failure to comply is not clear. The requirement of Art 5 of Nagoya is only that the benefit be shared “in a fair and equitable way.” The IPIC Submission discusses this problem in more details, which I will not go into here, as it is not germane to the TPP provision.)

An obvious question arising out of Nagoya is how it is to be enforced. One proposal that has gained a great deal of attention at WIPO and in various UN deliberations is to use the patent system to enforce the Nagoya benefit sharing regime by requiring disclosure of the origin of genetic material in any patent application: see eg this WIPO document. Switzerland and Norway have already implemented such provisions in their Patent Acts.

This is all by way of background, six smaller countries (PE/NZ/BN/MY/MX/VN) have proposed the following provision:

Article QQ.E.23: Proposed joint text for the Intellectual Property Chapter on Traditional Knowledge, Traditional Cultural Expressions and Genetic Resources

3. Where national legislation establishes such requirements, the Parties recognise that users of genetic resources or traditional knowledge associated with genetic resources shall:
(a) obtain prior informed consent to access genetic resources and their derivatives;
(b) access traditional knowledge associated with genetic resources and their derivatives with the prior informed consent or approval and involvement of the indigenous or local community holding such knowledge; and
(c) equitably share the benefits arising from the use of genetic resources and its derivatives and traditional knowledge associated with genetic resources and their derivatives on mutually agreed terms.

If I understand the notation correctly, this proposal is opposed by three countries (AU/SG/CL). Foonote 122 states that “CA/US position is that QQ.E.23 provisions should be addressed in the Environment Chapter. The US/JP opposes the inclusion of this proposal in this Chapter.” Since the Environment Chapter was not leaked, we don’t know the position Canada, the US or Japan is on these provisions. The suggestion that this is an environmental issue, rather than an IP issue, is noteworthy in itself. Depending on how it is implemented, the Nagoya Protocol has the potential to have a major impact on innovation and IP, and I have long been puzzled by the lack of attention paid to it by the IP community. Perhaps it is because it has been thought of primarily as an environmental issue (and recall, Nagoya is a protocol to the Convention on Biological Diversity). In any event, without quibbling about what is primary and what is secondary, this is certainly an important IP issue, which deserves attention from the IP community.

The proposed provision largely repeats the Nagoya obligations, and given that it would apply only where the requirements have already been established by national legislation, it has no independent force. With that said, the underlined phrase “and their derivatives,” goes beyond what is express in Nagoya, though it is arguably implicit. This phrase is opposed by Canada (along with NZ), wherever it appears. It seems to me that what we are seeing here is an attempt to clarify the uncertain scope of the Nagoya ABS right. The Canadian opposition to “and their derivatives” looks like an attempt to mitigate the problem identified in the IPIC submission, quoted above. Note that while NZ is one of the countries supporting the proposal, it opposes the extension of the right to derivatives.

Five countries (PE/NZ/MX/CL/VN) also propose the following provision:
4. The parties recognize that:
(a) information about genetic resources [and their derivatives] and traditional knowledge [ and their derivatives] can be useful in assessing patent applications against existing eligibility criteria; and
(b) the intellectual property system is one possible means to protect the traditional knowledge [and their derivatives] and traditional cultural expressions of indigenous and local communities.

It may be that Art E.23.4(a) in particular is intended to set up the argument that when a patent application claims genetic resources (or their derivatives), disclosure of the origin of those resources is helpful to the standard examination process. This would provide an independent argument for requiring disclosure of origins in any patent application. Alternatively, it may be that the provision is intended to ensure that genetic resources are known in the prior art, and so unpatentable under standard criteria, are not patented simply because of a inadequate prior art databases. This point is made expressly in the subsequent provision, proposed by PE/NZ/MX/CL:

5. The Parties affirm that they will promote quality patent examination of applications concerning genetic resources and traditional knowledge [and their derivatives] to ensure that the eligibility criteria for patentability are satisfied. This may include:
(a) in determining prior art, ensuring that readily available documented information related to genetic resources [and their derivatives] or traditional knowledge [and their derivatives] is taken into account;
(b) [etc]

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