ACCESSING AGRICULTURAL BIOTECHNOLOGY

RESEARCH IN LATIN AMERICA:

PRIORITIZING STRATEGIC BIOTECHNOLOGY POLICIES

OVER NOVEL LICENSING TECHNIQUES

ANDREAS KALOGIANNIDES, M.A.

A research essay submitted to The Faculty of Graduate Studies and Research

in partial fulfillment of the requirements for the degree of

Master of Arts

The Norman Paterson School of International Affairs

Carleton University

Ottawa, Ontario

August 3rd 2010

© 2010, Andreas Kalogiannides

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TABLE OF CONTENTS ABSTRACT ....................................................................................................................... iii ACKNOWLEDGMENTS .................................................................................................. iv

INTRODUCTION ............................................................................................................... 1

Methodology .................................................................................................................... 6

CHAPTER 1: Issues and Licensing Strategies in Accessing and Transferring Agricultural Biotechnologies .................................................................................................................. 11

1.1 Standard Licenses .................................................................................................... 21

1.2 Open-Source Licenses ............................................................................................. 28

CHAPTER 2: Biotechnology Policies in Latin America: Innovation Systems in Bolivia and Brazil ........................................................................................................................... 35

2.1 The Brazilian Biotechnology Innovation Model ..................................................... 40

2.2 The Bolivian Biotechnology Innovation Model ...................................................... 48

CHAPTER 3: Lessons Learned from the Innovation Systems in Brazil and Bolivia........ 58

CONCLUSION .................................................................................................................. 70

REFERENCES .................................................................................................................. 73

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ABSTRACT

The problem of limited access to biotechnology research tools as a result of intellectual property protections is largely illusory and has not been voiced as a significant obstacle by major Latin American institutions conducting agricultural biotechnological research. Encouraging innovation in pro-poor agricultural biotechnology research is not [primarily] a function of novel licensing strategies. This paper will present a comparative analysis of biotechnology strategies and innovation models in Brazil and Bolivia to demonstrate that calls for the widespread adoption of collaborative licensing strategies, such as standardized and open-source licenses, will not be effective in encouraging technology transfer unless core, capacity-forming biotechnology policies are also in place. Innovation and technology transfer in agricultural biotechnology require strong guidance and strategic policy formulation from the state.

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ACKNOWLEDGMENTS

I would like to thank my mother, Helen, and my father, Peter, for keeping me grounded and sane in the times when I felt anything but. Much thanks also to my supervisors, Professor Jean Daudelin and Professor Jeremy de Beer, for

their contributions, guidance – and above all – their patience. Thanks also to Susan Finston whose pragmatic outlook and experience helped shape my

views on the subject.

1

INTRODUCTION

The involvement of the private sector in agricultural biotechnology has increased

the role of negotiating, acquiring and managing intellectual property (IP) rights. Public

and private actors conceive of IP in different ways and therefore manage and use

technologies differently: private entities seek to increase shareholder value whereas

public entities seek to produce knowledge in public goods technologies. This divergence

of perspectives influences how public and private actors manage and use intellectual

property rights. No more is this evident than in the development and transfer of

agricultural biotechnology for pro-poor uses. Some commentators have suggested that

the utility of traditional IP management instruments, such as Material Transfer

Agreements (MTA), in encouraging technology transfer for research purposes ought to be

re-evaluated because of their potential to limit public sector access to new research.

Along these lines, it is suggested that novel licensing techniques, including the use of

standard licenses, open-source licenses and patent pools, should be form an integral part

of a pro-active IPR management strategy for countries wishing to increase opportunities

for biotechnology research and development (R&D) and commercialization.

However, issues navigating intellectual property rights are not the main obstacles

impeding innovation in agricultural biotechnologies. Hence, novel licensing methods

might not improve access to research tools as much as theorized by many commentators,

such as John Barton, Sarah Boettinger, Eran Binenbaum and Janet Hope, to name only a

few.1

1 The futility of open-source licensing models was prominent theme in my meeting with Susan K. Finston, an expert on technology transfer in agricultural biotechnology and innovation policy. Her two decades of

While accessing patented research tools used in basic research is theoretically an

2

issue for some public sector institutions, evidence suggests that intellectual property

rights are not the main factor inhibiting the progress of most agricultural biotechnology

research; in fact, intellectual property rights are generally not even on the radar-screen of

researchers, scientists and managers working in agricultural biotechnology. Instead, the

process of acquiring patent rights is incidental to other factors that have a significantly

larger influence on the progress of innovation, including the maturity level of the

biotechnology industry, the strength of regional or sub-regional partnerships, the strength

of national agricultural research services and the extent of cooperation between

international agricultural research centers and national research institutes. These factors

are all a function of strategic government policy in the areas of developing scientific

capacity, prioritizing research areas and positioning public sector institutions as

incubators of cutting-edge R&D. As such, re-positioning public sector research upstream

from the private R&D involves a re-evaluation of government agricultural policy.2

In addition, while it has traditionally been thought that strong intellectual property

rights are the main drivers of innovation, recent studies have confirmed that IP is rarely

the most important factor, no matter how rights are managed.

3

experience has indicated to her that the patent-thicket or “anti-commons” scenarios described in academic literature and research do not accurately reflect the real-life issues in technology transfer. Rather, the biggest obstacles facing the transfer of agricultural biotechnology are the lack of coordinated research policies, unclear biosafety regulation and lack of adequate incentives for commercialization of new public-domain research. see Finston, Susan. Meeting with Susan Finston. Vol. Discussed IP rights in agricultural biotechnology., 2010.

For example, a 2001 study

2 The strategies of the International Financial Institutions, in terms of their assistance to and policy conditionality for the poorer nations, within which subsistence farmers are especially likely to be found, are also indirectly responsible for contributing to limited public sector research capacity. see Barton, John. Nutrition and Technology Transfer Policies. Vol. 6. United Nations Conference on Trade and Development and the International Centre for Trade and Sustainable Development (UNCTAD-ICTSD Project on IPRs and Sustainable Development), 2005. [Barton] 3Krattiger, Anatole F., R. T. Mahoney, "The Role of IP Management in Health and Agricultural Innovation." Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices Mill Street, Oxford, U.K.: MIHR (Centre for the Management of Intellectual Property in Health

3

by the Rockefeller Foundation4

1. R&D in the public and private sectors

found that there are six “components of innovation” that

affect the development and availability of new biotechnologies:

2. The ability to manufacture to high standards new health technology

products

3. The existence of national distribution systems in both public and private

sectors

4. The existence of international distribution systems, including the operation

of global funds and trade between countries

5. Systems to manage IP

6. Systems for drug and vaccine regulation to achieve safety and efficacy5

Intellectual property management is merely one out of the six nodes. The other five

nodes are all dependent on innovation and biotechnology policies, including the extent to

which R&D is encouraged in the public sector and commercialized by the private sector;

the presence of collaborative, decentralized research networks; and the existence of

efficient technology distribution pipelines for public sector innovations to find their way

to the private sector.

The growth in agricultural technology due to agro-industrialization should, in

theory, offer many opportunities for public-private partnerships to generate useable

Research and Development) and PIPPRA (Public Intellectual Property Resource for Agriculture), 2007. [Role of IP Management] 4 Unfortunately, many of these studies have been in the area of pharmaceutical and health technology. However, new agricultural technologies are very similar to pharmaceuticals because they are also based in biotechnology research, and this paper makes the fair assumption that principles affecting innovation in pharmaceuticals will also work for agriculture. 5 Mahoney, R. T. “Building Product Innovation Capacity in Health”, Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices Mill Street, Oxford, U.K.: MIHR (Centre for the Management of Intellectual Property in Health Research and Development) and PIPPRA (Public Intellectual Property Resource for Agriculture), 2007 [Innovation Capacity in Health]

4

biotechnology research that can benefit subsistence farmers,6 and the policy environment

in which these partnerships mature is the key determinant of how efficiently farmers can

access and use this technology. For example, at the level of basic and applied agricultural

biotechnology research (public sector research is mostly concentrated at the basic and

applied levels), tax incentives, market size, the profitability of small-to-medium

enterprises (SMEs), research capacity, the existence of a functioning legal framework and

national trade policy are all very important in determining which technologies are

developed, transferred and ultimately commercialized.7

A critical component of a strong biotechnology policy environment is leadership

and strategic planning from the state. Biotechnology R&D is so heavily dependent on

technology and research that agricultural research policies must explicitly prioritize the

role that biotech plays in the economy to create the necessary conditions for innovation;

for example, to become competitive in biotechnology, the state must focus on

strategically developing scientific and technological capacity and policies must facilitate

these developments and investments.

