Journal of Intellectual Property RightsVol 7 January 2002 pp 33-45

Adoption and Implementation of IntellectualProperty Rights: Experiences of Selected

CountriestSudha Mysore

Indian Institute of Horticultural Research, Bangalore 560089

(Received 6 September 2001)

The new global trade order, initiated at the Uruguay round of global trade negotiationsculminated in the establishment of the World Trade Organization (WfO). One of theimportant prescriptions of the new trade rules in the form ofTrade- Related IntellectualProperty Rights (TRIPS) includes the compulsive modification of the existing Intel-lectual property protection legislation with regard to agriculture especially by thedeveloping countries. The new set of rules prescribed by WTO under TRIPS wereopined to open new dimensions in the type and extent of research exchange betweenthe nations and also aim at redefining the role of public and private research organi-zations. One of the important reasons for extending intellectual property (IP) protec-tion for plants and other living organisms, it is said, is to make agriculture acommercial venture and for attracting private investment into agricultural research.The popular rationale in support of intellectual property rights (IPR) for plants hasoften said to be one of stimulating effect. The present study reviews the economicimpact of the adoption of IP protection mechanisms in USA and Latin Americancountries. Results indicated that availability of IP protection is in itself insufficient indetermining the rate of innovation. More important factors like the scientific base ofplant breeding, market forces and demand side factors appear to have greaterinfluence in determining the rate of introduction of new varieties. Consolidation bythe multinationals in seed industry and increased seed prices were among the othersignificant results. The need to commercialize new plant varieties has raised thestrategic importance of public germplasm and reduced its availability for other users.On the other hand, access to public germplasm by the private seed industry improveddue to more formal and transparent procedures. The PBRs like many other policyinstruments were favourable towards resource rich farmers than the small andmarginal groups.

+This work formed a part of the author's research experience as a Fulbright Visiting Scholar at CornellUniversity, Ithaca, USA.

34 J INTELLEC PROP RIGHTS, JANUARY 2002

Inclusion of new areas in trade regulation,/ viz. textiles, intellectual property rights

(IPR) related to trade in agriculture (includ-ing plants, animals and microorganisms)and services made the Uruguay round ofGAIT, the longest and the most debatedone. The international trade negotiations inthis round opened several new avenues ofresearch including agriculture and micro-or-ganisms and raised issues that are not onlyrelated to science and technology policiesbut often cut across the economic, ethicalissues and international trade politics. Im-portant among these are the issue of IP pro-tection of the results of research, issues oftechnology import and food security leadingto widening technology-lead productivitygap between the resource rich and resourcepoor countriesDeveloping countries being the net import-ers of modem technology seldom opted forthe adoption of IP laws. As natural reserve ofbiological diversity, which is required forany crop improvement activity, developingcountries have shared this reserve freely forglobal needs, without any compensation ofany sort, leave alone, an acknowledgementIn contrast, the wro and TRIPS provisionscompel them to modify existing IntellectualProperty protection legislation with regardto agriculture, including plants and animalresources. The new set of rules prescribedbywro underTRlPS are likely to open newdimensions in the type and extent of re-search exchange between the nations andalso aim at redefining the role of public andprivate research organizations. One of theimportant reasons for extending IP protec-tion for plants and other living organisms isto make agriculture a commercial ventureand for attracting private investment intoagricultural research. Has this objectivebeen fulfilled in the developed countries? Orin other developing countries which havealready adopted some form of property pro-

tection mechanisms? Are questions thatneed answers? An attempt has been made inthis paper to review the status of IP regimesfor agriculture in other countries and elabo-rate on the experiences in the adoption andimplementation of IP regimes to draw infer-ences for future use.

International Efforts in ExploitingIConserving Global Biological Diversity

The interdependency of countries for ge-netic resources for crop productivity im-provement or for disease resistance is wellestablished. Countries like North Americaare completely dependent on species fromother countries for their food and industrialcrops. Instances of international collabora-tions rescuing crop variety loss or reinstat-ing a crop in its primary habitat through theexchange o! plant genetic resources are in-numerable.The adoption of international undertakingon plant genetic resources as a non-bindingagreement by the FAa in 1983 (Rome Con-vention) marked the first step in the direc-tion of conservation, exchange andutilization of global plant genetic resources.This system has two components:0) The international agreements and co-

operation under FAa, and(ii) International research systems work-

ing in close collaboration with one an-other.

