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Plant Patents: From Exclusivity to Inclusivity
Patents on plants have always been a ‘hot potato’. Similarly, the relationship between patents on plants and plant breeder’s rights has been subject of an intense societal and academic debate. Most recently, the grant of patents for plants resulting from essentially biological processes, notably tomatoes with reduced fruit water content and broccoli with anti-cancer potential, spurred stormy disputes. Decisions on the scope of plant biotech patents equally fueled a legal battle.
In the ongoing debate, the writings of Paul van der Kooij have contributed a lot in uncovering and understanding the complex legal landscape at hand, and in tempering the tone of the discussion with well-crafted legal arguments. But, what characterizes Paul’s approach in this debate even more, is his genuine interest and his warm attention and affection for the impact of intellectual property legislation on the daily concerns and livelihoods of breeders, big or small. The present essay is an attempt to add to Paul’s unique and multi-faceted approach, and entice him with an optimistic essay on the inclusive potential of plant patents.
1. Current problems with plant patents1
Over the past years, concern has been expressed about the potential hindering effect on innovation of the continuous increase of patents in the life sciences. The academic debate on the possible discouraging impact of the proliferation of patents was set in motion by the seminal article from Heller and Eisenberg ‘Can Patents Deter Innovation? The Anti- commons in Biomedical Research’ in 1998.2
Did the prevailing assumption that an anti-commons problem was present in biomedical sciences hold out in the field of human genetics? Our research, applying a rigorous qualitative analysis and assessment of gene patent claims, did not confirm the emergence of a patent thicket3 in human genetics.4 Even though our empirical study found that there was some reason for concern in the field of diagnostic testing in view of the upsurge of whole genome sequencing, there did not seem to be wide and strong evidence that the rise of patents in genetics led to devastating patent thickets, frustrating the use of technology and ultimately leading to a tragedy of the anti-commons.
Did an anti-commons problem emerge in the context of plant biotechnology? Concerns were expressed in the field of molecular breeding, with the Golden Rice technology as a poster child story, said to be covered by some 70 patents.5 Concerns were also voiced in the context of conventional plant breeding in view of the exponential growth of patents claiming native plant traits.6 It was argued that the need to assemble multiple traits in one plant variety may well lead to a patent thicket, resulting in restricted access to genetic variation. Some empirical work has been carried out to investigate the emergence of a patent thicket in plant breeding,7 but broader patent landscaping studies are necessary to confirm the existence of a patent thicket in this field.
Far more worrisome than the emergence of a patent thicket in human and in plant biotechnology, is the problem of access. There is growing concern in industry circles for potentially blocking single patents. A tragedy of the anti-commons may not only occur as a result of fragmentation of patents, but may also arise in case of the emergence of a single, so-called ‘blocking’ patent.8 Is has been argued that the major problem in the plant breeding sector is not fragmentation or overlap, since “the number of patents available per species is often one only”,9 but rather access to single, relevant patents. Guaranteed access to variation – and thus patented material – is essential for breeders for the development of new plants and food security in the long run.10
2. Measures to facilitate access
2.1. Plant patent clearinghouses
Rather than focusing on public, legislative measures – such as the introduction of a breeder’s exemption in patent law – quite some attention has been devoted lately to private, collaborative licensing mechanisms – such as patent pools and clearinghouses11 - that could act as useful mechanisms to safeguard swift access to patents in the area of human and plant genetics.12 Some recent collaborative license initiatives bear witness of the aim to facilitate access to single, potentially blocking patents.
2.1.1. Some working examples
Exemplary in this regard are the Syngenta e-licensing platform, the Enza initiative and, most prominently, the ILP Vegetable platform.
The Syngenta e-licensing platform13 offers breeders and research institutes guaranteed access to a wide portfolio of patented native traits and enabling technologies present in their commercial vegetable varieties. A key feature of the platform is royalty free access for licensed traits during development and breeding of new varieties and royalty payment at preset terms if the newly-developed and commercialized variety contains the patented trait.14 In principle, more favorable conditions than the preset ones are not available by contacting outside of the e-licensing system. However, bilateral agreements may be used in specific cases when a deal entails more than a monetary retribution. The Syngenta initiative is an impressive effort to establish a fully fletched standardized licensing clearinghouse in the sense that it organizes access to patented subject matter on in advance defined standard terms.15 It remains to be seen to what extent users consider the royalty setting fair and reasonable, and whether the platform is effectively used.