8

6 The Hortex program is a good example of the type of partnerships that are possible given the correct regulatory and policy framework. The program is a large partnership between a variety of institutions that helps Bangladeshi farmers export fruits and vegetables to Europe. see World Bank, Rural Development Sector Unit, South Asia Region, “South Asia; Strategy and Action Plan for Development”, July 11, 2001; see also Barton supra note 2 at 14

Innovation systems are governed through the

structures and procedures policymakers set to encourage innovation and provide

7 These issues are all specifically recognized by the World Bank in its rural strategy development papers; the World Bank has also identified a need for significant increases in technological development and research capacity. see From Action to Impact: Africa Region’s Rural Strategy. World Bank, Rural Development Sector Unit, 2002. [Action to Impact]; see also Barton supra note 2 at 18. Moreover, it is also particularly important that the situation of the resource-poor farmer should be taken into account to ensure that the benefits of modern biotechnologies reach small farmers. The majority of farmers in some Latin American countries are classified as resource-poor. see Roca, W. "Agricultural Applications of Biotechnology and the Potential for Biodiversity Valorization in Latin America and the Caribbean." AgBioForum 8.2. [Roca] 8 see Krattiger, Anatole F. "Public-Private Partnerships for Efficient Property Biotech Management and Transfer, and Increased Private Sector Investments." IP Strategy Today 4 (2002). at 5 [Krattiger]

5

incentives to innovating agents and govern the interactions among them. This ultimately

determines the efficiency of technology transfer.9 It is often the case that the technology

exists, but there are inadequate information channels and innovation policies to absorb

and use the technology:10

It is…necessary that innovation policies support collaboration and the sharing of scarce resources for innovation. These policies can be complemented by mechanisms that prioritize specific subsectors or territories in order to not divert scarce innovation resources across too many activities.

11

As this paper will discuss, this is particularly the case with respect to most Latin

American countries with limited capacity for basic and applied biotechnology research.

Sophisticated licensing models can only contribute to research capacity when there are

also advanced mechanisms for IP management and advisory support services; dedicated

mechanisms to encourage public-private cooperation and knowledge-sharing; absorptive

capacity by training scientists and researchers in applied research and IP management; the

development of SME biotechnology firms through venture capital funding and support

services. With a few exceptions, this has been the experience of several countries with

emerging biotechnology systems in the Latin American and Caribbean (LAC) region,

where innovation systems are characterized by departmentalization and low levels of

inter-ministerial exchange and cooperation.12

9 see Hartwich supra note 10 at 1

The limited amount of biotechnology R&D

being produced is not a result of proprietary limitations on biotechnology tools, but rather

of other factors, including underdeveloped local capital markets, lack of strategic vision

10 see Taxler supra note 13 at 38 11 Hartwich, Frank. Innovation Systems Governance in Bolivia; Lessons for Agricultural Innovation Policies. Vol. 00732. Washington, D.C.: International Food Policy Research Institute, 2007 [Hartwich] at 6 12 Ibid Hartwich at 18; see also Smits, R. and Kuhlman, S. 2004. “The Rise of Systemic Instruments in Innovation Policy”. International Journal of Foresight and Innovation Policy 1(2-3): 4-32. [Systemic Instruments in Innovation Policy]

6

from the state, the absence of incentives for risk-taking in R&D and inadequate venture

capital mechanisms:13

Experience with GMOs in LAC to date seems to indicate that the crucial strategic

links between research and the farmer are the existence of “down-stream” capacities, that is, traditional plant breeding programs and operational seed markets as well as commercial micro-propagation undertakings and other types of industrial capabilities (i.e. plant diagnostic and veterinary medicine commercial sectors, etc.), rather than the scientific capacity required to develop the events or products involved.14

Methodology

Brazil has been very successful in developing pro-poor biotechnological research

(at the basic, applied and commercial levels). This has very little to do with anything

pertaining to the use of specific licensing policies or instruments, but rather with the level

of strategic policy direction provided by the state. Moreover, novel licensing instruments

are likely to be ineffective in a developing country, such as Bolivia, whose

biotechnological capacity is still in its infancy and where there is also not a robust

innovation system already in place for other industries; in fact, there is also little evidence

that open-source or patent-pool licensing strategies would even be effective in Brazil

where there already exists developed biotechnology research capacity coordinated by

strategic national biotechnology policies. An objection to my methodology might be that

there have not been any instances of open-source licenses being used in either country,

and therefore, a conclusion that such licensing techniques would not make technology

transfer more efficient is premature. However, we must remember also that open-source

biotechnology licenses have not been used anywhere in the world, let alone in Latin

13 Taxler, Greg, et al. Recent Developments in Agricultural Biotechnology in Latin America and the Caribbean: Implications for IDB Lending. Sustainable Development Technical Paper Series ed. Vol. RUR-107. Washington, D.C.: Inter-American Development Bank, 2000. [Taxler] 14 Ibid Taxler at 52

7

America (this paper also contains a brief discussion of the main reasons for their lack of

adoption). This paper also contends that a two-country comparison is more appropriate

than a comparison of several countries in the region because Latin America is highly

diverse not only with respect to its vast genetic resources, but also with respect to socio-

economic and cultural characteristics.15

15 Conde, Cecilia, Sergio Saldana, and Victor Magana. "Thematic Regional Paper: Latin America." FightingClimate Change: Human Solidarity in a Divided World. Human Development Report 2007/08 ed.United Nations Development Program - Human Development Report 2007/08, 2007. [Conde]

Since the turn of the millennium, as the neo-

liberal policy mix held over from structural adjustment programs of the 1980s has slowly

given way to new innovation systems, there have been separate and distinct efforts in

several countries to make innovation policies more efficient. For example, Costa Rica is

developing new laws governing technological innovation; Columbia is also re-evaluating

its national innovation systems and developing legislation to put them into practice; and,

in Chile and Mexico, there has been legislation focused on providing funding to private

innovation clusters. This author does not believe it would be instructive to compare them

all as that could be better accomplished through a different paper. In addition, this paper

also holds that Brazil must be included in any relevant case study of biotechnological

innovation in Latin America. Brazil has emerged as an undisputed leader in

biotechnology research not only in the LAC region but also on the world stage; clearly,

Brazil is doing something right. A few other Latin American countries, namely

Argentina and Mexico, are also generally ahead of the curve, but this paper assumes a

comparison of the countries grouped towards the middle of the pack might not

sufficiently demonstrate the true nature of the policy drivers of strategic innovation.

Instead, it is a struggle of the countries with the least developed and emerging

biotechnology systems. What might they learn from the experiences of Brazil regarding

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encouraging the development of agricultural biotechnology research? Similarly, can their

development be facilitated through the use of novel licensing strategies that Brazil has not

used?

This notwithstanding, the comparative analysis presented here concedes a few

prima facie issues in a two-country comparison. The first is with respect to population

size - Brazil has a large population and internationally renowned higher-education

system, while Bolivia is one of Latin America’s poorest countries whose development

over the last few decades has been marred by political instability. However, given the

similarities in terms of their respective levels of rural poverty, goals regarding the

management of biodiversity, respective state-led initiatives to generate basic research and

choice of intellectual property regimes (IPR), differences either in scale, e.g. GDP-style

economic valuations or the total value of agricultural experts, cannot adequately explain

the contrasting pictures of agricultural biotechnological development. (For all of Brazil’s

size, GDP per capita growth is nearly identical – 4.1% in Brazil and 4.3% in Bolivia.16

16 Figures are from 2008. International Fund for Agricultural Development "Rural Poverty in Brazil." 2010. <

)

This is not to say that both the political strife in Bolivia and the power of Brazil’s

economy have not, in some ways, affected the rate of biotechnological progress; no

industry is an island unto itself and it is true that economic power and political stability do

play a role in the success in the development of any industry. Nonetheless, this paper

holds that a comparison is still useful because of the similarities in levels of rural poverty,

systems to manage intellectual property in biodiversity and levels of biodiversity itself.