Conservation ofgenetic resources in situ, exsitu, their access, distribution and use hasbeen the important tasks of these globalsystems, popular as the Consultative Groupon International Agricultural Research(CGIAR). National Agricultural ResearchSystems (NARS) across continents havebenefited substantially from the free acces-sibility of biological diversity under theCGIAR institution!'. Indian Rice researchand wheat improvement under green revo-.

:~. ""

,. ¥

MYSORE :ADOPTION AND IMPLEMENTATION OF INTEUECfUAL..... 35

lution have gained substantially throughthese collaborative efforts. The gradual im-provement in the yield potential of rice waspossible only through crosses between dis-tant parents (indica andjaponica); exploita-tion of hybrid vigour from crosses arisingfrom places of distant origin2.

While genetic diversity is essential for cropimprovement, continued use of hybrids orimproved varieties could lead to genetic uni-formity and attendant problems. Geneticuniformity over the years has been the sin-gle most important reason for crop failuresin the past. The great Bengal famine of 1943in India, Tungro virus epidemic in rice inPhilippines and Indonesia in the 70s, areexamples of such calamities. Over exploita-tion of genetic resources for achievinghigher crop productivity often leads to overdependence on some species and therebythe neglect of others leading to their extinc-tion. The International organizations like theCGIAR through their Multilateral MaterialTransfer Agreements (MMTAs) have beeninstrumental in reverting crop losses in allsuch situations.

In sharp contrast to the free exchange ofgenetic material under international collabo-rative efforts, the practice of private owner-ship and application of intellectual propertyprotection in the form of 'patents' or 'patentlike'protection mechanism has been invogue elsewhere over a long time. Therehave been other efforts as well, which fo-cused on environmental concerns. The Co~-vention on Biological Diversity (CBD) ,assigns sovereign rights to State over all itsbiological resources. By this, the conventionprovides for 'regulating access to geneticresources', and introduces 'benefit sharingclause' to the benefit of developing coun-tries.Pending approval of the newly modified In-dian Patent Law 1999 and the Protection of

Plant Varieties and Farmers' Rights Bill(pPV, 2000) are expected to provide the nec-essary protection for the natural resourcesand biological diversity of the country'.There has been a clear shift in stand fromone of total dismissal of the idea of 'protect-ing live forms' to identifying and providing'patent like protection' over the years. Theconcerns with regard to the implementationand effectiveness of such legislation in pro-viding the much needed security for thebiological resources of the country and as amechanism that is expected to boost invest-ment into agricultural research is yet to beseen.

.~

It is in this context that this presentationattempts a review of the experiences of theselected countries, which had adopted intel-lectual property protection procedures forprotecting plant varieties.

Experiences of other (Selected)Countries in the Adoption ofIntellectual Property Protection Rights

The argument often made is that since plantvarieties are easily reproducible and largelyinherit their characteristics, private breed-ers are not able to recoup their investmentsin breeding, thereby discouraging in-creased private sector investments into thissector. The popular rationale in support ofIPR for plants has often been said to be oneof stimulating effect. As a result of intellec-tual property protection, it is hoped that pri-vate activity in plant breeding will increase.This increased investment will be in theform of increased entry of new firms in plantbreeding, larger volumes of real investment,and expansion of already existing privatebreeding programs. On the other hand,there are contradictions to this theory,which raise the issue of increased monopoly

..•• :c;- .

••• , •• w

..,

~'.

j'dD. ,t, ."..i¥ S (SHE;

36

XPU':"P;,_" _ (4 ". a_ Uf' ,

J INTELLEC PROP RIGHTS. JANUARY 2002

market power and other new forms of barri-ers on trade.Several countries have modified the legisla-tive support for providing IP protection forplants and living organisms. The introduc-tion of PVPAAct 1970 in USA is prominentamong these, and serves as an example forcomparison with present Indian dilemmas.The experiences of Latin American coun-tries serve empirical evidence for future ref-erence for India.

Economic Impact of Adoption of IP Pro-tectionfor Plants (Plant Breeders' Rights)

The review of the economic impact of theadoption of IP protection mechanisms hasbeen presented under the following heads:

(1) Changing direction of private invest-ment in plant breeding due to the adop-tion of plant breeders' rights (PBRs),

(2) Capacity of PBRs in stimulating plantsbreeding, and

(3) Evidences in the direction ofincreasedmonopoly power in the seed market.