Another agricultural e-licensing platform is set up by Enza Zaden.16 The Enza Zaden platform offers a selection of (trait) technologies and accompanying varieties, relating to lettuce, cucumber and melon. The standard terms include a non-exclusive, royalty- bearing license to use the patented (native trait) technology, for research, breeding and commercial purposes. Unfortunately, details on the royalty terms are lacking, so it cannot be verified whether Enza is indeed a standardized licensing clearinghouse, offering access at predefined financial terms.
An even wider clearing initiative in the agricultural sector is the International Licensing Platform for vegetable plant breeding (ILP Vegetable), launched in November 2014 by a group of breeding companies.17 The main objective of IPL Vegetable is to guarantee worldwide access to patents that cover crucial vegetable plant traits that are currently covered by patent claims by ILP Vegetable member companies. Central in the set-up of IPL Vegetable is the principle of membership and reciprocity: the willingness to become a member and put one’s patents on the platform is a key condition to be allowed access to all patents on the platform (see Figure 1). The ILP Vegetable mechanism, provides an information service listing available patents to allow technology owners and/or buyers to initiate one-to-one bilateral license negotiations. Indeed, license negotiations are first conducted on a bilateral basis and are expected to take place on ‘fair and reasonable’ terms. During the bilateral negotiations, members may choose to make use of the standard license provided for by ILP Vegetable. If bilateral negotiations fail and members do not reach a consensus within a period of three months after the start, ILP provides comprehensive mediating facilities. The case can be submitted to the secretary of the ILP Vegetable and later on to a group of independent experts, who will take a decision based on a so-called baseball procedure.
At first sight, ILP Vegetable may be qualified as a standardized (or at least a technology exchange) clearinghouse. However, its architecture contains a few elements which resemble a patent pool: it is set up as a multiparty agreement between the participating companies, and strongly characterized by a membership principle, possibly creating a club atmosphere. The latter aspect might come under competition law scrutiny.18
Figure 1. International Licensing Platform (ILP) Vegetable
2.1.2. Shaping universal access: Turning patent rights into remuneration rights
Collaborative licensing platforms, such as patent pools and patent clearinghouses, provide witness of a paradigmatic shift in (the exercise of) patent law. Patent pools and clearinghouses may turn the property rule into a (private) liability rule, crafting guaranteed access to patents, in the sense that licenses have not to be bargained and negotiations cannot result in a veto to access the patented technology (see Figure 2). The concept of liability rules finds its origin in the entitlement theory articulated by Calabresi & Melamed in their epoch-making contribution ‘Property Rules, Liability Rules, and Inalienability: One View of the Cathedral’.19 Merges introduced the liability rules theory in the intellectual property (IP) law discourse. As he puts it, property rules are “absolute permission rules”: one cannot take the entitlements without prior permission of the holder, whereas liability rules are “take now, pay later” rules: others can use the entitlement without permission of the owner, so long as they adequately compensate the owner later.20 Translating the Calabresi-Melamed concepts to the IP arena, Reichman describes a liability rule as a rule “that takes the form of an automatic license without the power to exclude”.21
Figure 2. Turning the exclusivity rule into a liability rule regime22
Patent pools, requiring as a matter of competition law open and non-discriminatory licensing policies vis à vis everyone, convert the exclusivity principle of patent protection into a liability regime. Standardized collecting clearinghouses, if characterized by ex ante disclosure of standardized licensing and royalty conditions, also convert the exclusivity principle of patent protection into a liability regime thereby creating universal and conditional access, the condition being payment of a fee. This type of clearinghouse also turns the exclusive patent right into shared use.23 However, if the licenses offered by the clearinghouse are only available for qualified users, the effect would be restricted access, and the transformation from a property rule dominated to a liability rule governed regime would not take place. In this regard, technology exchange clearinghouses do not always trigger the transformation from a right to exclude to a right to remuneration, as they might mainly serve as a marketplace to find licensing partners, where the patent holder keeps the authority to exclude certain licensees, and where – in the event the licensee is accepted – licenses are individually crafted.24
From the cases under study, the Syngenta e-licensing platform manifestly meets the criteria to transform the property rule into a liability rule. This platform provides universal (open to all), and conditional openness (payment of a fee), where the details have been clarified ex ante (fixed fee or customized menus of licensing terms tailored to the needs of different licensee profiles). Also the IPL Vegetable platform meets the criteria to transform the property rule in to a liability regime. ILP Vegetable provides universal (open to all) and conditional openness (payment of an annual fee; contribution of respective patents to the platform) (see Figure 1). The implementation of a reciprocity rule into the platform does not seem to hamper the universality of the openness, as everyone is invited to join the platform under this condition. On the contrary, the quid- pro-quo mechanism may well trigger technology holders, who are hesitant or unwilling to commit their patents to the platform, to participate in the platform and ultimately enlarge the total portfolio of patents available on the platform to include all interested users.
