A few weeks ago we were closely following the IPKat debate on the Nagoya Protocol on Access & Benefit Sharing with a sense of déjà vu.
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| The IPKat's Indian friend |
It has been more than a decade since India enacted the Biological Diversity Act (BD Act), a law which regulates access to the country’s biological resources as also the subsequent commercialization of the results of such biological research.
As a law firm which has advised several innovator companies on navigating the bureaucratic nightmare that has been put in place by the BD Act, we can identify with the concerns raised by Darren in his excellent posts on the Nagoya Protocol.
The Biological Diversity Act, 2002
The BD Act, a copy of which can be accessed on this link, was enacted in 2002, exactly a decade after the Rio summit where the Convention on Biological Diversity (CBD) was finalized in 1992.
In a nutshell, the legislation ‘nationalizes’ all biological resources and associated knowledge. This means that every transaction starting with access to Indian biological resources to the task of protecting the intellectual property rights arising from the research involves multi-level approvals from the bureaucrats at the National Biological Authority (NBA) or the State Biodiversity Authorities, created under the BD Act.
To be more precise, foreign companies or Indian companies with foreign share-holding can ‘obtain’ biological resources from India or conduct bio-survey or commercialize the results of any research only after the prior permission of the NBA. Indian companies on the other hand are only required to ‘intimate’ the State SBAs that bio-resources are going to be used for research. When it comes to the issue of applying for IP protection of the resulting research, both Indians and foreigners will have to approach the NBA for permission to apply for patents in India or abroad.
While granting any of the above permissions, including the filing of patent applications, the NBA can fix conditions, including mandatory equitable benefit-sharing/royalty sharing of revenues earned from the commercialization of research conducted on biological resources from India.
Valuation of intellectual property is difficult even in the best of times but to vest in bureaucrats of the Government of India the power to fix royalties/ ’benefit-sharing’ for IP at the time of filing a patent application, is an invitation for trouble.
In the 12 years since India enacted the BD Act, the NBA has failed to notify any guidelines for the calculation of such royalties. Even presuming that the NBA did get down to the task of notifying such guidelines, it would be hard-pressed to provide a justification because the entire theoretical foundation of the CBD or BD Act is extremely vague.
To illustrate this problem with an example, let’s have a look at the famous ‘Kani’ case, which is often pitched as the perfect example of how traditional knowledge associated with biological resources can be monetized to the benefit of the owners of such TK.
The Kani Tribe & the “arogyapacha” plant
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| Trichopus zeylanicus |
The Kani tribe which is located in Kerala, South India had knowledge of a particular berry, known locally as “arogyapacha” with the scientific name “trichopus zeylanicus ssp. Travancoricus”. The Kani tribe had knowledge of certain unique anti-fatigue/anti-stress properties of these berries. Some Indian scientists had learnt of these berries while members of the Kani tribe were leading them on an expedition. The scientists convinced the Kani tribe to share with them the plant which was the source of the berries. After 8 years of research on the plant which was the source of the berries, the scientists managed to isolate twelve active chemical compounds from the plant with far ranging properties which included ‘anti-stress and immune-stimulating properties’ and ‘also boosts stamina, relieves fatigue, helps control tumors and activates the body’s natural defenses and cellular immune system’. The Indian scientists used these extracts to create a herbalised formulation which could be marketed. Then the scientists filed a patent application for the same and entered into an agreement with an Indian company for marketing the final product. The scientists also assisted the Kani tribe in incorporating a trust which would get a share of the revenues earned through the sale of the formulation. (An excellent summary of the entire case can be found on the WIPO website over here)
The example given above, took place in the nineties long before the BD Act was enacted in India. Let’s presume for the sake of this post that this example was taking place in context of the BD Act. How would the NBA decide the scope of equitable benefit sharing?
What is ‘equitable benefit sharing’?
The main challenge lies in determining ‘equitable benefit sharing’. As per Section 21, this could include either a revenue sharing agreement or joint ownership of intellectual property rights or ‘fixing the location of production, research and development in such areas which will facilitate better living standards to the benefit claimers’.
The issue over here is simple: How is a government bureaucrat going to decide ‘equitable benefit sharing’ on mutually beneficial terms, where a collective of people such as a tribe is involved only in the identification of the berries, while the scientists were the ones who spent eight years researching the berries to isolate the active compounds and where the marketing company has assumed risk while getting the product to the market?
A fair negotiation would presume that either side had the right to walk away from the deal.
The BD Act however does not give the tribe the right to walk out of a deal. The relevant provision, Section 21, requires the NBA to ensure that equitable sharing of benefits arising out of the use of accessed biological resources is on ‘mutually agreed terms’. Despite the use of the phrase ‘mutually agreed’, it is the NBA which has the ultimate power to decide the terms. In pertinent part, Section 21(2) gives the NBA the following power ‘payment of monetary compensation and non monetary benefits to the benefit claimers as the National Biodiversity Authority may deem fit.’
Does it really make sense for the state and its bureaucrats have the right to decide equitable benefit sharing in such circumstances?
To complicate matters further, let’s presume the worst nightmare involving collective ownership of property rights: what if there is a discord amongst the members of tribe on whether knowledge should be shared? Should all members of the tribe have an equal say in a decision? Should such rights be held in perpetuity? How are the royalties to be shared within the tribe?
The above questions merely scrape the surface of politically sensitive issues regarding the moral and philosophical basis of collective ownership claims by holders of traditional knowledge.
Has India benefited from the enactment of the Biological Diversity Act, 2002?
In this backdrop, the most important issue is whether India has benefited from the enactment of the BD Act, 2002 over the last 12 years. This is an empirical issue and although we haven’t studied the data in detail, we would be surprised if an empirical study demonstrated any positive results for any of the stakeholders. There have been complaints from some quarters that money collected under the BD Act by the NBA is not being re-invested in the maintenance of biodiversity.
India’s accession to the CBD and the subsequent enactment of the BD Act has been based on a post-colonial narrative where it was presumed that the West was exploiting India’s rich biodiversity and that India was only losing through a regime of free trade in biological resources. This assumption is possibly flawed since India has also gained through free trade of biological resources. There is perhaps no better example than the Green Revolution of the sixties and seventies which made India self-sufficient in basic food crops. This was possible due to Norman Borlaug’s high yielding wheat varieties from Mexico. There are several other examples of crops like potato, peas and tomato entering India from other countries and becoming a staple in the Indian diet.
Conclusion
Our primary concern with the massive bureaucratic apparatus created by India to execute its obligations under the CBD is the fact that it is creating a massive opportunity for rent-seeking and delaying and bureaucratizing scientific collaboration and research projects within and outside India.
The fact that the Indian legislation has a penal provision greatly adds to the climate of fear surrounding research involving biological resources in India. It doesn't help that these provisions have actually been invoked in one case, where Indian academics of a government university are facing the possibility of jail time for an alleged violation of the BD Act while working on a government funded project. More recently there has been news of Hershey’s top brass being prosecuted for allegedly violating the BD Act.
We agree that biodiversity must be protected but clearly India is on the wrong path.
Europe would do well to learn lessons from India’s problems.
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