Changes in the Direction of Investmentin Post -adoption Period

The only research on the relationship be-tween PBRs and private investment is theone conducted by Butler and Marison, in1985 on the R &D outlays of 60 companiesin US. This study evaluated the impact ofPVPA on US agriculture after the adoptionof PVPA in 1970CB)4. The evidence estab-lishes the increase in private investment inthe aggregate, but does not prove clearly thesame as true with regard to the compositionof this investment and the factors underlyingthe changes. In terms of total investment into research, older firms (i.e. existing prior tothe 1970) showed greater R&D expendi-

tures as a group, but the range of cropscovered was few. The R&D/sales ratios ofthese companies indicated that the R&D ex-penditure of older firms, that were estab-lished prior to PVPA had investment ratio ofUS$1.4million in 1980with average sales ofUS$40million.While those established laterhad R&D expenditure of US$O.4million in1980,with average sales of US$l1 million. Itcould be inferred that those firms that en-tered the industry after PVPA inception, re-mained relatively small and occupiedmarginal share of the market. The main-breeding firms by and large were from thelarger MNCs, primarily through the merg-ers and acquisitions that had increased dur-ing the post PVPAperiod in the US.

With regard to the distribution of privateinvestment, some useful insights have beenshown on the factors that actually stimulateprivate investment in plant breeding. Interms ofmagnitude and share of total invest-ments in plant breeding, wheat and Soybeanwere the crops that attracted private invest-ment. Their respective shares increasedfrom 5%and 1%in 1965 to 10%in 1979. Thequestion that needs to be assessed is, "Canthis increased private investment be attrib-uted to the presence of PBRs?"s

The case of soybean brings forth the 'mys-tification associated' with the plea for IPRAcreage under soybean in the US has in-creased rapidly between 1940-70,at approxi-mately 10% per annum. The increasedacreage is in reality, a reflection of the tech-nical advancement that had taken place inthe US agriculture during that time. Theincreased mechanization lead to what isknown as 'power farming' agriculture in theUS during this period. This lead to the in-creased substitution of animal and humanlabour by machines. At the same time, therewas an increase in the use of chemical inputs

MYSORE :ADOPTION AND IMPLEMENTATION OF INTELLECfUAL..... 37

like fertilizer to revitalize the soil nutrition.This structural transformation brought inchanges in the cropping pattern. With thegradual elimination of the com-oat crop-cy-cle, there was need for a new legume fornitrogen fixing in the soil. Since, soy aptlyfitted into this role ofnitrogen fixing crop, itspopularity increased thereby increasing theacreage. Keeping these factors in view, theanalysis of the role and impact of PBRs (inthe case of the US) often suggests that thePVPA to be more marketing Act, rather thanone that promoted research. "There is littleevidence to support the contention that thePVPA has powerfully stimulated additionalprivate investment in plant breeding re-search ... ,,4

As far as the increased popularity of soy-bean, the attention could be drawn to theadditional demand side factors, such as thecommercial value of the crop and its useful-ness for other purposes, making it one of themost valuable crops by 1950s. Export mar-kets for soymeal, use of soybean ina rangeof processed foods were some of these thatadded to the commercial importance of thecrop. As far as seed companies were con-cerned, soybean had a crucial advantagecompared to most other crops: the soybeangerm is highly fragile and breaks down dur-ing the harvesting process thus rendering itimpossible for farmers to save and reuseseeds. Consequently, private investmentswere quite secure. In this context, the stimu-lating role of PBRs remains questionable'',

Capacity of PBRs in Stimulating PlantBreeding

The crux of a PBRs system focuses on theproduction of new plant varieties. In fact,though highly reductionist, the test of suc-cess of the system is substantially contin-gent on the resulting rate of introduction of

new varieties.5 If private investment in plantbreeding occurs, then by extension thisshould manifest itself in increased produc-tion of new varieties. This view is popular inthe literature and used to validate the grantof protection. Several studies conductedsince 1980 suggest that the availability ofPBRs has increased the number of privatesector breeders, as well as the number ofprivate varieties released and planted'', How-ever, not only is society interested in thepace of innovation but also equally con-cerned about the direction of technicalchange - are the new varieties substantiallybetter? Both, the rate of innovation and thenature of the innovations are important.

With regard to the evidence in terms of re-lease of number of varieties, the questionthat needs to be asked is the causality 0 isthe availability of PBRs the sole factor re-sponsible for the number of varieties beingreleased? Since, it is complicated and theo-retically difficult to establish, the probableway is to study the trends in varietal release,'before' and 'after' the enactment of PBRs. Ifthe rate of introduction were higher in thesubsequent period it is still necessary toestablish the primacy of PBRs as the causalfactor. Besides the various demand-side fac-tors 0 such as changing acreage, increasingcrop profitability 0 there are crucial supply-side factors that could be attributed to thenumber of varieties released during a speci-fied period. For example, technology ad-vancement, such as a new breedingtechnique, technology such as the use ofcomputer-based systems for informationprocessing, monitoring of crosses have con-tributed to the increased production of newvarieties. The relationship between the rateof innovations and IPRs is thus needs morecomprehensive rationale than what is avail-able in the literature.

