37037 NOTES AGRICULTURAL & RURAL DEVELOPMENT Intellectual Property Rights for Plant Breeding and Rural Development: Challenges for Agricultural Policymakers ISSUE 12 JUNE 2006 BY: ROB TRIPP, NIELS LOUWAARS, AND DEREK EATON Developing countries are being urged to strengthen This brief is based on a study on the impact of IPRs in intellectual property rights (IPRs) to foster innovation the breeding industry in developing countries executed and expand trade. The field of agriculture is no in 2004 for the World Bank (Louwaars et al., 2005). exception, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) requires all World Trade Organization (WTO) members to pro- CHOICES FOR PLANT vide either patent or sui generis protection for plant VARIETY PROTECTION varieties. Only a few industrialized countries use IPRs for plant breeding are meant to establish incen- patent systems for plant varieties, and developing tives for investment in research by providing the countries will almost certainly look towards sui gener- breeder a certain degree of control over the commer- is options for plant variety protection (PVP) to meet cialization of a new variety for a specified period. PVP their TRIPS obligations. allows the assignment of exclusive rights for seed production and marketing to the breeder, excluding Although many developing countries have drafted competitors from the seed market. Some IPR systems legislation to address PVP requirements, relatively few (particularly patents) also establish restrictions on the have begun to implement PVP, and little guidance is use of the variety in further breeding efforts. The available on appropriate strategies. This note looks at other source of "competition" is farmers, who tradi- some of the key decisions facing agricultural policy- tionally save seed and exchange or sell it among their makers in establishing a PVP regime, examines the neighbors. The degree to which PVP systems in devel- implementation of PVP, assesses some of the impacts oping countries are able to limit such practices and limitations of PVP regimes, and identifies policy depends on economic, administrative, and political priorities that complement the establishment of IPRs factors. A general prohibition on saving seed of pro- for plant breeding. tected varieties is an unlikely strategy in most devel- oping countries. The most widely used systems for PVP are under the auspices of the International Union for the Protection of New Varieties of Plants (UPOV). Most Organization for Economic Co-operation and Development (OECD) countries and some developing countries are mem- bers of one of the UPOV conventions, although that is not the only sui generis option under the TRIPS Agreement. Countries wishing to join UPOV must present legislation compatible with the 1991 conven- tion. UPOV membership offers a number of advan- tages, including a source of technical backstopping for variety testing and the assurance of a PVP system recognized and respected by foreign investors. On the other hand, the 1991 convention imposes potential restrictions on farmer seed management practices Table 1. Comparison of Major IP Systems for Plant Varieties Criteria UPOV 1978 UPOV 1991 Utility patents (United States) Requirements Novelty (in trade) Novelty (in trade) Novelty (in invention) Distinctness Distinctness Utility Uniformity Uniformity Non-obviousness Stability Stability Industrial application Seed saving Allowed for private and For use on own holding Not allowed without non-commercial use only (but for listed consent of patent holder crops only) Seed exchange Allowed when Not allowed without Not allowed without noncommercial consent of right holder consent of patent holder Breeder's exemption Use in breeding allowed Use in breeding allowed Not allowed without (but sharing rights in consent of patent holder case of essentially derived varieties (EDVs)) Source: Adapted from Helfer (2002), Krattiger (2004), and van Wijk et al. (2003). that may be politically unacceptable, a threat to seed In addition, it is important to recognize that IPRs are not security, and impossible to enforce. Only in specific cases the only incentive for plant breeding. India, for instance, where seed saving might threaten a market (e.g., export has had a thriving and diverse commercial seed sector for markets for flowers) or seed exchange would reduce more than two decades but has only recently imple- incentives for plant breeding (e.g., informal seed sale by mented PVP legislation. Much of its success has been larger farmers or sales by grain merchants in competi- built on hybrid seed, which offers biological protection tion with the commercial seed sector) would restrictions because its inbreds can be kept from competitors (as be justified in most developing countries. trade secrets) and the declining yields of saved seed encourage farmers to return to the market. Even for non- An IPR system for plant breeding must chart a careful hybrid varieties, companies can sell seed to farmers who course between providing sufficient incentives