The alleviation of rural poverty is one of the targets of encouraging agricultural

technology transfer and the protection and use of biodiversity resources is a prerequisite

http://www.ruralpovertyportal.org/web/guest/country/home/tags/brazil>. [IFAD]

9

for achieving this goal. For instance, despite its size, Brazil is still a middle-income

country with a large and poor rural population. Poverty levels and human development

indicators in poor rural areas place Brazil among some of the poorest countries in Latin

America.17 Moreover, both countries have large rural populations: approximately 19% of

Brazil’s total population lives in rural areas; similarly, 33% of Bolivia’s population is

situated in rural areas. Rural poverty in Brazil is rampant, affecting approximately half of

the rural population – 18 million people – making it the largest number of rural poor in

the Western Hemisphere. 18 Most of Brazil’s four million farms produce at the

subsistence level, yet also account for approximately 70% of its total food production.19

17 See IFAD supra note 16

Importantly, both countries approach intellectual property from similar normative and

empirical perspectives. Both have signed many of the same international agreements,

such as the Convention on Biological Diversity (CBD), the International Union for the

Protection of New Varieties of Plants (UPOV) 1991 and the Trade Related Aspects of

Intellectual Property (TRIPS) Agreement. Both countries have enacted new pieces of

legislation protecting plant life – Brazil through its Provision Act of 2001 and Bolivia

through its new Constitution introduced in early 2009. With respect to the levels of

biodiversity, Brazil and Bolivia are among the most biodiverse countries in the LAC

region. Along with India, China, Costa Rica, Ecuador and a few others, they are

considered to be “mega-diverse” developing countries, i.e. having around 60%-70% of

the world’s genetic resources within their borders. With these similarities, there is

sufficient background that we might compare the biotechnology innovation systems of

18 Ibid 19 Ibid

10

both countries through the intellectual property and plant protection regime in place to

manage and protect these resources.

This paper is divided into three chapters. Chapter 1 sets out the basis for my

analytical framework through a discussion of the proposed advantages of novel licensing

techniques as means to better manage and transfer agricultural biotechnology. Chapter 2

begins with a discussion of the main challenges facing the development of agricultural

biotechnologies in the LAC region, followed by a comparative analysis of the innovation

systems in Bolivia and Brazil. Chapter 3 distills some of the key lessons gleaned from

the comparative analysis of Brazil and Bolivia.

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CHAPTER 1: Issues and Licensing Strategies in Accessing and Transferring Agricultural Biotechnologies

This chapter will set out the basis for my analytical framework. It outlines the

proposed advantages of novel licensing techniques as a means to better manage and

transfer agricultural biotechnology. I shall begin by highlighting a few of the main issues

involved in accessing and transferring proprietary biotech research. Next, I shall

critically discuss several potential solutions that have been proposed to overcome these

challenges, beginning with a look at the use of standardized licenses, followed with a

brief discussion of patent pool arrangements and culminating with a larger discussion of

open-source licensing and the reasons why it is being proposed as a tool to improve the

management of proprietary biotechnology rights.

The public agricultural research conducted by universities and agricultural

research centers has been the “[t]he traditional mechanism of supporting nutritional

research, both in the developed world and in the developing world”.20 Public research

institutions have also traditionally been the originators of new seed technology, as most

“new seeds varieties in most developed nations came from national or public university

breeding institutions”.21

20 see Barton supra note 2 at 8

However, while public agricultural research benefitted from a

large amount of funding by governments and donors from the 1960s to the 1980s, it has

21 Public research institutions, including Consultative Groups on International Agricultural Research (CGIARs) were the primary drivers of agricultural innovation in the Green Revolution during the 1960s and 70s. Ibid Barton at 8

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remained mostly stagnant since then.22 Inadequate funding for agricultural research has

diluted the influence of the Consultative Group of International Agricultural Research

(CGIAR) system. Traditionally, the international agricultural research system would

hand down research to national agricultural research centers, but the system of national

agricultural research centers (NARS) has been disrupted by the influx in scientific

research coming from public and private actors, universities and joint ventures,23

At the same time, shrinking public sector budgets have increased private sector

participation in the generation of agricultural biotechnology research. With large R&D

resources to fund long-term projects, a critical mass of resources for scientific research,

expertise in marketing and distribution, and access to global markets, private firms have

replaced public institutions as the leading source of technological innovation for market

agriculture

resulting in a vacuous space in the research and development of new agricultural

technologies.

24 with the ability to determine research priorities at the basic and applied

level.25

22 This is due in no small part to poorly funded agricultural policies of the economic liberalization reforms of the 1980s throughout Latin America that favoured private sector involvement. see Barton supra note 2

23Recently, the NARS system has been found to be inefficient in generating technological research, unresponsive to the needs of small farmers and not conducive to wider stakeholder involvement. There has been some effort to invigorate the concept of the NARS through the agricultural knowledge and information system (AKIS), comprised of a group of organizations that facilitate knowledge management, information sharing and cooperative interactions between farmers, universities, food co-ops and agro-industry. This, too, however, has been criticized for its ability to generate concrete technical solutions and so far it has yet to significantly impact decision-making in agricultural policies. As a result, the public sector currently finds itself downstream of the private sector where research priorities are dictated by private firms. see Hartwich, Frank, Anastasia Alexaki, and Rene Baptista. Innovation Systems Governance in Bolivia: Lessons for Agricultural Innovation Policies. Vol. 732. Washington, D.C.: International Food Policy Research Institute, 2007 [Hartwich] at 11. see also Röling, N., and P. G. H. Engel. "The Development of the Concept of Agricultural Knowledge Information Systems (AKIS): Implications for Extension." Agricultural Extension: Worldwide Institutional Evolution and Forces for Change. Ed. W. M. Rivera and D. J. Gustafson. Amsterdam, Netherlands: Elsevier Science; see also Barton supra note 2 at 14 24 see Barton supra note 2 at 9 25 The priority of biotechnology innovation has been reducing costs in agricultural sectors that are already highly productive by raising productivity levels through value-added activities and improvements in

13

Many academics and commentators have voiced concerns about how intellectual

property rights in biotechnology research are being managed by the private sector. The

concern is related to public sector access to research developed in the private sector –

specifically, that technologies developed in the private sector will be locked down with

patent rights and this may ultimately reduce the quantity and quality of cutting-edge

research for pro-poor technologies. Freedom to operate in biotechnology research –

defined as open and unencumbered access to basic research tools – is very important in

public agricultural research. Due to the private sector’s heavy involvement in agricultural

biotechnology, many key pieces of basic research have been patented, thereby potentially

limiting the public sector’s freedom to operate. Also, with more and more agricultural

biotechnology subject to proprietary control, the potential for an increase in transaction

costs rises as well because “researchers in agricultural biotechnology must coordinate

numerous disparate property rights in order to obtain an effective privilege of use”.26 The

assumption, then, is that public researchers will not pursue certain research activities for

fear they will infringe patents, creating a chilling effect that limits their freedom to

operate.27

Long established patterns of intellectual communication essential to the functioning of academic institutions are already being disrupted, with noticeable delays in publication due to IP concerns. Intimidation of potential users of

According to the Inter-American Development bank, this concern already

exists in the Latin American and Caribbean region:

quality. While some view this as a normal evolution of the R&D investment cycle (i.e. areas offering high rates of return are developed first, followed by lower-return areas over the long term.), technologies that could benefit small farmers in developing countries are not sufficiently developed. see Taxler supra note 12 at p.13; see Chrispeels, M. J. "Biotechnology and the Poor." Plant Physiology 124 (2000): 3-6. [Chrispeels] 26 Hope, Janet. Open Source Biotechnology. Doctor of Philosophy Australian National University, 2004 Australia. [Open Source Biotechnology] 27 Boettinger, Sarah. "Open Source Patenting." Journal of International Biotechnology Law 1.2 (2004). [Boettinger]

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biotechnology because of complexity of IP issues and lack of experience of small companies and public sector is a real risk.28

Conversely, however, public research institutions require the knowledge capacity to

properly manage IP rights they acquire from the private sector – skills ranging from

negotiating license agreements to dealing with potential patent infringement claims to

prioritizing the patenting of new research to maximize freedom to operate.29 This is a

challenge for many public institutions that lack institutional IP management strategies;

where such strategies do exist, they are often inadequately staffed and funded:30

The assembly of the different inventions leading to freedom to operate in the market place is strongly influenced by institutional capacities to manage IP and by institutional strategies related to partnership building. This is undoubtedly one of the most critical areas where developing countries could benefit greatly from assistance.

