By: Mercedes Campi,National Scientific and Technical Research Council (CONICET) and University of Buenos Aires, Faculty of Economics
Instituto Interdisciplinario de Economía Política de Buenos Aires, IIEP-Baires
firstname.lastname@example.org – email@example.com
Alessandro Nuvolari, Scuola Superiore Sant’Anna, Institute of Economics
For Citation: SITE4Society Brief No.13-2018
Related to Sustainable Development Goals (SDGs) and National Programmes of country concerned as: #SDG2 (Zero hunger)
Country Focus: Developed and developing countries
SITE Focus: Innovation, Environment, Governance
Sub-disciplines of science/social science/humanities: Economics of Innovation, Law
Based on: Campi, M. and A. Nuvolari (2015), “Intellectual property protection in plant varieties. A worldwide index (1961-2011)”, Research Policy, Vol. 44 (4), 951-964. Data is available at: https://mercedescampi.wordpress.com/data/
The Trade Related Aspects of Intellectual Property Rights (TRIPS) in 1994 made patentability of micro-organisms, and non-biological and microbiological processes for the production of plant varieties, compulsory for signatory countries of the World Trade Organization (WTO). TRIPS also requires all WTO members to provide an “effective” intellectual property (IP) protection system for new plant varieties either by patents or a sui generis system or by any combination thereof. The leading alternative to patents is an IP system conforming to the International Convention for the Protection of New Varieties of Plants (UPOV).
The major difference between patents and UPOV can be understood as follows. Patents require innovations, including new plant varieties, to be novel, non-obvious or involving an inventive step, and useful or susceptible of industrial application. However, under UPOV, IP protection can simply be granted to plant varieties that are new distinct, uniform, and stable. This is because UPOV (and, in general, sui generis systems) takes the view that the intrinsic features of improved plant varieties makes them unsuitable for patentability. Unlike manufactured product innovations, most improved plant varieties can be replicated by accessing seeds, cuts, tubers, or other parts. Hence, as innovations, they are reproducible without re-engineering. Further, new plant varieties are not developed only by economic actors or organizations, but are obtained through the accumulation of genetic improvement carried out over centuries by farmers – by selecting the best ones –and further improved by breeders in the public and private sector. Thus, innovation in plant varieties has an unavoidable community and cumulative nature not really suited for the attribution of monopoly rights to a single entity.
Genetic diversity of maize in Peru
Furthermore, under UPOV (and any sui generis system), in order to reward innovative activity, while allowing access to genetic material of improved varieties, there are two important types of exemptions. Farmers’ exemption grants farmers the privilege or exception to save and reuse purchased seeds. Similarly, breeders’ exemption permits breeders the possibility of using a protected plant variety to develop breeding activities.
Members of the UPOV before and after TRIPS (2017)
Presently, a few countries (e.g. Australia, Japan, Korea, and the United States) have chosen to allow for full patentability of biological material and even of plant varieties. However, the majority of European and developing countries have opted for UPOV. Initially designed by European countries in 1961, UPOV had a limited number of members until the ratification of the TRIPS, when it was adopted much more widely as it was a more general framework to provide plant breeders exclusive rights on new plant varieties. Among those with UPOV, some countries allow for farmers’ exemption, while others don’t. Similarly some apply breeder’s exemption, while others don’t. Finally, a few countries like India have rejected both patents and UPOV, designing their own sui generis system.
Such diversity in plant IP protection systems adopted in different parts of the world leads us to question the rationale of the different systems as they affect a wide range of interests of stakeholders ranging from heterogeneous farmers, plant breeders, multinational companies, public institutions of research and development, and the whole society as a consumer of agricultural products. Indeed, the design of IPRs should actively involve those interests and the demands of the TRIPS agreement should be complied also taking into account the flexibilities it provides. Quantitative indicators of IPRs for plant varieties would allow an understanding of the effect of IPRs on agriculture – but there is none available at the moment. Hence, our central research questions.
- Can we measure the strength of intellectual property right systems vis-à-vis new plant varieties and its evolution over time?
- Which are the possible impacts of strengthening of intellectual property rights systems vis-à-vis new plant varieties?
Motivation for Research Questions:
One might ask, why should we care to measure the strength of IPRs on new plant varieties or seeds? The answer is quite obvious. The implications of stronger or weaker IPRs are highly debatable on economic, moral, and ethical grounds. Stronger IPRs (especially patenting) restrict access to use protected plant varieties, which can stifle future developments of better seeds, food security, and the capabilities of countries to provide adequate food crops for their citizens. On the other hand, weaker IPRs may not provide sufficient incentives for innovation. But given the trade-off between providing incentives and allowing access to new developments, breeders’ exemptions facilitate innovation creation by plant breeders by allowing access to protected material. On another plane, farmers’ exemptions give recognition to the incremental contribution of farmers in the development of new crops.
