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Double Dutch: Breeder’s exemption in patent law

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Double Dutch: Breeder’s exemption in patent law

The Dutch government has committed itself to including a breeder’s exemption in the Dutch patent law. Political opposition and lobby groups are advocating for a full (UPOV 1978-style) breeder’s exemption.

At present, the Dutch government is investigating the legitimacy of a limited breeder’s exemption (free development but no commercialization) in the light of TRIPs, the EPC, and the EU Biotech Directive.

WTO requirement
Innovative plant breeding is thought to be essential in feeding an expanding global population in the face of a drop in available agricultural land and seasonal drought in the years to come. The development of better yielding plant varieties can take a decade and millions of Euros. Plant breeders therefore seek to protect their intellectual property in order to recover the costs of R&D. Members of the WTO must, as a result of the TRIPs agreement, provide for the protection of plant varieties by patents or by an ‘effective sui generis system’ or both. In the United States, Australia and in European countries such as the Netherlands, plants can simultaneously be protected by patent rights and plant variety rights (PVRs). In China, Brazil, and India, plants can only be protected by a PVR.

Options under UPOV
A total of 70 countries have adopted the PVR system of the International Union for the Protections of New Varieties of Plants (UPOV). Most countries, including the Netherlands, adhere to the Convention’s most recent (1991) version, whereas a minority keep adherence to the 1978 Convention. Both versions of the UPOV convention provide for a so-called breeder’s exemption, which is mandatory under the 1978 Convention, and optional under the 1991 Convention. The 1991 Convention allows members to ban commercial activities with new varieties developed under the breeder’s exemption. This optional narrowing of the exemption was not implemented in the Netherlands’ Seeds and Planting Materials Act 2005, and neither is it part of the EU Community Plant Variety Rights (CPVR) regime under Regulation 2100/94/EC, which is effective in the Netherlands.

‘Leaky’ protection
The Dutch ‘breeder’s exemption’ thus stipulates that everyone can freely use protected varieties to develop new varieties, which, in addition to that, can also be freely marketed. It is common practice that breeders use their competitors’ varieties to introduce its beneficial traits into their own breeding lines. Under a PVR, it is not the genes and individual phenotypic traits of a plant that are protected, but rather the unique combination of genes expressed as a distinct, uniform, and stable phenotype. It is not the purpose of a PVR to prohibit the recombination of the genetic building blocks present in a protected variety, but to encourage the gene assembling skills of the breeder. This ‘leaky’ type of protection ensures free access to genetic material, including material which is PVR protected, to the benefit of the plant breeder and the plant breeding process.

Patents for technology
Although patent law of many jurisdictions has an experimental use exemption (research exemption), patent law does not have a breeder’s exception and thus provides improved protection over PVRs. Also, the patent claim may cover all varieties having the novel and inventive feature. With the extension of patent protection to recombinant DNA methods for producing transgenic plants and their resulting products, patents have assumed increased significance. The broader ambit of patent rights is one particular advantage of this form of IP protection, covering, as it does, plants, seeds, and enabling technologies. The patent system is aimed to stimulate technological progress by providing temporary monopolies in specific fields of technology, including plant breeding. TRIPs requires that patent rights issued for a production process, extend to the product directly obtained by that process. Hence, novel and inventive processes in plant breeding confer protection to plants obtained by the method. In addition, plants themselves can be covered by patent claims. The conditions of novelty and inventive step should provide an effective safeguard against mere juxtapositions of plant features available in the public domain.

German and French breeders
The advent of patents in plant breeding has triggered a public interest for a breeder’s exemption in patent law. The patent acts of Germany, France and Switzerland have a limited breeder’s exemption in that they allow patented biological material to be used at least for breeding purpose. Hence, German, French and Swiss breeders can continue their work, but they require the patent holder’s permission to market new varieties with the patented aspect. This is equivalent to a permissive breeder’s exemption allowed under the 1991 UPOV Convention. If the resulting variety does not contain the patented trait, it can be commercialized without the consent of the patent holder. This approach maintains the genetic background in the public domain while observing at least some of the legitimate rights of the patent holder.

Too easily granted
Certain groups such as the Dutch plant breeders association Plantum-NL and the Dutch public organization Centre for Genetic Resources, the Netherlands (CGN) are critical about the benefit of the patent system in plant breeding. They argue that patents have undesirable effects by allowing for strategic use and monopolistic behavior, that they are associated with high costs of legal assistance, that they create large inequality between parties with different legal capacities, and that they are too easily granted through careless application of the patentability criteria. In general, it is their opinion that patents hinder breeding activities, have a negative impact on innovation, and result in an unwanted concentration of power in the agricultural sector. Hence, they propose to amend patent law and implement an extensive breeder’s exemption.

