Material Transfer Agreements: Balancing IP rights and sovereign rights

Ruaraidh S. Hamilton

23 May 2011

Rice research to production: genetic resources

2

23 May 2011

Rice research to production: genetic resources

3

You can find diversity in rice for almost any conceivable trait

The history of Agriculture

• 10,000 years of genetic innovation

based on

• 10,000 years of unrestricted exchange of genetic diversity without IP protection

• Result:– Explosion of new biodiversity created by farmers– Natural variants with potential to meet almost any need

• Feeding growing population, adapting to changing climates, soils, pests, diseases, cultural preferences, nutritional needs...

Cultivated rice is more diverse than wild rice for many traits

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Early Morning Flowering

Popular belief: rice flowers open late morning• 4200 diverse rice varieties screened for time of day of flowering (TDF)

• ~ 590 flowered before 9:00 AM• 45 lines confirmed with early peak TDF flowering

Source: Greg Howell

Farmers have modified rice to grow where its wild progenitors cannot grow

Approximate limits of wild and cultivated rice

Agriculture now

• Population growth, Climate change, Decline in natural resources Progress has to be faster

• Enter IP rights– Temporary (20 years) right to protected profit from invention– Protection long enough to recoup costs of invention– Encourages investment in invention even with delayed profit

• Rights to protection of– Sales of improved crop varieties– Use of genes that confer superior crop characteristics

• Result– Commercial companies use varieties in the public domain

as parents to create improved proprietary varieties

A dilemma

• Is it right that big companies use for profit biodiversity created by poor farmers?

• Commercial perspective: YES– No IP rights on inventions older than 20 years– Traditional farmer-breeding does not separate investment in

invention from profit-taking IP protection not appropriate

• Traditional farming perspective: NO– Biodiversity generated by hard-working poor farmers.– Not right for hi-tech companies to take it, use their expertise

to profit more from it, and sell it back to poor farmers

Enter sovereign rights

• Convention on Biological Diversity 1993– Permanent right of nations to an equitable share of the

benefits arising from use of biodiversity under their sovereignty

– Permanent right of indigenous communities to protection of their traditional knowledge

(Contrast temporary IP rights over inventions)

• New restrictions on access to biodiversity– Government-to-government negotiation– Prior Informed Consent for access– Mutually Agreed Terms for allowable use and the equitable

sharing of benefits• Impediment to agricultural progress

The origins of modern varieties of rice

• Varieties are bred by combining progenitors from many sources– Up to 54 progenitors of one variety– From up to 24 different countries

• Each released variety includes, on average– 63% of its genome from foreign sources– Foreign genome derived from 7 varieties coming from

3-4 countries• 20 countries (all developing) have only

foreign germplasm in released varieties

Large-scale international exchange of rice is essential for progress

International origins of rice varieties

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Impact

2011 ACIAR study on IRRI’s work inIndonesia, Philippines, Vietnam

• GDP increased $1.5b/year

• Benefit:cost = 21.7:1

Benefit-sharing through the CGIAR(=IRRI + sister institutes)

• 1990-2005 SDC-funded Lao-IRRI project– Increase in annual Lao GDP attributed to the project is 7 times

larger than total investment over 15 years

• Investment in CGIAR– $1 invested in CGIAR research

average $9 / year benefit to developing countries(www.cgiar.org)

• Conclusion:– Restricting exchange of genetic resources hinders

development of developing countries

A solution

• International Treaty on Plant Genetic Resources for Food and Agriculture– Multilateral system of access and benefit-sharing– For a defined set of crops and relatives

• Important for food security• Countries need to share

– For defined purpose• Breeding, research and training for food and agriculture

– Exchanged under standard conditions• Standard Material Transfer Agreement

• In harmony with the CBD– PIC and MAT negotiated among governments– Equitable sharing of benefits arising from use

Standard Material Transfer Agreement

• Legal contract governing every material transfer under the MultiLateral System (MLS)

• Standard– Efficient, low transaction costs– Individuals authorized to exchange material – No further negotiation by lawyers or governments

• Complicated language but simple intent:– Recipient free to make fair and reasonable use of the

material for conservation and sustainable development in food and agriculture• Including making commercial profits

– Benefits realised by the user to be shared fairly and equitably– Same conditions apply to subsequent recipients

Protecting sovereign rights

• Provider can’t charge fees for access

• Can’t use the material for any purpose other than research, breeding and training for food and agriculture– E.g. Cannot grow it commercially– Cannot use it for chemical, pharmaceutical and/or other non-

food/feed industrial uses

• Can’t claim IP or other rights that “limit the facilitated access to the Material ..., or its genetic parts or components, in the form received ...”

Protecting sovereign rights (2)

• Recipient must make available all non-confidential information resulting from research on the material

• If the Recipient conserves the material, – Must make it available to others

• If the Recipient distributes it to others,– Must do so under a new SMTA

Protecting sovereign rights (3)

• If the Recipient uses the material transferred to develop improved material and shares it with others before commercialization

– Must do so under a new SMTA

– Must specify that the material is “PGRFA under Development”

– Must identify the ancestors previously received with SMTA and used to create the PGRFA under Development

Protecting sovereign rights (4)

• If Recipient uses the material to develop and commercialize a Product, and does not make the Product available to others with SMTA,

– Must pay 0.77% of sales to the Governing Body of the Treaty

– Must submit annual reports to the GB on liability to payment

Leaving space for management of Intellectual Property

• Access to PGRFA under development is at the discretion of its developer– Can be a trade secret

• If developer chooses to share PGRFA under development with someone else:– Can attach to the SMTA additional conditions relating to

product development– Can charge additional fees

• Developer can protect, license and commercialize final product– No one else can commercialize except under licence from

developer

Material put into the MLS

Black box crop improvement process – breeder(s) do anything with material received and with the progeny

they develop with it, provided conditions of SMTA remain attached to the material developed

Final Product commercialised with SMTA specifying sovereign rights and

with developer’s choice of IP protection

Overview of development processunder the Multilateral System

Managing IP: key to partnerships in crop improvement

• Partner = farmer– Farmer free to grow our varieties subject to national

legislation• Partner = developing country national

program– Free to use (but not misuse) our breeding lines and varieties

in their research and breeding• Partner = private company

– Need full clarity on what both sides can and can’t do– Identify IP ownership– Non-disclosure agreements– Use of our material for breeding– Use of our material for gene / trait discovery

Recipient wants it for breeding and research

Recipient wants it for commercial production

or other purposes

Sample transferred

with SMTA

Not allowed

Transferring material received from the MultiLateral System

MLS material

Recipient wants it for breeding and research

Recipient wants it for commercial

production

Sample transferred with SMTA and

additional conditions if still under development No longer

under development.

Licence issued

No longer under

development.Sample transferred

with licence

Transferring own breeding lines

Own pre-commercial breeding line

Use for production

Tests

Decides to use for production

Further breeding & research

Conclusions

• The International Treaty on Plant Genetic Resources for Food and Agriculturewith itsMultilateral System for Access and Benefit-Sharingprovides framework to – Support efficient agricultural progress– Protect sovereign rights over biodiversity – Promote appropriate IPR protection– Avoid unacceptable IPR claims

• Key instrument is theStandard Material Transfer Agreement– Used for every material transfer for breeding, research and

training for food and agriculture

Thank

you