Breeding Business. The Future of Plant Breeding in the Light of Developments in Patent Rights and Plant Breeder’s Rights
Netherlands Ministry of Agriculture, Nature and Food Quality (LNV), Wageningen, Centre for Genetic Resources (CGN) – Wageningen University and Research Centre, December 2009
66 Pages Posted: 5 Dec 2010 Last revised: 15 Mar 2013
Date Written: December 30, 2009
Upon request of the Netherlands Minister of Agriculture, Nature and Food Quality a study has been conducted into the future of plant breeding in the light of developments around plant breeder’s rights and patent rights. The following questions were formulated: Present a review of the trends in the different plant breeding subsectors and the production of plant propagation material and in plant biotechnology. What is the situation of the concentration of companies and the role of intellectual property in this? Who are the main patent holders in plant breeding? What are the socio-economic consequences of these developments for the diversity of companies and adequate market competition? What are possible consequences for the (inter)national breeding sector, the role of Dutch companies, and for developing countries? What are the possible consequences for the use of genetic diversity, for food security and quality, and for the production of green raw materials (biobased economy)? Which positive and negative effects are to be expected for which parties as result of these developments and how could undesirable effects be restricted or prevented? Which legal aspects play a role when taking measures to prevent undesirable effects? Which different legal systems in the world play a role in this?
The study comprised an investigation into relevant trends in the plant breeding sector and a number of semistructured interviews with stakeholders. This report describes the major trends, analyses these trends in the light of the questions above, and formulates recommendations based on a number of normative points of departure for arriving at conclusions.
Innovative plant breeding plays an important role in a number of public objectives, such as food security, environment, sustainability, and a number of transitions in the rural area, e.g. to a ‘biobased economy.’ The plant breeding sector is of high economic significance with a steadily growing export value and a significant ‘spin off’ to the trade in final products, in particular ornamentals. The Dutch plant breeding sector holds a very strong position in vegetable crops, ornamental crops, and potatoes. The Netherlands plays a leading role in fundamental, strategic and applied research in plant genetics and plant breeding. The strong knowledge sector in The Netherlands is important for the plant breeding sector, including foreign seed companies that often have major R&D activities in The Netherlands.
Innovation in plant breeding is dependent on specific knowledge, the development and application of new technologies, access to genetic resources, and capital to utilise those factors. Access to technology as well as genetic material is essential for the development of new plant varieties. Competition and profitability of the plant breeding sector play a major role in the sustainability of the total food chain. Farmers and growers have an interest in competition in the seed market.
Plant breeding is characterised by continuous innovations and the ever ongoing development of new varieties that ever better meet the requirements of producers and consumers. The driving force behind this innovation is acquiring or increasing market share. The plant breeder’s rights system is a specifically designed legal system for the protection of plant varieties. Plant breeder’s rights give the developer of a new variety the right to exclude others from commercialisation. The breeder’s exemption ensures that other breeders may in a sort of ‘open innovation’ use such a protected variety in their own breeding programme, making the best properties of these varieties available to the breeding programmes of competitors.
Technological developments showed a rapid progress in recent decades. One significant change results from the developments in molecular biology, initially outside agriculture, which led to the introduction of patent rights in the breeding sector. This system of intellectual property rights (IPR) certainly not only applies to genetic modification but to an ever broadening range of new techniques that make plant breeding more efficient and effective.
Patent positions in combination with technological developments have in recent decades led to a large consolidation move among breeding companies. For most crops only a few companies are controlling a large part of the world market. This makes a growing part of the global food supply dependent on a few companies. The access barrier for new companies to the plant breeding sector is high, where IPR plays a role next to the large amount of knowledge and expertise required to set up a breeding company and the long development period for new varieties. Farmers and growers fear that their freedom of choice is threatened and that no varieties will be developed for certain crops that specifically meet their requirements when the decision power in breeding moves away from The Netherlands.