38 J INTELLEC PROP RIGHTS, JANUARY 2002

The only available study that has examinedthis issue related to ornamentals and fruitsin the UK 7 The results, as noted below, areclearly very mixed.

Apples:There is no statistical support for theclaim that PBRs led to increased rate ofintroduction ofnew varieties. PBRs have hadno perceptible impact on the trend rate ofintroduction of new varieties.

Strawberries: The availability of protectionhas had a positive impact on the rate ofintroduction of new varieties. However, themain beneficiaries of the availability ofPBRshave been public breeders and foreignbreeders, i.e. their respective shares of thePBRs increased.

Rose: The number of rose varieties releasedafter the availability of protection has in-creased substantially suggesting a positiveinfluence. However, statistical tests con-clude that there has been a feedback effectbetween the number of grants made and thepace of innovation. The result casts seriousdoubts on the significance of PBRs in influ-encing the rate of introduction of new varie-ties.

French bean: PBRs have had minor influenceon the rate of release of new varieties,though this appears marginal in comparisonto the impact of other seed market regula-tions (e.g. National Lists*). The absence ofa clear-cut positive impact of PBRs on therate of introduction of new varieties acrossthe spectrum of crop species substantiallyundermines claims for an enactment ofPBRs in India. Any effort to suggest thatPBRs have singularly caused the increase inthe number of new varieties is questionable.

The above results indicate that availabilityof intellectual property protection is in itselfinsufficient in determining the rate of inno-vation. More important factors like the sci-entific base from which plant breedingemerges and demand side factors appear tohave greater influence in determining therate of introduction of new varieties.

Even placing the mixed result aside, it isnecessary to consider wider social and eco-nomic issues concerning the rate of intro-duction of new varieties. Theever-increasing introduction of new varie-ties is not an end in itself. A mere count ofthe number of varieties introduced is an in-sufficient indicator of inventive activity oreconomic value. Given the scarce economicresources, it would be useful to examine thequalitative aspects of the new varieties. Eco-nomic value would be added if the new va-rieties were to push out the productionfrontier of the economy - enable a higherlevel of production. Here we are concernedwith notions of inventiveness within thegrant-giving process. Unfortunately, there isno test for inventiveness or utility in thesystem for grant of PBRs Commercial breed-ers predominantly work with improved ma-terial, varieties that are well adapted to localconditions. The pressure to consistentlyhave a market presence with a portfolio ofvarieties restricts the range of breeding con-ducted by commercial enterprises. In the USand the UK, till very recently, substantivedevelopment of parental material was under-taken within the public sector. Internation-ally, research centres with the ConsultativeGroup provided much of the foundationalresearch and key breeding material. Theprivate sector used these publicly developed

*In UK, the committee on transactions in seed (1960), was commissioned to examine the appropriateness ofPBRs in UK, and focused on the public good characterization of plants, which is popular as the National List.

MYSORE: ADOPTION AND IMPLEMENTATION OF INTELLECfUAL..... 39

parental lines to produce new and distinctvarieties. Obviously, given the widelyshared parentage of the commercial varie-ties it would be difficult to establish an inven-tive step, either in terms of genetic makeupor in agronomic terms'', Given the focus ondistinctness, many of the protected varietiesare genetically quite identical and in agro-nomic terms may not add anything to theeconomy. It is with this background that

skepticism is expressed in terms of the useof the rate of introduction of new varieties asan indicator of inventive activity. The in-crease in the number of new varieti~s onlyreflects commercial strategies of productdifferentiation9. Hence, the rate of the intro-duction of new varieties alone cannot betaken as an indicator for measuring the im-pact of PBRs.

It is therefore important to understand andevolve appropriate methods to evaluate thecontribution of each sector in the develop-ment of new varieties. Equally important isthe 'effective life' of a specified variety. It isoften observed that a specific variety is longlasting than the others. The speed withwhich a variety loses its impact also needs tobe quantified while assessing the impact ofPBRs.

Limited econometric support exists to makethe case that the rate of introduction of newvarieties have increased after the enactmentof PBRs and that this increase is solely aconsequence of PBRs. Further, evidencefrom wheat in the UK suggests that age ofthe variety has an important contribution inassessing the net grants towards the in-creased inventive activity.