The transition from a property rule to a liability rule has met with considerable sympathy in academic circles, researching initiatives which fuel the sharing ideology. However, it is important to note that a liability rule regime – shifting the control over the gate of access to technology from patents to fees – may lead to a system where no longer patents but (exorbitant) fees hinder access to technology. The recent literature on patent hold-up illustrates this point very well. Patent hold-up might occur when a patent holder is able and has an incentive to claim royalties that far exceed the economic value of the protected invention.25
2.2. Inclusive patents26
An alternative form of patents, so-called inclusive patents, can provide the legal power base to endorse universal and sustainable access.
2.2.1. Shaping universal and sustainable access: Introducing inclusive patents
Universal openness refers to access and use which is awarded to an indefinite number of users and where nobody can be excluded. Sustainability refers to continuity, virality, infectiousness or perpetuity where openness is passed on from one inventor/improver to another, thus establishing a chain of openness which can be endorsed amongst follow-on improvers.
Universal and sustainable openness will have to be based on the pre-existence of intellectual property rights (IPRs). IPRs do not only invest knowledge and technology owners with the authority to exclude others, to allow and control use and enforce royalties, but also to control sharing and openness, and to enforce users to behave in a sharing way. The idea of promoting access through rights that exclude is the underlying paradox of IP law and policy.
Establishing a truly universal regime requires the existence of IPRs, complemented with ‘open source’ type license agreements, allowing recipients to use, share and change the original invention. Crafting a fully sustainable regime, requires a ‘copyleft’ type license, allowing recipients to use, share and change the original invention and carries the additional obligation to make improvements available to other users on the same open source terms as the recipients received it. In other words, copyleft imposes an obligation on the licensee to make any downstream innovations that it chooses to distribute beyond the boundaries of its own organisation available under the same terms as the original technology.
Plant innovation can be made open and kept open via the dynamic interplay between patents and copyleft licenses. Rather than turning to the traditional patent to achieve the goal of universal and sustainable openness, I propose the creation of an alternative, low cost property entitlement: the inclusive patent.
2.2.2. Basic characteristics of the inclusive patent
The IPR regime is necessary because of the erga omnes nature of the IPR: a copyleft style license clung to a patent endeavours to attach the sharing norm to the invention itself, rather than only to the contractual parties.
The kernel of an inclusive patent, allowing the establishment of universal and sustainable openness, has the following features. First – and this is a pivotal element – the inclusive patent is meant to be an alternative right. The inclusive patent does not replace, nor does it alter the regular, traditional patent establishing an exclusionary right. The inclusive patent rather aims at providing an alternative, prompt and easy system for those inventors and tinkerers who wish to spur universal and sustainable openness and foster sharing. Second, the inclusive patent is conceived as a one-sided right. A traditional patent can be seen as a two-sided right. On the one hand, a traditional patent is an exclusive right, empowering the patent holder to exclude others not having his consent from making or using the patented product. On the other hand, the corollary of the right to exclude, is the right to include: a component of the right to exclude is the right to include. The inclusive patent establishes a fully open and sustainable access regime, entailing covenanted sharing. Third, the inclusive patent is a strong, high quality patent. Fourth, the inclusive patent is a registration patent. Sixth, the inclusive patent is a low cost patent. Seventh, an inclusive patent is a long term patent.