31

Similarly, there is a “widespread misunderstanding regarding IPR and freedom to operate

in developing countries”;32 this confusion persists even in the international agricultural

research system. There is a lack of understanding not only about how domestic and

international patent laws work, but also what patent laws apply and how intellectual

property rights impact freedom to operate.33

28 see Taxler, supra note 12 at 42

For example, a study of five Latin American

regions by the International Service for National Agricultural Research (ISNAR)

concluded that researchers often had no information with respect to the legal protection of

29 see Taxler supra note 12 at 42 30The options for public research institutions for dealing with IP include: 1) inventing around the patents (science and research based approach); 2)re-design product (product development approach) 3) Convince IP owners to relinquish their ownership 4) ignore IP rights of owners 5) seek licenses for the IP and 6) A pragmatic approach consisting of options 2 through 5. see Krattiger supra note 8 31 Ibid Krattiger at 15 32 Binenbaum, Eran, et al. "South-North Trade, Intellectual Property Jurisdictions and Freedom to Operate in Agricultural Research on Staple Crops." Economic Development and Cultural Change 51.2 (2003): 309-35 at 315 [Binenbaum] 33 According to Binenbaum, “a survey of the use of proprietary biotech research inputs at selected CGIAR centers showed considerable confusion on the part of researchers regarding the existence of relevant IPR and freedom to operate. see Binenbaum supra note 31 at 315

15

the technologies they were using, were not aware of the territorial limits of patent licenses

or how this affected their research.34

Another frequently voiced concern relates to the licensing strategies of private firms.

In response to the public sector’s touch-and-go approach to IP management, private

companies have developed a risk-averse IP management strategy (especially when

operating in developing countries) and prefer to license out technology with specific field

of use and territory restrictions in an effort to mitigate risk exposure.

35 When technology

is licensed, biotechnology companies tend to be very protective of their investments as

licensing results in a loss of control and offers few quality and liability assurances.36

Companies also hesitate to grant licenses in emerging markets for fear of creating new

competitors.37 Private firms are generally opposed to the idea of standardized licenses

because they want to make investment decisions on a selective, case-by-case basis.38 For

example, the standardized open-source BiOS licenses developed by CAMBIA have yet to

be used by the private sector; private firms prefer to simply take out more patents on

research.39

34 Even where the transfer of technology occurred through material transfer agreements that placed restrictions on third-party uses, more than 70% of the researchers saw no problems with distributing their final products and still believed their end-products would have legal protection. see Taxler supra note 12 at 45

As such, evidence suggests that what might be viewed by the public sector as

an “unwillingness to deal” is better characterized as an obligation to make informed

35 Janet Hopes writes: “As the new wave of technology development has increased the chances of such types of control, the same processes that can make developing countries more dependent on the import of new technologies may cause redistribution of direct investment away from developing countries.” see Open Source Biotechnology supra note 25 at 13. 36 see Krattiger supra note 29 at 6 37 The terms of the license were not disclosed. see Taxler supra note 12 at 37 38 see Open Source Biotech supra note 25 at 65 39 Weiss, Rick. "Firms Seek Patents on ‘Climate Ready’ Altered Crops." Washington Post 2008 <http://www.washingtonpost.com/wp-dyn/content/article/2008/05/12/AR2008051202919.html>. [Weiss]

16

investment decisions.40 Private investment dollars will naturally seek out safer

biotechnologies in more sophisticated markets. In most cases, it is difficult to fault the

private sector for its hesitation to make long-term R&D investments in an uncertain

business climate for pure line crops such as beans, rice and wheat.41

Many public research institutions have formed partnerships with the private sector in

an effort to narrow this public-private divide and generate new opportunities for

commercialization. There is a defined need to support basic research “that offers only a

long-run and uncertain benefit for the industry, but is crucial for society, and then to work

with the private sector to integrate that research into products whose final research and

development and manufacture are carried out by the private sector.”

42 Expert

commentators, including Anatole F. Krattiger, John Barton and Susan Finston, in addition

to several international institutions such as the World Bank and the United Nations

Conference on Trade and Development (UNCTAD), suggest that public-private

partnerships can be instrumental in generating public sector agricultural biotechnologies

because they allow the public and private sectors to assume different, yet complimentary,

responsibilities in the R&D process. Partnerships often take the form of strategic

alliances and research contracts, but increasingly take the form of company-university

ventures43

40 Interestingly, according to the Inter-America Development Bank, most private firms have been quite willing to license out technology to research institutions in Latin America. This has opened up the possibility that an institution can become a provider of agricultural biotechnology without actually having any specific research strengths beyond basic research. see Taxler supra note 12

because universities are able to undertake the long-term, basic research on

41 see Taxler supra note 12 at 37 42 According to A.F. Krattiger, “such partnerships are absolutely essential because little, if any, IP is generated and used (i.e., sold) by one entity alone. Different players are almost always involved, with each player extracting value from the IP in one form or another (e.g., directly through licenses, indirectly through strategic advantages. see Krattiger supra note 29 at 9; see also Barton supra note 2 at 15 43 see From Action to Impact supra note 7

17

socially-beneficial technologies that is largely ignored by the private sector44 and this

maximizes the comparative advantages of the public and private sectors. In theory, PPPs

leverage the private sector’s disposable funds, specific expert knowledge, access to global

markets and production methods of private firms and the public sector’s freedom to

operate and market linkages in undervalued markets. As such, it is widely argued that

public-private partnerships (PPPs) “show increasing promise and reflect the substantial

role of the private sector in global agricultural research”.45

Interestingly, however, there is not much evidence indicating that PPPs have yielded

tangible results in agricultural biotechnology R&D.

46 In fact, only “about 7% of all

genetic transformation events generated by national research systems were conducted in

collaboration with the private sector”.47 Creating linkages with public institutions through

long-term research ventures not only necessitates sharing trade secrets and scientific

knowledge,48 but also exposes private firms to the risks of making large, fixed in-country

investments – something that private biotechnology companies hesitate to do in

developing countries.49

44 Many research developments are so uncertain that companies do not want to engage in areas which may not turn out to be commercially viable. University research often suffers from financial constraints so that research funding from the private sector is usually very welcome. see From Action to Impact supra note 7 at 21

A survey of the stakeholders involved in agricultural PPPs,

conducted by the International Food Policy Research Institute, found that, among the

45 Ibid at 21 46 see Spielman, David J. "Evaluating the Changing Role of Agricultural R&D, Partnerships, and Networks in Enhancing Technological Opportunities for Sub-Saharan Africa." A RoadMap Towards Making the Benefits of GM Crops Available to Resource-Poor Farmers in Africa. Bellagio, Italy, September 13-17 2005. [Spielman] 47 see Atanassov, Atanas, et al. To Reach the Poor – Results from the ISNAR-IFPRI Next Harvest Study on Genetically Modified Crops, Public Research and Policy Implications. EPTD Discussion Papers ed. Vol. 116. Washington, D.C.: International Food Policy Research Institute, 2004. 48 see Taxler supra note 12 at 38 49 In many cases, national laws on biodiversity influence a private firm’s decision to invest. Many countries that have ratified the Convention on Biological Diversity require “equitable” access and benefit sharing terms in material transfer agreements. This policy can be an obstacle for private investment as the term ‘equitable’ is very vague and complications from legal costs and possibly public relation issues. see Krattiger supra note 29 at 6-7

18

several factors which constrain PPPs, transaction costs were too prohibitive and incentive

structures in the public and private sectors were fundamentally different.50 The survey

concluded that “[t]here is a need for greater study of the structural, organizational and

managerial aspects of partnerships to make the approach more feasible and more relevant

to the needs of resource-poor farmers.”51

The importance of institutional IP management capacities can be illustrated

through the steps in the technology process in public-private partnerships. This process is

directly affected by government regulations on investment, taxation and intellectual

property.

Thus, it is reasonable to conclude that research

and IP management capacities need to be addressed before any issues pertaining to

accessing or transferring technologies.