Plant breeder’s rights and patent rights may be conflicting in plant breeding. Specific liberties of breeders and farmers are lost with the patentability of plant-related inventions. The significance of access to genetic resources for the development of new plant varieties was already recognised at the time of the Plant Breeders’ Decree of The Netherlands (“Kwekersbesluit”) in 1941 and has as ‘breeder’s exemption’ been confirmed in more recent international treaties such as the International Union for the Protection of New Varieties of Plants (UPOV 1961/1978/1991), the Agreement on Trade-Related Aspects of Intellectual Property Rights (WTO-TRIPS - 1994), and the International Treaty on Plant Genetic Resources for Food and Agriculture (IT PGRFA - 2001).
Patent rights hold possibilities for strategic use, which may lead to lack of clarity in the market and to monopolistic behaviour. It may also lead to high costs of legal assistance. Plant breeder’s rights have no such effects.
The study also focuses on aspects of biodiversity and developing countries. Recent analyses of the trends in genetic diversity of crops indicate that in Northwest Europe and North America genetic erosion has been brought to a halt and that diversity increases as result of a widespread use of genebank materials and new techniques, making use of such materials in breeding more effective. It is uncertain whether this trend is also visible at a global scale and whether it will continue when the number of breeding programmes diminish as a result of further concentration in the sector. The discussions about the roles of IPR in plant breeding also concern developing countries. These countries have difficulty in meeting the international IP protection requirements while at the same time optimising their IPR systems to meet the needs of their own society. Trade-related aspects of IP may conflict with development-related aspects. A policy aimed at restoring the balance between the rights of the inventor on the one hand and public interests at the other in The Netherlands implies that developing countries should be able to find this balance within the frameworks of TRIPS. This means that The Netherlands should not on its own, or via the EU, impose stricter IPR requirements on developing countries (in trade agreements) and should in UPOV also take the interests of developing countries in the interpretation of the Convention (in particular farmer’s exemption and non-commercial use) into account.
The research team has formulated the following normative assumptions on the basis of literature research, analyses of the main trends in plant breeding, discussions with experts on the Advisory Board and interviews with stakeholders: Plant breeding should make a sustainable contribution to global food supply and sustainable agriculture and horticulture. Access to genetic variation is essential for future crop breeding. Innovation capacity in the breeding sector should be preserved, and even strengthened. Competitive strength in the sector should be preserved by a diversity of companies. The Netherlands breeding sector should be enabled to defend its competitive position in a fair way. Proper safeguards should be created for obtaining a decent and profitable market share. Intellectual property rights should stimulate innovative strength.
Patent rights, together with the way these are granted and exerted, contributes to a decreasing diversity in breeding companies and threatens innovation in plant breeding. The general conclusion on the basis of the normative assumptions above is that the patent system needs to be amended. This can be reached by: amendments of legislation and regulations, by increasing patent quality, and by improvement of the way that innovators use their patent rights.
Amendment of regulations is necessary to increase the room for innovation in plant breeding. This can be reached by restricting the scope of patents in plant breeding, and more specifically by reinstating the exemption of patents on plant (varieties) or by introducing full breeder’s exemption in patent rights. Both options should preferably be implemented at European level, possible via a revision of the Biotechnology Directive, and preferably in consultation with other countries with a significant plant breeding sector (such as the USA, Japan, and China). Because implementation of the proposed amendments may take a long time the report also contains recommendations for other policy options that can be introduced simultaneously, such as tightening of the evaluation criteria for granting patents and banning the strategic use of IP rights that stimulate monopolistic tendencies in plant breeding.
Finally, the recommendations of the report discuss some legal consequences of the policy options and formulates recommendations for related policy areas such as competition law (economic policy), access to genetic resources in biodiversity policy, IP aspects of development cooperation policies and knowledge policy.
Keywords: Plant Breeding, Genetic Resources, Molecular Marker Technology, Genetic Modification, GMO's, Intellectual Property, Patents, Plant Breeders Rights, Business Models, Economic Aspects, R&D Investments, Concentration, Developing Countries, Access to Genetic Variation, Right to Food, Food Securit
JEL Classification: D23, D45, H 41, H51, I18, K11, L14, L4, L 65, O13, O31, O32, O34
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