Over the last decade or so, the emergence of collaborative license mechanisms – such as standardized patent clearinghouses – can be witnessed in the area of plant biotechnology. Rather than addressing fragmentation, these platforms have been created to facilitate transfer of single (potentially blocking) patents, and guarantee universal access. Contemporary research also suggests new models fostering sharing of plant breeding material in a universal and sustainable way, via the use of ‘inclusive patents’. Inclusive patents have the potential to infuse an advanced breeder’s exemption in patent law in a cost-efficient manner.
1 This section is based on Van Overwalle, G., ‘Patent Pools and Clearinghouses in the Life Sciences: Back to the Future’, in Research Handbook on IP and the Life Sciences, D. Matthews & H. Zech (eds.), Edward Elgar, 2017 (in press).
2 M. A. Heller & R. S. Eisenberg, ‘Can Patents Deter Innovation? The Anticommons in Biomedical Research’  280 Science 698.
3 A patent thicket has been defined as “a tangled, twisted mass of intellectual property rights, which criss- cross the established walkways of commerce”, where “numerous contracts with multiple, independent right holders” are required (R. P. Merges, ‘Contracting Into Liability Rules: Intellectual Property Rights and Collective Rights Organizations’  84 Calif. Law Rev. 1293-1393), or as “a dense web of overlapping intellectual property rights” that must hack their way through in order to actually commercialize new technology” (C. Shapiro, ‘Navigating the Patent Thicket: Cross Licenses, Patent Pools and Standard Setting’ in Innovation Policy and the Economy (Vol. I), E. Jaffe et al. (eds.), MIT Press, 2001, 119–150). For a critical note on these definitions, see Van Overwalle, 2017, note 1.
4 See I. Huys, N. Berthels, G. Matthijs & G. Van Overwalle, ‘Legal Uncertainty in the Area of Genetic Diagnostic Testing’  27 Nature Biotechnology, 903-909.
5 See G. Graff and D. Zilberman, ‘Towards an Intellectual Property Clearinghouse for Agribiotechnology’  3 IP Technol. Today, 1–12; G. Graff, S.E. Cullen, K. J. Bradford, D. Zilberman, & A. B. Bennett, ‘The Public–Private Structure of Intellectual Property Ownership in Agricultural Biotechnology’  21 Nature Biotechnol., 989–995.
7 N. Louwaars, H. Dons, G. Van Overwalle, H. Raven, A. Arundel, D. Eaton & A. Nelis, Breeding Business. The Future of Plant Breeding in the Light of Developments in Patent Rights and Plant Breeder’s Rights (Study on request of the Netherlands Ministry of Agriculture, Nature and Food Quality), Wageningen, Centre for Genetic Resources (CGN) – Wageningen University and Research Centre, 2009, (CGN Rapport 2009-14 EN), 27 and the references cited there (available at http://www.wageningenur.nl/nl/show/Breeding-Business.htm) footnote 46.
8 In the present paper, ‘blocking patent’ refers to a patent covering essential features of the invention which cannot be invented around.
9 See the e-licensing platform from Syngenta, more in particular the FAQ section (http://www3.syngenta.com/global/e-licensing/en/e- licensing/About/Pages/Frequentlyaskedquestions.aspx).
10 Louwaars et al. , footnote 7, 27 and the references cited there.
11 The term ‘clearinghouse’ is derived from banking institutions and refers to the mechanism by which cheques and bills are exchanged among member banks to transfer only the net balances in cash. Nowadays the concept has acquired a broader meaning that refers to any mechanism by which providers and users of goods, services and/or information are matched (For more, see Van Overwalle 2017).
12 See e.g. G. Van Overwalle, ‘Designing Models to Clear Patent Thickets in Genetics’, in Working within the Boundaries of Intellectual Property, R. Dreyfuss, H. First D. and Zimmerman (eds.), Oxford, OUP, 2010, 305-324 (further abbreviated as G. Van Overwalle ); G. Van Overwalle (ed.), Gene Patents and Collaborative Licensing Models. Patent Pools, Clearinghouses, Open Source Models and Liability Regimes, Cambridge, CUP, 2009; G. Van Overwalle et al., ‘Models for Facilitating Access to Patents on Genetic Inventions’, 7 Nature Review Genetics, 2006, 143 ff.