Structural Changes in the Seed Industryin Post PVPA Period

Between 1960and 80, a total of762 corporatetake-overs have been reported in Americaand Europe. Between 197~86, a total US$lObillion worldwide was spent in this acquisi-tion drive - largely led by chemical compa-nies like Sandoz, DeKalb-Pfizer, Shell, ICI,and Ciba Geigy, who accounted for almost athird of the corporate take-overs. In the US,100 take-overs have been documented, outof which, only two occurred prior to theenactment of PVPA in 1970(B). Thesetrends suggest that provision of IPR in plantvarieties hastened the pace of mergers andacquisitions in the seed industry. It is widelyfelt that PBRs, much like any other IPR,aggravate market distribution since they area barrier-to-entry. Being a right that debarsothers from a range of transactions involvingthe protected subject matter, PBRs impart adegree of monopoly power to the recipient.Empirical evidence suggests increased mar-ket distribution effect and seed prices. Re-ports indicated that more than 50%of thegrants received for research purposes werebeing spent on the top four crop species.Even in the more profitable crops, whichhave attracted a larger share of breedingactivity, e.g. soybean, wheat, cotton, peasand beans, the share of the top four compa-nies is high - ranging between 38-67%.Insome instances, the market is extremelyconcentrated with few firms gaining all thegrants, e.g. tobacco where 3 firms hold 100%of the grants, cauliflower and onions wherefour firms hold over 90%of the grants, andbarley, rice, tomato and com where four-firm concentration ratios range between 71-84%.Based on this, it could be inferred that,"the majority of Plant Variety Protection(pVP) certificates issued is for a few cropsand is issued to a few plant-breeding organi-

.,..'.

40 J INTEILEC PROP RIGHTS, JANUARY2002

zations." "The firms holding the major shareof PVP certificates issued are seed firmswith large plant breeding programmes thatwere established well before the passage ofthe PVPA4. This conclusion establishes therelationship between crop specific profitabil-ity and the proportion of investment thatgoes into its breeding activity by a privateinvestor. Secondly, the point worth noting isthe impact of the size and the age of thebreeding programmes on the share ofgrants secured. Evidence of the distributionofgrants in wheat in the UK suggest towardsa historical process of consolidation withinthe seed industry'',

-The share of grants controlled by the topfive increased from 68%in 1965-74to 88%in197fr85 and settled at 79%in 1986-95.

-Between 75-80%of tl,e applicants receivedno grants.

The top five grant-holders formed a part oflarger multinational seed companies likeUnilever [and now Monsanto] and As-traZeneca, indicating a skewed distributionof grants. This was also reflected in the seedmarket share in UK The wheat seed marketof UK was observed to be controlled by asingle company - Plant Breeding Interna-tional, Cambridge. Its market share in-creased from 20% in 1972 to cross 80% in1980, after which it has maintained a shareof approximately 65-70%through the 1990s.The other important stakeholders were As-traZeneca, Weibull, Limagrain and Petkus.These companies represent a long track re-cord into wheat breec'i.rg' and also the sig-nificance of mergers and acquisitions intothe formation of a company.

It was an interesting inference that indicatedthe firms, which were able to consolidate,were those which could charge a higherprice. The IPR protection only enhanced

their capacity to improve and consolidatetheir profits. Though other factors such asthe existence of varieties in the market didinfluence, prices appeared to playa signifi-cant role in concentration of the seed mar-kets. Empirical evidence in the US and UK,so far suggests an increase in the proportionof expenditure on seeds over the years. Amajor proportion of this increase was to-wards the increased prices of seeds, mainlythe royalty payments.Both the US and UK have experienced thewithdrawal of the 'state' from 'near-market'activities - the breeding of new varieties andseed distribution. Simultaneously, the scopeof PBRs has gradually widened to incorpo-rate an even greater range of transactionsinvolving the protected variety. Thus, thepractice ofon-farm seed saving and over-the-fence seed exchanges have been outlawed,as is the processing of saved seeds. It wasthe increased collaboration of chemical andseed companies that provided the firms tomark up their seed prices. Hence, it could beinferred that, though, PBRs were not solelyresponsible for higher seed prices, they pro-vided certain important linkages towardsthe increased prices. These include the tra-ditional marketing strategies such as prod-uct differentiation.