52 It is also not linear, taking place over the course of the entire product

development cycle from basic research to commercialization in the marketplace.53 As

such, it is akin to an organic process where the research value of IP rights and transaction

costs acquiring such rights must be continually evaluated against the goal of maximizing

freedom to operate. For example, at the initial product clearance stage of acquiring

research technology, strategic decisions must be made regarding what components,

technologies and processes might need to be acquired under license.54

50 Spielman, D. J., and Gruber Von K. Public Private Partnerships in Agricultural Research: An Analysis of Challenges Facing Industry and the Consultative Group on International Agricultural Research. Vol. 113. Washington, D.C.: International Food Policy Research Institute, 2004. [Spielman & Gruber]

If alternative

51 see Spielman supra note 45 52Technology transfer is “the process of developing practical applications from the results of scientific research”. see Finston, Susan. "Technology Transfer Snapshots from Middle-Income Countries: Creating Socio-Economic Benefits through Innovation." Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices (Volume 2). Ed. Anatole Krattiger, R. F. Mahoney, and L. Nelsen. Mill Street, Oxford, U.K.: MIHR (Centre for the Management of Intellectual Property in Health Research and Development) and PIPPRA (Public Intellectual Property Resource for Agriculture), 2007. [Finston II] 53 see Krattiger supra note 29 at 15 54 The first regulatory hurdle in the technology transfer stage is the systematic product clearance - a quasi-legal document produced that outlines: the methods and procedures used to create the product; its principal

19

technologies exist, researchers can focus only on those items where IP rights can be

secured; if rights are not able to be secured, then research can be re-focused to invent

around patent rights.55

Because the corporate world is in a constant state of change, determining precisely which entity has the right to grant licenses for a particular component or process is not always straightforward. Indeed, as companies re-structure, sell/assign patents, or grant licenses, with or without the right to sub-license, the degree of uncertainty increases.

This product clearance process can often increase the transaction

costs in acquiring technology and is frequently cited as a major concern in situations

where there is inadequate public sector capacity to navigate IP rights:

56

Due to the need to assemble technologies at various stages of the process, government

policies aimed at encouraging biotechnology development can make technology transfer

more efficient by regulating the complex set of relationships between IP owners from

public and private institutions. Regulation of these relationships can take several forms.

Some academics have called for reform in the issuance and management of biotechnology

patents. Art K. Rai has proposed that government institutions and agencies should be

allowed to limit or circumvent patent rights should an anti-commons scenario emerge.57

components; the IP rights attached to each principal component; and, the owner of these IP rights. It is vital that happens at the earliest possible time in the R&D cycle to avoid future IP interference issues. The next step in the technology transfer process involves obtaining a freedom to operate opinion (FTO) from a patent attorney. This should also be completed as early as possible in the development process. Most public sector institutions engaging in agricultural biotechnology R&D will be limited in the number of FTO opinions they can acquire due to such high transaction costs. see Krattiger supra note 29 at 15

Dan Burk argues that patents should be technology specific, meaning when granting

patents, a judge (and not a patent examiner per se) should pay attention to the specific

factors and consequences of granting the patent, including the size of the industry,

55 Ibid Krattiger at 15 56The product clearance for the development of Golden Rice technology was particularly challenging due to the uncertainty in determining which parties were the patent assignees. 57 see Rai, Art K. "Genetic Technology: Social Values and Personal Autonomy in the 21St Century." Wake Forest Law Review 34.827 (1999). [Rai]; see Adelman, David J. "A Fallacy of the Commons in Biotech Patent Policy." Berkeley Technology Law Journal 20 (2005): 985. [Adelman]

20

competition levels and transaction costs.58 The National Academy of Sciences has also

proposed several reforms to the U.S. patent system, including giving the U.S. Patent and

Trademark Office (USPTO) more flexibility in considering newly developed

technologies, raising the threshold for the non-obviousness standard, instituting an “open”

review procedure for new patents and carving out a narrow research exemption.59

Unfortunately, there are issues with these propositions as possible ways to regulate

the IP relationships between public and private actors. For example, reforms to the patent

system might reduce the number of patents for agricultural biotechnology applications

due to the risk-averse nature of corporate investment strategies. Moreover, most of these

solutions have been by developed countries - net exporters of biotechnology that also

have an established patent regime and robust policy environment in place. Application in

a developing country context will look very different, where issue is not so much with the

patent system itself but rather the existence of information channels and the institutional

capacity to absorb technology. As net importers of biotechnology, developing the

institutional capacity to manage technology transfer licenses would probably be more

appropriate. It is also likely that merely changing the contractual terms without also

making other substantial revisions to how rights acquired under the contract can be

reduced to practice ignores some of the more significant challenges posed by the external

regulatory environment and innovation policy.

58 Burk, Dan, and Mark A. Lemley. "Is Patent Law Technology Specific?" Berkeley Technology Law Journal 17.1155 (2002): 1202. [Burk] 59 Merill, Stephen. A Patent System for the 21St Century. Washington, D.C.: National Academy of Sciences, 2005. [NATS]

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1.1 Standard Licenses

One suggestion that has gained some traction within academic circles is to simplify

the rights transfer process through standardized licenses.60 Appeals for the widespread

adoption of standard use licenses have become more common given the use of Material

Transfer Agreements (MTA) as the main rights transfer instrument in the technology

transfer process.61 Standard MTA clauses, such as the definition of material and field-of-

use clauses, will define what is covered by the agreement and how and where the

technology can be used.62 There are also transaction costs involved with negotiating

MTAs: for example, a prospective licensee must first find the licensor, a process made

more complicated by the fact that there can be multiple parties with rights to a piece of

technology.63 This process alone can involve considerable cost. Once owners are

located, there will be several rounds of negotiation, laid out in both formal and informal

agreements, such as confidentiality agreements, material transfer agreements, and

agreements to negotiate.64

60 Expert commentators including John Barton and John Walsh have studied the issue of transaction costs in agricultural biotechnology licenses and concluded that it would be helpful to develop a standard set of licenses to facilitate rights transfer. See Open source biotechnology supra note 25 at 99

Due to such costs, it is thought that creating a more

standardized licensing mechanism might reduce or possibly even eliminate such

61 Material Transfer Agreements, generally drafted separately from the main license agreement, define the extent and purpose of the transfer and also provide a succinct technical description of the material so that the licensee can use the technology without having to conduct more research. see Open source biotechnology supra note 25 at 109 62 There will also commonly be a grant-back clause where the licensor right retains rights to “modifications or derivatives made from the material that incorporates the investigator’s original ideas or concepts.” Though the determination of whether such clauses are anti-competitive will depend on the wording in each agreement, they do make it more difficult for the licensee to confer rights to a future developer, which greatly reduces the commercial utility of the research and might also reduce the incentive for the licensee to make full use of the technology. Kaplan, Warren. Using Intellectual Property Agreements to Promote the Objectives of Public-Private Partnerships in Developing Affordable Products for Developing Countries. World Health Organization - Center for International Health & Development. [Kaplan] 63 According to Eran Binenbaum, “… [w]here ownership of relevant rights is sufficiently diffuse, the multilateral bargaining problem can become impossible to resolve “. See Binenbaum supra note 31 at 313 64 see Open source biotechnology supra note 25 at 109

22

transaction costs. The concept of using standard licenses was also the basis for the

establishment of PIPPRA; and, more recently, the National Institute of Health (NIH) also

created a Uniform Biological Material Agreement as a standard license.65

However, there are several issues with the use of standard licenses. It is possible

that the inherent subject matter of biotechnology contracts (i.e. difficulties in delineating

rights to living materials comprised of several individual components) makes standard

licenses difficult to be adopted on a large scale.