Food security
Several Dutch political parties have picked up this call for such an extensive breeder’s exemption in patent law. Essentially, the argument is that innovation in plant breeding, such as the development of multiresistance in plants, is cumulative and results from a joint effort of the breeding industry. Apart from the notion that the process would depend on the availability of the widest possible stock of material and ‘locking up’ genetic resources with patents is a bad thing, it would also be undesirable to grant one party the monopoly rights for all varieties that harbor a certain trait. In particular if such a variety contains traits incorporated by other breeders under breeder’s rights. Plant patents would also be in conflict with the fact that plant varieties are unpatentable under European patent law. Lastly, monopolization should be prevented from the perspective of food security, and an extensive breeder’s exemption is therefore warranted. It must be noted, however, that access to breeding material is also restricted by other means than IP protection. For instance, some countries have chosen to exclude certain categories of plant genetic resources from the Multilateral System to be set up under the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA) which regulates the exchange of germplasm of major crop varieties between member states and the sharing of benefits emanating therefrom. Also, some developing countries have been exercising their rights under the Convention on Biological Diversity (CBD), to regulate access to their genetic resources, and in doing so have restricted the free flow of those resources.

Devastating consequences
There are a large number of stakeholders with contrasting views on the subject. The plant science industry federation CropLife International, for instance, holds that there is no evidence that patent protection has a negative effect on the development of new and improved germplasm. Breeders in nations without a breeder’s exemption in their patent laws, such as the United States, are among the most successful in the world.

CropLife believes that Plantum’s view ignores the advancement of plant science and the increasing importance of trait research and is in conflict with TRIPs as it erodes the patent system. Also, it argues that an extensive breeder’s exemption would render any patent granted on plants unenforceable and thus useless against competition, and would consequently have a severe chilling effect on innovation. In the face of the current global economic downturn, investment in innovation is already threatened and a further reduction in plant science innovation could have devastating consequences.

Erosion of the patent system
The Dutch Biotechnology Association NIABA, although in favor of a limited breeder’s exemption in patent law, strongly opposes a full breeder’s exemption, arguing that this would erode the patent system for reason that biological material would be outlawed. If patented biological material can be used without compensating the inventor who has invested heavily to make his invention, this would create an unjust situation that seriously affects thousands of very innovative small and large biotechnology companies in Europe.

Equal protection
Pioneer Hybrid, a U.S.-based producer of hybrid seeds for agriculture, asserts that developing new varieties and improving agricultural productivity require that business opportunities outweigh research risks. Without effective IP protection, technology and breeding practices will tend to follow the path of least resistance in respect of the risks and resources employed. After all, breeders must invest in order to incorporate unadapted and exotic germplasm into their breeding programs. Insufficient return on investment will force breeders to use the well-characterized and well-adapted varieties that are already widely used on farms. This reduces the genetic base and narrows diversity in breeding populations and actually puts food and feed security at risk. New genetic technologies and breeding approaches facilitate the use of genetic resources that would otherwise not be used in breeding, or that were hitherto practically unavailable due to their presence in wild species or in exotic or unadapted varieties. This contributes to the use of a broader genetic base in agriculture. An IP environment that effectively promotes the use of well-adapted varieties, and that discourages the use of more exotic germplasm, tends to stimulate the use of an increasingly smaller cadre of existing, well-adapted varieties. Inventors in the area of plant breeding should not be deterred from taking risks, but should be encouraged to take risks and invest resources, and be rewarded with IP protection that is equal to that available to inventors in other fields of endeavor. While proposing to widen the access and benefit sharing provisions under ITPGRFA, Pioneer Hybrid opts for a new provision in the UPOV Convention that renders the breeder’s exemption for UPOVprotected material inoperative during an initial period.

Legal assessment
In September 2011, the Dutch government expressed the ambition to introduce a limited breeder’s exemption in the Patent Act. This limited exemption would allow the use of the patented material for breeding purpose, but not the commercialization of the new varieties. This exemption adds to the existing research exemption, which would not permit the development of a novel plant variety. A legal assessment of the possibilities for a limited and for an extensive breeder’s exemption in the light of the Biotech Directive, the European Patent Convention, and the TRIPs agreement is now being performed by the government. The results should be available soon. The report of an independent chairman on a public debate about the desirability of the breeder’s exemption is expected to be published in the course of 2012. The government is likely to await the view of the European Food Safety Authority (EFSA) with respect to food security, and appears to prefer an internationally supported initiative in compliance with TRIPs, the EPC and the EU Biotech Directive.


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