The Latin American Experience

In accordance with the GAIT agreement,each one of the member countries areobliged to protect the genetic material andplant varieties either through patents or byany appropriate alternate system called thesui generis. Three Southern cone countriesof Latin America, viz. Argentina, Chile andUruguay adopted the Plant Breeders' Rights(PBRs) as a part of general laws regulatingthe seed industry, way back since early1980s.Mexico and Colombia introduced the

MYSORE : ADOPTION AND IMPLEMENTATION OF INTEUECfUAL.... 41

intellectual property protection regimes dur-ing 1994 and 1995 respectively. The objec-tive in all the five countries has been to fosterthe private plant breeding initiative and toincrease access of improved varieties fromabroad in case of fruits and ornamentalcrops'',

The reasons for adoption of IPR or PBRs,impact of PBRs on research investments byprivate seed companies, changing structureof the relationship between the foreign seedcompanies and domestic ones, impact ofsuch an adoption on the research directionof the public sector organizations has beenreviewed. Irrespective of the differences inthe relative size and importance of agricul-ture to their respective economies, theWorld Bank has identified all the five coun-tries as developing countries. Agricultureand agro-industry, though declining, wasfound to be the most important economicsectors in these countries. Argentina andUruguay are typically agro exporting coun-tries, traditionally based on the export ofcommodities like wheat, maize, soybean,etc., However, all the five had diversifiedagriculture with declining dependence onagriculture. The other significant commonfeature between the five countries was thepresence of dualistic agriculture, charac-terized by the co-existence of large numberof traditional sector comprising small farmsand peasants and fewer large farms withmodem agriculture. Also typical to the dual-istic agriculture, the entrepreneurial sectorconcentrated on export-oriented agriculturewhile the peasant agriculture still dependson sustenance farming.

Generally, the use of improved seed or cer-tified seed is a good indicator of the develop-ment stage of the seed industry. Theexistence of a well-established seed industryfollows that the seed marketing gets deregu-

lated and certification becomes less impor-tant. Only Argentina was in this stage ofdevelopment. The rest of the Latin Americancountries still had peasants using land raceswhile the entrepreneurial farmers used im-proved seed. The agricultural sectors werein the midst of profound changes with theireconomies opening up to the internationalmarkets and the redefinition of the role ofstate in the economy. The economic stabili-zation programs were implemented with ob-jectives of increased privatization, unilateralreduction in tariff, enforcement of unilateraland bilateral free trade pacts signed creatingfree trade zones.

Seed Multiplication and Commercializa-tion

State played a crucial role in the estab-lishment and proliferation of seed industryin all the countries. The State interventioncould be seen not only in plant breeding anddirect seed production, but also in seedregulation and technology diffusion activi-ties. The seed industry was consolidated bythe existence of adequate regulatory frame-work and technical capabilities. Private seedindustry followed the public sector initia-tives. Domestic industry concentrated onself-pollinating varieties while the multina-tionals specialized in hybrids. The Interna-tional Centre for Tropical Agriculture(ClAn located in Colombia directly sup-ported seed activities through training inaspects of PBR and technical assistance inseed production technology.

Introduction and Enforcement of PlantBreeders' Rights (PBRs)None of the three Latin American countriesthat adopted PBRs had a public debate of theproposed changes in the legislation. Thiscould be attributed to the military rule of the

42 J INTEllEC PROP RIGHTS. JANUARY 2002

countries at the time the decision to enforcePBRs was taken. However, even under thereinstated Civil Governance, the enforce-ment of PBRs was never a political issue. InMexico, the private seed companies, fruitand ornamental plant growers were in sup-port of the PBR legislation in order to getbetter varieties from foreign collaborators.The opposition was mainly from the publicsector. The patent law was amended in Au-gust 1994 and does not provide for the pro-tection of plant varieties any longer.Varieties will now have to be protected un-der PBRs. In sum, the main force behind thedecision to strengthen PBR legislationcomes from the fact that:

(i) Domestic seed companies wanted toprotect their own plant varieties

(ii) Domestic seed companies and cultiva-tors of fruit and ornamental plants thatfelt pressure from foreign breeders toimprove the legal protection in orderto get better access to foreign breed-ing lines and varieties, Subsidiaries offoreign companies wanted protectionof their varieties and breeding lines inorder to enter the LatinAmerican seedmarkets, and

(Hi) Public agricultural research centres,were in need of additional income tocompensate budget cuts.

PBR Enforcement

Enforcement of PBR legislation, being a pri-vate right on property, is up to the individualright holder .to enforce and exercise theirrights. In Argentina, though the law was inforce since 1981. it was in reality a deadletter. This was due to the lack of informa-tion. high inflation ar.d lack of credit thatforced the growers not to purchase freshseed year after year. First ever effort to de-fend PBR was realized in 1990 by three Ar-

gentine wheat breeders, two private compa-nies (Buck and Klein) and a private co-opera-tive -'Produsem', which has been createdby the public sector research institute INTAThe Wheat companies jointly started to de-fend the plant breeders' rights by encourag-ing those dealers who were trading seed thatwas produced without authorization tochange over to a system including the regis-tration of seed transactions, licensing con-tracts and royalty payments. The wheatbreeders' initiative was followed by the crea-tion of an association of plant breeding or-ganizations known as ARPOV in 1991.