66 This was the case with the NIH’s

Uniform Biological Material Agreement (UBMA), which was not widely used because it

was too legally formalistic and technical.67 In response, the NIH modified its approach,

recommending that patenting and licensing policies be tailored to the level of commercial

development being sought: for example, if large private sector investment is necessary,

then the technology should be patented, or, if investments are not necessary, patenting is

most likely not necessary.68

65 According to the NIH, the UBMTA and other standard agreements are designed to reduce the cost of negotiating licenses on a case-by-case basis. Interestingly, the NIH also reports that many universities have only approved the terms of the UBMTA, but still continue to use their own license agreements. see National Institute of health (NIH). Report of the National Institutes of Health Working Group on Research Tools. National Institute of Health (NIH), 1998. [NIH Report]; see also Hope, Janet. Biobazaar: The Open Source Revolution and Biotechnology. President and Fellows of Harvard College, 2008 [Biobazaar] at 225

NIH advocated for responsible licensing strategies and a set

of specific policy recommendations that are designed to stimulate the development for IP

knowledge management, including: research policies that require institutions to develop a

66 Janet Hope argues that , “while biotechnology licenses routinely contain definitions of ”materials”, ”products” and ”technology” as well as of patents and other proprietary rights, drafting these definitions is not a routine matter.” Poorly drafted MTAs are especially problematic given that licenses deal with unpredictable, evolving living materials. see Open source biotechnology supra note 25 at 65, 116. 67 Though it was designed to be a genuinely user-friendly license, its “boilerplate” language is still regarded by most to be overly complicated and difficult to interpret. see Open Source Biotech. see also NIH Report supra note 64 68 The NIH also holds that patenting is not required for many research tool technologies as they will most likely never be developed commercially. Ibid NIH report at 95

23

set of best practices for licensing as a condition for receiving research funding grants;69

enlarging the experimental use exemption in patent law; re-evaluating the standards of

non-obviousness and utility; and changing how patent examiners approach new

developments in biotechnology.70 To enhance the prospect that licensing is conducted

efficiently, the NIH developed the Cooperative Research and Development Agreement

(CRADA) as a part of monitoring component in the project approval process. CRADAs

are an example of a type of policy that creates the appropriate information-development-

commercialization channels that actually encourage the creation and dissemination of

new agricultural technologies. CRADAS are designed “to make government facilities,

intellectual property, and expertise available for collaborative interactions to further the

development of scientific and technological knowledge into useful, marketing products”71

and would ensure that each project is carefully evaluated for its overall research

objectives. In this way, CRADAs could also be a monitoring tool in public-private

partnerships to evaluate whether a collaborative arrangement is even necessary given the

research tools being used and the research goal being sought.72

In addition to standardized licenses, it has been suggested that patent-pooling is

another novel licensing strategy that might increase public sector access to biotechnology

69 The NIH believes that by placing responsibility with the applicant, bureaucratic inefficiency will be reduced. As a result, a normative shift in attitude would occur because applicants develop a consensus as to what steps are required in order to obtain funding. see Merill, Stephen, and Anne-Marie Mazza, eds. Reaping the Benefits of Genomic and Proteomic Research: Intellectual Property Rights, Innovation and Public Health.The National Academic Press, 2006. [Mazza] at 139 70 With regard to experimental use, it was proposed that there should be no patent infringement if the goal of the research is to discover: 1) the validity of the patent and scope of afforded protection; 2) the features, properties, or inherent characteristics or advantages of the invention; 3) novel methods of making or using the patented invention; or 4) novel alternatives, improvements or substitutes. Ibid Mazza at 141-145. 71 National Institute of Health (NIH). "Model CRADA Agreements." National Institute of Health (NIH) Office of Technology Transfer. 2010. <http://www.ott.nih.gov/cradas/model_agree.aspx>. [OTT] 72 In some cases, a CRADA may not be necessary if one or more of the research goals can be met through another type of contractual instrument, such as a procurement contract, MTA or cooperative agreement. Ibid OTT

24

research. A patent pool is an arrangement whereby two or more patent owners agree to

license one or more of their patents to each other or to third parties. Rights transfer in

patent pools is generally accomplished through an exclusive license or an assignment to a

separate administrative entity charged with controlling the patent portfolio.73 Similar to

open-source licenses, patent pools can avoid creating an anti-commons scenario by

removing licensing costs and facilitating knowledge-sharing.74

The use of patent pools in the biotechnology field could serve the interests of both the public and private industry, a win-win situation. The public would be served by having ready access with streamlined licensing conditions to a greater amount of proprietary subject matter. Patent holders would be served by greater access to licenses of proprietary subject matter of other patent holders, the generation of affordable pre-packaged patent “stacks” that could be easily licensed, an additional revenue source for inventions that might not otherwise be developed. The end result is that patent pools, especially in the biotechnology area, can provide for greater innovation, parallel research and development, the removal of patent bottlenecks and faster development

In a 2000 white paper, the

USPTO extolled the idea of patent pools in biotechnology, concluding that:

75

Similarly, the Food and Agriculture Organization (FAO) has also applied the idea of

pooling research in the form of the access and benefit sharing mechanisms found in the

International Treaty on Plant and Genetic Resources for Food and Agriculture

(ITPGRFA).76

73 Terms of the license, such as royalties, field of use restrictions and termination, are left to the parties to negotiate.

It establishes an interesting licensing model for an international

74 The National Research Council of the National Academies writes that “[p]patent pools remove intellectual property barriers to the exploration of technology, promote the integration of complementary technologies, and reduce the transaction costs of obtaining multiple licenses” see Mazza supra note 69 at 97-99; Patent pools are thought to have many of the same advantages as open-source licenses in promoting access to biotechnology research tools: the avoidance of “blocking” patents and “stacking” licenses; reduction of licensing transaction costs; improved risk distribution; and the exchange of trade secrets not necessarily covered by patents see also Clark, Jeanne, Joe Piccolo, and Brian Stanton. Patent Pools: A Solution to the Problem of Access in Biotechnology Patents?. U.S. Patent and Trademarks Office (USPTO), 2000. [USPTO] 75 Ibid USPTO at 11 76 The ITPGRFA was created by the Food and Agriculture Organization (FAO) on November 2001 and entered into force in June 2004. The goal of the ITPGRFA is to ensure that intellectual property rights

25

biotechnology framework that encourages collaborative research. It is thought that the

ITPRGFA can simplify the management of IP rights by reducing the layers of potential

licensing and cross-licensing agreements by creating a commons to preserve the genetic

materials that form the foundation of agriculture. The treaty also protects both private

and public interests because it allows for the commercial development of agricultural

technologies while also allowing for the preservation of fair and equitable access and

benefit sharing.77

Nonetheless, neither framework in the ITPGRFA nor patent pool arrangements have

been readily adopted by the biotechnology industry, mostly owing to concerns of

violating anti-trust legislation (patent pools can either restrict competition or output

depending on whether the licenses are assignments, exclusive or non-exclusive

licenses).

78

regimes do not inhibit the ability of private and public participants to access the materials and technology required to carry out research and breeding at both the national and international level. see

Moreover, with respect to the ITPGRFA, the transfer of genetic materials is

still regulated through Standard Material Transfer Agreements (SMTA). Although the

Saez, Catherine. "International Seed treaty’s Goals of Biodiversity and Food Security are Tough to Implement." IP Watch (2008): Dec 1 2009. <(http://www.fao.org/ag/AGP/AGPC/doc/services/pbn/pbn-193.htm#a116>. 77For example, under the treaty, recipients of genetic materials cannot claim IP rights over the material they have received through the system without voluntary consent of contributing members. Members agree to make their genetic diversity and crop information stored in their gene banks available to all other members through an online database. Materials distributed for use in food and agriculture are made available free of charge or at minimal cost. Should members wish to assert IP rights in a piece of technology, they must enter into voluntary agreements with other parties.77 Similarly, should a recipient of material create a new plant variety with genetic materials obtained in the system, any benefits from its use or commercialization must be shared fairly and equitably. see Halewood, Michael, and Kent Nnadozie. "Giving Priority to the Commons." The Future Control of Food: A Guide to International Negotiations and Rules on Intellectual Property, Biodiversity and Food Security. Ed. Rajotte Tasmin and Goeff Tansey.International Development Research Centre (IDRC), 2008. 115. [Halewood] 78 The U.S. Department of Justice and the Federal Trade Commission have issued policy direction guidelines on anti-trust issues in IP licensing. Inter alia, patent pools may be anti-competitive if 1) excluded firms cannot effectively compete in the relevant market for the good incorporating the licensed technologies; 2) pool participants collectively possess market power in the relevant market, and 3) the limitations on participation are not reasonably related to the efficient development and exploitation of the pooled technologies. see Anti-Trust Guidelines for the Licensing of Intellectual Property. Washington, D.C.: U.S. Department of Justice and Federal Trade Commission, 1995. see also Standard Oil Co. v. United States, 283 U.S. 163 (1931) for a discussion of the differences between legitimate and prohibited abuses of restrictions in patent pool arrangements.