Moreover, the importance of our research queries is reiterated by a new reality. The strengthening and harmonization of IPRs systems on a worldwide scale is raising substantive concerns. IPRs systems in agriculture have dramatically increased concentration in the seed market. In 2011, just ten companies held almost 80% of the world market for seeds. Notably, this trend towards increasing concentration is also fueled by mergers and acquisitions, such as the recent acquisition of Monsanto by Bayer, which will result in just three companies controlling nearly 60% of the world’s seeds market, nearly 70% of the chemicals and pesticides needed to grow food, and nearly all of the world’s genetically modified crop genetic traits. In addition, this concentration at the firm level also implies concentration in a few commercial plant varieties affecting biodiversity and increase vulnerability of the system.
Data and Methodology Used:
We have studied the historical evolution of plant varieties IP-related legislation in countries, using data from WIPO Intellectual Property Laws and Treaties Database, UPOV Lex, FAO Lex, ECOLex, and The World Law Guide. In addition, when data were not available, we used institutional web pages at country level and consulted with experts of different countries.
Indicator developed to measure strength of IPRs on new plant varieties:
Our index is composed of five components: (i) ratification of UPOV conventions, (ii) farmers’ exception, (iii) breeders’ exception, (iv) protection length, and (v) patent scope, which considers whether patentability is allowed in five domains related with agriculture – food, microorganisms, pharmaceutical products, plant and animals, and plant varieties.
For any country in a given year, the index can take a score from 0 to 5 with higher scores indicating stronger intensity of IP protection. These are the elements that tend to vary more from country to country and over time within the UPOV/TRIPS framework. This index was applied on the compiled data to measure the relative strength of IP protection on agriculture for 69 developed and developing countries for the period 1961-2011. We are currently extending the index to include IPRs up to 2017 and to around 90 countries.
Main findings and discussion:
With TRIPS, worldwide, the strength of IPRs systems on new plant varieties is increasing and converging (see Figure below).
IP protection index for countries of different income level
High-income countries already had stronger systems of IP protection relative to low- and middle-income countries, but the gap is narrowing. As a consequence, dispersion between and within groups of countries has decreased, which obviously reflects a substantial increase in the harmonization of IPRs systems.
2. However, the impact of stronger IPRs on new plant varieties cannot be generalized and seems to be weak in the case of developing countries. For example, in different empirical studies, we observe that:
- Strengthening IPRs increases agricultural value added in developed countries but has no significant effect in developing countries. Likewise, in the case of yields of cereals, stronger IPRs have a positive effect for high- and low-income countries, but no effect for middle-income countries.
- Evidence of nonlinearities seems to confirm a threshold effect of IPRs – i.e. increasing IPRs has a positive effect on agricultural yields until a certain level after which it becomes negative. This threshold also varies for countries of different income level.
- Similarly, stronger IPRs have a negative effect on agricultural trade volumes and developing countries are more negatively affected.
Conversely, strengthening IPRs increases foreign direct investment in the form of mergers and acquisition in the agri-food sector, particularly in developing countries.
Large-scale export-oriented production in Argentina
These heterogeneous effects are not surprising if we consider that countries differ in terms of capabilities, production systems, market structure, institutions, and, more generally, development levels. Likewise, agricultural systems are very diverse around the world in terms of organization, technology adoption, farmers’ size and characteristics, just to name a few dimensions. It is not tough to imagine the differences between a large-scale export-oriented agriculture such as the one existing in some regions in Argentina, the United States, and Brazil, and the agricultural production mainly developed by small-scale farmers for self-consumption or for domestic markets in many regions of Latin American, Asian, and African countries. In this context, the idea of a one-size-fits-all system as the one promoted by the UPOV and the TRIPS is unlikely to be adequate.
Small-scale farmers offering their products at local markets in Colombia
- At least for developing countries, the recent drive towards the strengthening and harmonization of IPRs systems in agriculture may actually represent a suboptimal configuration and, therefore, a less sanguine and more cautious approach towards IPRs reforms ought to be in order. (See our findings for the case of agricultural value added, agricultural productivity, agricultural trade, and mergers and acquisitions in the agri-food sector).
- This implies that countries should consider the specific characteristics of their agricultural systems and design and adopt IPRs systems that are consistent with these features. An agricultural system characterized by large-scale export-oriented farmers who usually buy seeds from breeders will most probably need a different IP protection system than one of mainly small farmers that are used to improve and exchange their own seeds. Not considering these differences can lead to serious inefficiencies and social conflicts.
Note: All photographs taken by Mercedes Campi.