ARPOV designed a successful administra-tive system to control the licensing of seedproduction. The licensing contract designedincluded:

registration and protection of the vari-ety,agreement between the breeder andthe producer,licence to offer information upon re-questpenalties for non-compliance with theseed lawlicence to maintain a seed book. and

The licence to authorize ARPOV torealize audits at the licensee's prem-ises.

Seed bags that are traded through ARPOVcarried a special stamp with a code numberthat refers to the names of the breeder. thelicence, contract number and the variety'",

The control of protected varieties by breed-ers in Chile and Uruguay has been less ef-fective as the titleholders were followingindividual policies and these did not succeedvery often. Though, PBR are private rights,government plays an important role in en-forcement of the law. Both in Chile and Uru-

MYSORE :ADOPTION AND IMPLEMENTATION OF INTELLECfUAL..... 43

guay, the ministry of agriculture was respon-sible for infringement detection. Thismechanism of infringement detection in Ar-gentina was found to be rather weak. A newinstitute known as the Institute of Nationalde Semillas (INASE), a self financing bodyrelying on the tariffs as the sole source ofincome, checks the compliance with the li-cence contracts and presence of ARPOVstamp.An important measure of the effectiveness ofPBR system is the reduction in the seedproduced and traded without authorizationof the breeder. Seed dealers induding grainelevators and cooperatives purchase grainfrom farmers and sell this grain as seed toother farmers. In Argentina, between 1989and 1994, the number of unregistered seeddealers reduced to 40%.The enforcement ofPBR in Argentina has increased the share ofseed supply under the control of breeders tonearly 55%.These figures are in comparisonwith those in USA for wheat and soybeanseed.Indian Experience Prior to Enforcementof Intellectual Property RightsThe legislation on the plant variety protec-tion has now been approved by the parlia-ment, it is yet to be enforced in India. Areview of the existing pattern of researchinvestment and research linkages in Indiarevealed the predominance of public sectororganizations till mid 80s and there after achanging structure and contribution of pri-vate sector research institutions. The IndianCouncil of Agricultural Research (ICAR) isthe primary authority for co-ordinating re-search in India, the average research expen-diture by public, state and private sectorresearch organizations stood at aroundRs.2360 million by 1987 11. But in the postliberalization period between 1990and 1995,the research expenditures tripled due to the

initiation of several new institutions and ex-pansion by the existing institutions. The ma-jor thrust has been into agriculturalbiotechnology with the establishment ofDe-partment of Biotechnology with an initialinvestment of over US $ 30 million. Over 400private seed companies have been in opera-tion dealing mainly in the production ofbiotechnology related products.A review of private sector seed companiesand their performance by Selvarajan et al,1998,indicated that 90%of the hybrids devel-oped in various crops originated from theprivate sector institutions. Irrespective ofsize of the investment by the company, theirresearch programmes were for the develop-ment of hybrids. Cereals followed by vegeta-bles were their option for developinghybrids. Seed industry was well aware ofbiotech research options and were concen-trating on crops like tomato, maize and cot-ton in the order of preference and tissueculture based micropropagation, So-madonal variation, DNA markers for ge-netic traits and transgenic crops were theirresearch priorities+" Although, private sec-tor dominance is on the increase in India,even prior to IPR, it is envisaged that thepublic vs private sector inter dependencewould increase in the post IPR adoption pe-riod.

'.':'!ir

~

Concluding Observations

a. Assessing the precise impact of PBRprotection on private investment intoseed industry is a difficult task. Thetrends indicated that, besides PBRs,there are other important macro-eco-nomic factors such as the market size,and demand, which have significantimpact on the investment pattern.However, it has been observed in Ar-gentina and Chile, that the PBR legis-lation has enabled domestic wheat andsoybean companies to increase their