26

ITPGR Governing Body crafted the SMTA to minimize the conditions imposed on a

project’s freedom to operate, the clauses in the SMTA are still relatively complicated and

it is not yet clear to what extent these conditions might still prove to be cumbersome for

sustainable agricultural innovation. More importantly, the private sector has been

reluctant to share research and contribute genetic materials and currently there are strong

doubts about how effective this system will be at encouraging technology transfer without

significant private sector cooperation.79 The effectiveness of patent pool arrangements

also depends on the specific concerns of the biotechnology industry. In biotechnology,

where patents are used offensively, patent pools increase the risk that a company will

forgo significant revenue if it had instead licensed its technology on an exclusive basis.80

Patent pooling also does not necessarily overcome the transaction costs involved with

locating multiple patent owners. In certain cases, a more knowledgeable public institution

can negotiate cross-licensing agreements to make use of the technology,81

79 see Halewood supra note 76

however

drafting cross-licenses is costly and time consuming; in many cases, simply locating the

patent owner can be difficult. Over and above any practical issues facing the adoption of

patent pools, there is also widespread disagreement on the empirical assumption that

patent pools or similar cross-licensing agreements would actually increase access in

innovation in R&D. A 2002 study of biotechnology and pharmaceutical companies by

the Organization for Economic Co-operation and Development (OECD) revealed that

companies engaged in cross licensing arrangements or public-private partnerships found

80 see Mazza supra note 68 at 98 81 see Boettinger supra note 26 at 227

27

it difficult to measure the relative contributions of each part and thus were very skeptical

of such arrangements.82

In the context of agricultural PPPs, there are further concerns voiced by the private

sector. There is the issue of liability for a private firm that donates a piece of technology

to a PPP: the firm forgoes licensing income but nonetheless incurs liability for direct or

contributory patent infringement claims. There must be a mechanism to deal with this

type of liability

83 - and frankly, most PPPs do not address this. Similarly, the protection

of trade secrets and confidential information is often not addressed by the public sector84

Despite this general agreement that current practices have had certain undesirable results, there appears to be no consensus on what is wrong with current practices and what should be done about them. Indeed, scientists, university technology transfer officials, and private firms express sharply divergent views as to the source of the problems that they all recognize. Moreover, because many issues relating to the transfer of research tools implicate core values of each of these groups, views are not only sharply divergent but very firmly held. These factors make it difficult to fashion mutually acceptable resolutions, even though the problems are evident to all concerned.

and this has also been cited as a major reason for the private sector’s unwillingness to

engage in standard-use licenses, open-source licenses and patent-pooling arrangements

with multiple public sector licensees in developing countries. The NIH has accurately

distilled this divergence in perspectives:

85

(Emphasis added)

82 see NIH Report supra note 64 83 The World Bank has identified liability for biotechnological donations as a key issue in facilitating public-private partnerships. See Dods, J. H. "Biotechnology, the Gene Revolution and Proprietary Technology in Agriculture: A Strategic Note for the World Bank." IP Strategy Today 2 (2001). [Dods] at 28-29 84 Confidentiality is important not only in IP matters but also in regulatory and trade matters. There is the concern that sophisticated licensing techniques, such as open-source, may require a company to give up [unpatented] trade secrets required to practice the technology without subsequent restrictions as to what other parties will do with this information. see Ibid Dods at 29 85 see NIH report supra note 64

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1.2 Open-Source Licenses

Extending the philosophy behind patent pools a bit further, the use of open-source

licenses is perhaps the most creative proposal to improve access while also preserving the

culture of technology licensing and remaining within the ambit of existing patent laws.

The goal of open-source licenses is to maintain the proper balance between the

enforcement of patent rights and the ability of researchers and collaborators to develop

the technology and move the project forward.86 It is thought that open-source license

models help re-position the public sector “upstream of the private sector and do more

basic research”.87

Open-source licenses have particular appeal given the transaction costs in

negotiating access to biotechnology. Technology transfer license agreements are

inherently complicated through their use of complex, legal language and can also be

poorly drafted, resulting in contracts that are more costly to draft and interpret.

88 While

open source licenses are neither incomplete nor “un-technical”, they focus on the rights

directly associated with the material being transferred.89

86 see Biobazaar supra note 65 at 117

Also, as they are easier to draft,

87 see open source biotechnology supra note 25 at 15 88 While there has been discussion among experts about the use of standard, industry-wide open source licenses, the use of standardized licenses has not been widely adopted, especially in the private context, as biotech companies are hesitant to adopt a standard set of licenses for all their operations, preferring to evaluate each agreement on a case-by-case basis. see Biobazaar supra note 65 89 Many developing countries have signed various international agreements governing the structure of domestic IP laws, including the Paris Convention of 1883 and TRIPS, the International Treaty for Plant and Genetic Resources for Agriculture (ITPGRFA) and the Convention for Biological Diversity for many developing countries. These agreements create a robust system that balances intellectual property protection with access to research. Importantly, every agreement adopted by a developing country can add a layer of complexity to the availability of IP protections, including certain policies such as national treatment clauses and the establishment of minimum IP standards (i.e. minimum IP laws mandated for WTO members by TRIPS.) Nonetheless, the impact of these international commitments must be considered when making the decision to include open-source licenses as the main vehicle of technology transfer. see open source biotechnology supra note 69 at 170

29

read and understand for non-legal professionals, it is suggested that open-source licenses

can facilitate the management of proprietary rights, particularly in the context of public-

private partnership. Open-source licenses also work alongside traditional licensing

mechanisms and, generally, within existing patent laws, and thus do not require any large-

scale changes to the existing intellectual property legal framework.90 Like conventional

patent licenses, the rights conferred through open-source licenses are proprietary in the

sense that they are granted by a licensor to a licensee; however, the difference is that the

basis for granting the license is not necessarily to the exclusion of all others.91 Open-

source licenses may also obviate the need to negotiate multiple cross-licensing

arrangements: they require that parties agree that the “improved technology” be freely

cross-licensed or become part of the original research once again.92

An important and frequently cited advantage of open-source licenses is that their

inherently collaborative structure is well-suited to the nature of the scientific R&D value

chain.

93 Whereas traditional agricultural R&D is structured vertically “where the

development of the basic knowledge and its applications to technology generation are

closely interrelated, usually under-taken within the same organization”94

90 In fact, contrary to popular belief, “…open source licensing makes use of existing intellectual property laws”. see Biobazaar supra note 64 at 9

biotechnology

R&D is horizontal, encompassing many disciplines more closely related to pure science,

such as rDNA and genetic engineering principles. Most agricultural biotechnologies are

91 It has been suggested that the absence of such technicality has almost certainly contributed to the widespread adoption of open source software licenses. see source biotechnology supra note 69 at 110 92Licensees enter into binding agreements on the legal condition of keeping any improvements to the technology accessible to all other licensees, protecting the technology for open use. see Biobazaar supra note 65 at 227 93 The biotechnology R&D levels are Basic Research – where the primary research objective is exploratory or investigative; Applied Research – where the goal is to answer the questions arising from exploratory research in a more focused manner; and Commercial Development – where ideas arising from basic/applied research are used to create a product intended for commercial sale 94 see Taxler supra note 12 at 43

30

made up of components from other disciplines such as chemistry, botany and geology.95

Open-source biotechnology R&D is viewed by some as an extension of the open and

collaborative knowledge management systems that have historically driven the

development of new agricultural technologies.96 Product development in agricultural

biotechnology is a very complex process, comprising several phases in the research value

chain – from the conception and funding of research to the publication of and access to

the resulting data and finally culminating in the patenting of technologies invented by

publicly funded agents.97 It is a process best viewed as a set of tools that extends the

scope of agricultural research.98 Open source licenses allow researchers to decide from

the beginning how they envision the development cycle and ultimate end-use of the

technology. Not only are researchers free to pursue innovative research fields or end-

uses, but also this inherent freedom to operate can improve the possibility that future

licenses can be more easily negotiated in future stages in development.99 As such, it is

possible that open-source licensing arrangements that freely encourage cooperation

between licensees can be quite helpful at the level of basic and applied research,100

95 see open source biotechnology supra note 69 at 59

where

access to information and research tools is what matters and proprietary ownership is less

96 Rajotte, Tasmin. "The Negotiations Web: Complex Connections." The Future Control of Food: A Guide to International Negotiations and Rules on Intellectual Property, Biodiversity and Food Security. Ed. Geoffrey Tansey and Tasmin Rajotte.International Development Research Centre (IDRC), 2008. [Future Control of Food] 97 Octaviani, Alessandro. "Biotechnology in Brazil: Promoting Open Innovation." Access to Knowledge in Brazil: New Research on Intellectual Property, Innovation and Development. Ed. Lea Shaver. Yale University, Boston, M.A.: Information Society Project, 2008. [Octaviani] at 155-56 98 Taxler supra note 12 at 41 99 Janet Hope and Eran Binenbaum posit that “if a research program or commercialization proceeds before obtaining freedom to operate in enabling technologies, future negotiations may be placed in serious jeopardy. The negotiating position of the innovator typically deteriorates as innovation progresses.”99 This is extremely helpful in the context of agricultural biotechnology where “…technology is often licensed at an early stage of development, before the precise nature and utility of the product is known and sometimes before it can be protected except by trade secrecy” 100 The function of a license “is not to allow the ”sale” of a product to the end user…but to facilitate the integration of valuable information from a range of sources by establishing, not a product market, but a co-operative partnership” see Open source biotechnology supra note 69 at 105

31

important.101

Ultimately, the discussion surrounding open-source licensing is really about finding

new ways to strengthen the collaborative environment in the public sector through

improved IP management and increased access to patented technologies, culminating in

the commercialization of public goods research.