for recognize the quality and convenience of commercial investment in research and seed production and pro- seed, on the basis of reputation and branding as is the tecting seed security for resource-poor farmers. There is case for vegetable seeds in various countries. no need to establish an exceptionally rigid or compre- Conventional seed laws that determine what varieties hensive IPR regime in the early stages of seed system may be produced and that establish regulations for seed development. Legislation should be designed with con- certification and quality control can also limit the pro- siderable flexibility so that IPRs can be adjusted to match duction and sale of seed by competitors and can perform the evolution of the seed system. Commercial seed sys- some of the functions expected of PVP. tems usually begin with products that are difficult for farmers to save (hybrids, vegetables) and that generally require little IP protection. As the seed industry matures IMPLEMENTATION ISSUES and farmers recognize the value of commercial seed, companies will offer a wider range of products, some of In addition to establishing a framework for PVP legislation, which may require attention to IPRs. Seed industry there are administrative challenges for implementing PVP, development usually parallels the growth of agribusi- including decisions on where to house the new authority, ness, and markets for particular commodities may how to establish eligibility of a new variety for protection, demand specific attention to IPRs. which crops to protect first, how to recruit personnel with 2 requisite technical and legal capacities, and how the sion involves the protection afforded to extant (usually authority can pursue cost recovery while ensuring that public) varieties. Given that the rationale for IPRs is to pro- small players can afford to apply for protection. vide incentives for future breeding, rather than to reward past achievement, it seems reasonable to limit the protec- The PVP authority is usually established in the Ministry of tion periods for extant varieties. Agriculture (although the patent office is also an option). Administering a PVP system requires staff with legal and botanical knowledge and a good understanding of plant breeding and the seed industry; in many countries such expertise may be in short supply. PVP involves the careful testing of applicant varieties to ensure that they are distinct, uniform, stable (DUS), and new. In most implementation models the examination of applicant varieties requires test- ing stations to be established as efficiently as possible and to offer independent, transparent assessment. National research institutes may have the best human resources and facilities for this task, but as their plant breeders will want to apply for protection, it often makes sense to use the facilities of the seed certification agency. The expense of DUS testing may be considerable. Careful thought is required for establishing a fee structure for PVP. Cost recovery is certainly a worthwhile goal, but it must be balanced against the dangers of excluding appli- cants for crops with relatively small seed markets or vari- eties from companies or institutes that may not be able to afford large fees. Many PVP systems establish a uni- form fee schedule, including an application and testing fee, for all crops and then yearly, sometimes escalating, charges for maintaining protection. More differentiated EXTENSION AND fee structures might be based on the actual cost of eval- ENFORCEMENT uation (which may vary significantly between crops), the value of the protection (higher fees for crops with larger A PVP system will not meet its goals unless it is supported commercial seed markets), or the type of applicant (with by the full range of stakeholders. Breeders, seed produc- discounts for resource-poor farmers). Subsidies could be ers, traders, and farmers need to understand the objectives considered at least initially in order for PVP to promote of the system in order to comply with it. The development plant breeding. Regional collaboration (as in the of a PVP system should thus include an extensive informa- European Union) and the use of foreign DUS reports can tion campaign involving all stakeholders, including the significantly reduce costs. legal profession. One of the major challenges for a PVP sys- tem is providing effective enforcement. Establishing elabo- Not all crops need to be covered by PVP initially, and rate restrictions on seed use is counterproductive if there is choices should be made about which crop-breeding no enforcement capacity. Private companies and public efforts would benefit most from IPRs. With respect to institutes that lobby for the establishment of PVP must be public plant-breeding efforts, policymakers must distin- made aware that most enforcement responsibilities will fall guish between situations in which PVP will help stimulate on their shoulders. Likewise, identifying offenders is of lit- the deployment of crop varieties developed by public