44 J INTEU.EC PROP RIGHI'S, JANUARY2002

b

sales and royalty incomes. It could alsobe inferred that the PBR legislationhad strengthened the plant breedingprogrammes of the public sector insti-tutions in these countries.For the multinational seed companiesinvolved in hybrid production, the en-forcement of PBRs complements thebiological protection against un-authorized multiplication. The PBRsmay effect the relationship betweenthe domestic companies and foreignseed companies if the protection forparental lines is increased and thenumber of hybrids increased.PBRs have both positive and negativeeffects on the access to gennplasm atpublic institutes. The need to commer-cialize new plant varieties has raisedthe strategic importance of publicgennplasm and reduced its availabilityfor other users. On the other hand,access to public gennplasm by the pri-vate seed industry improved due tomore formal and transparent proce-dures.PBRs provide a better opportunity forthe growers and plant breeders to col-laborate with foreign breeders. On theother hand, foreign breeders may re-strict the supply if their material leadsto enhanced exports from these coun-tries.No direct negative effects of PBR leg-

islation on seed diffusion were ob-served in the three Latin AmericanCountries. The seed saving by thefarmers was not effected by the PBRlaws, due to the exemption included inthe legislation for farmers' use.The PBRs have favourable impact onthe domestic plant breeding industry.If the same trend could be observed

c

d

e

f

elsewhere is yet to be seen, as it de-pends on the number of breeders whoare active and their access to plantbreeding material. The seed dealerswere the main losers in the process ofimplementation of PBRs.

g The main limitation of PBRs was thatit has been designed to support thosefanners who have better resources.PBRs may not be suitable instrumentfor those farmers who operate on mar-ginal areas and low resource base.

Acknowledgement

Author acknowledges the facilities, oppor-tunity and guidance provided by Prof. Wil-liam Lesser at the Department ofAgricultural Resource and ManagementEconomics (ARME), Cornell University,USA, during her fellowship period. Authorwishes to thank the anonymous referees andother friends for their valuable suggestionsfor the improvement of the paper.

References

1 Lesser William, Sustainable Use of Ge-netic Resources Under the Conventionon Biological Diversity. Exploring Ac-cess and Benefit Sharing Issues (CABInternational Publication) 1999.

2 Swaminathan, Implementing thebenefit-sharing provisions of the Con-vention on Biological Diversity: Chal-lenges and opportunities, Plant geneticresourcesNewsletter, Nol12, 1997, 19-27.

3 Sudha M, Plant Variety Protection:Need for a Realistic Approach, Agri-cultural Biotechnology: Issues and Per-spectives. A compilation for the MediaForum on Agro- Biotechnology, organ-

• c,•....

;vIYSORE : ADOPTION AND IMPLEMENTATION OF INTELLECTUAL..... 45

ized by the Liberty Institute, NewDelhi, lih April 2000,2000.

4 Butler, L J and Marion B W, The Im-pacts of Patent Protection 011 the USSeed Industry and Public Plant Breed-ing. (College of Agriculture and LifeSciences, University of Wisconsin.Madison) North central regional pub-lication :104, 1985.

:') Rangnekar D, A Comment OIL the Pro-posed Protection of Plant Varieties andFarmers' Rights Bill, 1999 (School ofEconomics, Faculty of Human Sci-ences, Kingston University, KingstonKTl 2EE, UK) 1999.

(j Rangnckar D, Planned Obsolesce andPlant Breeding: Empirical Evidencesfrom Wheat Breeding in UK (1965-1995) (MS School of Economics, King-ston University, UK)2000.

7 Da Rocha, An Analysis of the Impact ofPlant Breeders' Rights Legislation onthe Introduction of New Varieties in UKHorticulture(Wye College, Universityof London, UK, PhD, ALP) 1994.

8 Sudha M, Intellectual Property Rightswith Respect to Agricultural Biotechnol-ogy: Options and Strategies for India.Project report submitted to the Depart-

ment of Agricultural Resource andManagerial Economics (ARME) , Cor-nell University, Ithaca, 1485~, NY,USA,2000.

9 Lesser \Y, Schmit Todd ~\'1,and RuizLilian M, Biotech and Inward links,Breeders' Rights and Inward links,Brazil. Paper presented at the AAEAannual meeting pre-conference, Indus-trialization, Globalization and Interna-tional Development, 1 ashville, TN, 6and 7August 1999.

10 Sudha :vI, Intellectual Property Rights,Agricultural Biotechnology a lid [PR Re-gimes-experiences of USA and LatinAmerican Countries, Invited paper forthe ICAI~ short course OIl IntellectualProperty Rights in Agriculture- TheEmerging Scenario, 1-10 August 2000,at the Department of Genetics andPlant Breeding, GKVK Campus, Ban-galore-652000.

11 Selvarajan S, Joshi Dinesh C andO'Toole John C, Agro-HioteclmologyCapacity and Demand. The Indian Pri-vate Sector Seed Industry (A RockfellerFoundation publication) 1999.