14 See http://www3.syngenta.com/global/e-licensing/en/e-licensing/About/Pages/About.aspx. The procedure to license patented native traits and enabling technologies unfolds in four steps. In a first step users are invited to search the Syngenta catalog by accessing the e-license website. When a user clicks on a trait or technology of his choice, detailed information on the technical features, the standard financial terms, the patent status and the list of commercial Syngenta varieties that contain the patented native traits appear. Further steps include filling out the standard agreement.
15 ‘Standard’ by no means signifies ‘one size fits all’ or absence of variability. ‘Standard’ means a preset license with options that vary according to the broad features of the rights. Standard licenses can be differentiated as to the nature of the user, the objective of the use and the profile of the eventual product to be developed by the licensee. The access to licenses can be arranged by a portal through which licensors and licensees can use a simple interface, with drop-down menus and standard questions, enabling the creation of a customized agreement, tailored to fit the large variety of circumstances in patent licensing (For more, see Van Overwalle 2017).
17 Eleven breeding companies were the founding fathers of ILP Vegetable, comprising both listed companies and family businesses from Switzerland, Germany, Japan, France and the Netherlands (namely (Agrisemen, Bayer, Bejo, Enza, Holland-Select, Limagrain, Limgroup, Pop Vriend, Rijk Zwaan, Syngenta and Takii)v(see http://www.ilp-vegetable.org/about-ilp and http://www.ilp-vegetable.org/members/ .
18 For more, see Van Overwalle 2017.
19 G. Calabresi and A.D. Melamed, ‘Property Rules, Liability Rules, and Inalienability: One View of the Cathedral’  85 Harv. L. Rev., 1089-1092. This title refers to Claude Monet’s series of paintings of Roeun Cathedral, implying that the authors’ academic analysis is but one look at a subject that can be considered from various points of view.
20 Merges  footnote 3, at 1293, 1302.
21 See J. H. Reichman, ‘Of Green Tulips and Legal Kudzu: Repackaging Rights in Subpatentable Innovation’  53 Vanderbilt Law Review, 1743-1798. Also see J.H. Reichman and T. Lewis, ‘Using Liability Rules to Stimulate Innovation in Developing Countries: Application to Traditional Knowledge’, in International Public Goods and Transfer of Technology Under a Globalized Intellectual Property Regime, K.E. Maskus and J.H. Reichman (eds.), 2005, 337-366. For an up to date analysis, see D. Krauspenhaar, Liability Rules in Patent Law. A Legal and Economic Analysis, Berlin-Heidelberg, Springer, 2015.
22 Figure taken from Geertrui Van Overwalle, ‘Exclusive Property versus Open Commons. The Case ofGene Patents’, The WIPO Journal: Analysis and Debate of Intellectual Property Issues, 4, 2013, 139-158.
23 See G. Van Overwalle, ‘Individualism, Collectivism and Openness in Patent Law: from Exclusion to Inclusion Through Licensing, in Individualism and Collectiveness in Intellectual Property Law, Jan Rósen (ed.), Cheltenham, Edward Elgar  71-114.
25See EPO Economic and Scientific Advisory Board (ESAB), Report on Patent aggregation and its impact on competition and innovation policy, Munich, 25 November 2014 (available at http://www.epo.org/about-us/office/esab/workshops.html).
26 This section is based on G. Van Overwalle, ‘Inventing Inclusive Patents. From Old to New Open Innovation’, Kritika: Essays on Intellectual Property, vol. 1, P. Drahos, G. Ghidini & H. Ullrich (eds.), Edward Elgar, 2015, 206-277; G. Van Overwalle, ‘Innovation without Property?’, in A Truly Golden Handbook. The Scholarly Quest for Utopia, V. Achten, G. Bouckaert & E. Schokkaert (eds.), Leuven, Leuven University Press, 2016, 300-314; G. Van Overwalle  footnote 22.
Published in Berichten industriële eigendom (BIE) – Special – Afscheidsnummer Paul van der Kooij, maart 2017, 29-32