insti- tle use if the court system is unable to understand or inter- tutes and those in which PVP may turn national research pret PVP legislation. Developing judicial experience in PVP institutes away from their public mandate. A further deci- may take some time. 3 IMPACTS AND LIMITATIONS Finally, farmers' demand for seed depends critically on a OF IPR REGIMES FOR dynamic domestic agricultural economy. Policies should PLANT BREEDING promote efficient agricultural output markets, seek opportunities to extend the value chain by promoting There is limited experience from developing countries on processing industries and related activities, ensure that the impact of PVP, but a few cases can be cited. In coun- farmers have access to good information and transporta- tries where a domestic private seed industry develops new tion links, and support agricultural research to provide a varieties of nonhybrid crops (such as rice in Colombia or continuing stream of innovations. wheat in Argentina), PVP ensures that varieties developed by small companies will not be reproduced by competitors. In countries such as India and China, where it is difficult to OPPORTUNITIES FOR ensure the physical security of inbred lines (because seed DEVELOPMENT AGENCIES production plots of competing enterprises are often close to each other), PVP is also welcomed for protecting hybrid Development agencies may assist policymakers in devel- varieties. Where the farming sector comprises mostly larg- oping a protection system that is tailored to the needs er farmers, PVP can also help control large-scale informal and capacities of the country's seed systems, which may seed sale of protected varieties and perhaps impose some vary considerably among export crops, domestic com- restrictions on seed saving. A well-run PVP system can also mercial commodities, and subsistence crops. Agencies provide public research institutes with tools for guiding the must realize that although the design of a regulatory deployment of their varieties, attract foreign companies to framework is important, it is only one element in sup- share more of their germplasm with local business part- porting commercial breeding and seed supply. Finally, ners, and provide additional security for contracting spe- countries need to develop the administrative, technical, cialty export crops. and especially human resources to implement the sys- tems with active involvement of all stakeholders. However, there is little evidence that simply establishing a PVP regime is sufficient to stimulate major investments in plant breeding in developing countries. Decisions about REFERENCES PVP should be taken in conjunction with broader policy Helfer, L.R. 2002. "Intellectual Property Rights in Plant Varieties: support to ensure a diverse and competitive private seed An Overview with Options for National Governments." Food and Agriculture Organization (FAO) Legal Papers #31, FAO, sector and a responsive public agricultural research system. Rome, Italy. They depend on a well-functioning legal system that allows enforceable contracts with seed growers and mer- Krattiger, A. 2004. "Editor's Introduction: PVP and Agricultural chants, the promotion of responsible business practices, Productivity." IP Strategy Today 9: ii-vi. and the encouragement of professional associations in Louwaars, N.P., R. Tripp, D. Eaton, V. Henson-Apollonio, R. Hu, M. agribusiness. The effective establishment and implementa- Mendoza, F. Muhhuku, S. Pal, and J. Wekundah. 2005. "Impacts tion of conventional seed regulations is also important. It of Strengthened Intellectual Property Rights Regimes on the Plant Breeding Industry in Developing Countries: A Synthesis of Five includes a transparent and efficient mechanism for provid- Case Studies." Wageningen, Centre for Genetic Resources, The ing release and approval for domestic and foreign varieties; Netherlands. a system of seed quality control that places increasing van Wijk, A.J.P., N.P. Louwaars, and D.J.F. Eaton. 2004. responsibility on seed producers themselves; and con- "Framework for the Introduction of Plant Variety Protection sumer education and protection so that farmers play a in Developing Countries." Wageningen, Centre for Genetic more prominent role in regulating the seed industry. Resources, The Netherlands. Derek Eaton is an Economist at the Agricultural Economics Research Institute at Wageningen University and Research Centre, Wageningen, The Netherlands. Niels Louwaars is a Senior Scientist at the Centre for Genetic Resources at Wageningen University and Research Centre, Wageningen, The Netherlands. Rob Tripp is a Research Fellow for the Rural Policy and Governance Group at the Overseas Development Institute, London, United Kingdom. This note was prepared with financial contributions by the World Bank and the Netherlands Ministry of Agriculture, Nature and Food Quality. You can download the text of this note, at www.worldbank.org/rural or email ard@worldbank.org. THEWORLDBANK 1818 H Street.NW Washington, DC 20433 www.worldbank.org/rural