It is this conceptualization of the agricultural R&D that has generated

interest in the possibility of using open-source licenses as a mechanism to improve access

to the biotechnology research tools which might facilitate both technology transfer and

innovation at the R&D level.

102 Interestingly, though, what little has

been written on the acceptability of open-source licensing models reveals that it is highly

likely that the number of projects abandoned or delayed due to limited access to

technologies is actually quite small.103

101 Where ownership does become important is at the time for commercialization. This is where conventional biotech licenses are more appropriate for the Commercial Development Stage, where the licensor wants to retain the greatest degree of control over their technology and the licensee wants to maximize freedom to innovate. Furthermore, the World Bank recognizes the difference between access to information and ownership of information: scientists and researchers require access to information, but for the companies that develop products and bring them to market, ownership is critical. see Dods supra note 82 at 26

It is not the presence of proprietary patent rights

that determined whether projects were most likely to be abandoned, but rather (in the

order most frequently cited by researchers): a lack of funding; conflicts with other

research priorities; and determinations that a project is not scientifically possible or

102 Critics of the Bayh-Dole Act in the United States, such as Sara Boettiger and Alan Bennett, argue that a re-alignment between public and private innovation systems is necessary to create the optimal conditions for public-private technology transfer. This implies a critical re-evaluation of the IP policies and laws that underlie a national innovation system. see Biobazaaar supra note 64 at 274-275 103Due to what little research has been done on the applicability of open-sour licenses to agricultural biotechnology, we can rely on the conclusions derived from examining the applicability of open-source licenses to biotechnology R&D in medicine. Though there are differences in both the scale, diversity of research and distribution and nature of ownership in the human and agricultural biotechnology industries, the two disciplines do overlap scientifically and it is fair to compare the two. The National Academy of Sciences in the United States was commissioned by the National Institute of Health to study the effect of granting licenses in biotechnology research. The study found that “access to patented inventions or information inputs into biomedical research rarely imposes a significant burden for biomedical researchers” see Mazza supra note 68 at 2-3

32

engaging.104 For example, in medical biotechnology, the amount of projects abandoned

or delayed as a result of difficulties negotiating rights to technologies is very small: when

researchers believed they needed permission to use a technology they sought it from the

patent owner; if no permission was given, some would still go ahead with the research.105

Therefore, while it is true that licensing models created with a view to fairly

distribute the burdens and benefits of biotechnology research do offer certain advantages

over more conventional licensing strategies, they are merely one small component in the

broader scope of science and technology innovation policy. These models are not likely

to benefit biotechnology industries that are still acquiring research capacity, lack IP

management skills and are (generally) net importers of biotechnology. Richard Jefferson,

the founder of CAMBIA and the creator of BiOS Open Source license, has explicitly

recognized that open-source licenses are merely one small piece of the puzzle:

The obstacles preventing the sharing of research materials between laboratories were not

related to IP rights but rather to wider innovation policies: specifically, a lack of

incentives and rewards for engaging in specific projects and the lack of

commercialization opportunities in academic circles.

The cheerleading rhetoric of open source, open access, open whatever, really is not enough, nor is it sophisticated enough to make the necessary efficiency gains in the innovation processes in poor countries, or for that matter, in rich countries dealing with poor people or neglected priorities. BiOS can be - if done well - about sharing the costs, sharing the load, making development faster and more transparent. But our experience in the last five years is that it must grow up. It must become a sophisticated part of innovation system reform, and must be built solidly on total patent system transparency.106

(Emphasis added)

104 Ibid Mazza supra note 68 at 123 105 Ibid Mazza 106 Kanashiro, Marta. "Entrevista Com Richard Jefferson." Vida Sintetica 2008. <http://www.cambia.org/daisy/bios/4343> [Kanashiro]

33

However, this is not to say that intellectual property rights might not limit access in the

future. As institutions increase their capacity for intellectual property rights and explicit

awareness about exposure to patent infringement liability, there will most likely be more

regulation over the activities of researchers, potentially inhibiting certain aspects in the

research process.107 Similarly, patent owners would likely start taking more legal action

against universities and research institutions for infringement, leading to an increase in

demands for licensee fees, grant-back rights or other restrictive licensing terms.108 But

today, however, despite much theorizing by academics and commentators, there is no

significant evidence of patent thickets and patent-blocking situations that are preventing

public sector access to private technologies.109

Therefore, if public sector access to research tools is not being unduly limited by

proprietary rights, then novel licensing techniques are not the most efficient option in

encouraging innovation in the development of public goods biotechnological research.

This next chapter presents a contrasting look at the innovation systems in Brazil and

Bolivia to demonstrate that the vast gulf in commercializable biotechnologies is such that

it cannot be explained by intellectual property rights limiting research capacity. Rather,

the comparison will demonstrate that public sector access to research is a product of

government strategic policies that create an environment which fosters innovation and

commercialization. Even in Brazil, where the technical capacity for high-level

biotechnology research exists, there “is no guarantee of physical availability and

107 see Mazza supra note 68 at 134-135 108 Ibid Kanashiro supra note 105 109 In its study, the NIH concluded that the “…apparent lack of substantial evidence for a patent thicket or a patent-blocking problem is associated with a general lack of awareness or concern among investigators about existing intellectual property”. see Mazza supra note 68 at 132

34

accessibility which can be established only with the right economic incentives and

effective institutional structures in place”.110

110 Karapinar, Boris, and Michelangelo Temmerman. Benefitting from Biotechnology: Pro-Poor IPRs and Public Private Partnerships. Vol. 35. Swiss National Centre of Competence in Research, 2007. [Karapinar] at 30

35

CHAPTER 2: Biotechnology Policies in Latin America: Innovation Systems in Bolivia and Brazil

This chapter begins with a brief discussion of a few of the challenges facing

agricultural biotechnological development in Latin America. This is followed by a

comparative analysis of the agricultural innovation systems in Bolivia and Brazil. There

is a stark contrast between the two countries in terms of the amount of new agricultural

biotechnologies that are generated and commercialized. The effectiveness of Brazil’s

innovation system cannot be explained by the use of novel licensing techniques to

increase access to proprietary technologies, but rather by the presence of concerted

national biotechnology strategies and policies aimed at increasing research capacity and

encouraging innovation in small-to-medium enterprises (SME) working in biotechnology.

The discussion of the innovation system in Brazil will focus on the effects of the National

Biotechnology Policy, centered on the innovation system in place at the State of Sao

Paulo Research Foundation (FAPESP). The development of two specific projects, the

Genome Project and the introduction of zero-tillage (ZT) technology, will be highlighted

as examples of successful projects that did not depend on either IP management capacity

or the use of novel IP licensing strategies. Next, this chapter discusses Bolivia’s

innovation system, focusing on the successes and challenges facing the Bolivian System

of Agricultural Technology (SIBTA). Limited access to patented technologies has not

been identified as an impediment to SIBTA’s work. SIBTA’s main strength is that it is

designed to involve the private sector in alleviating rural poverty by focusing on the needs

of small farmers; however, it lacks the strategic guidance and priority setting to make it a

valuable tool for the production of biotechnology research in the long-term. This is

36

problematic for the sustainable development of new biotechnologies for pro-poor uses as

“the direction and intensity of public investments in biotechnology will play a critical role

in how benefits reach small producers”111

[g]governments have a significant role to play in identifying which areas of innovative research can and should be promoted…governments also have a role in moving inventions from the theoretical level to the applied level (government-funded research drives a good deal of this movement) and in providing incentives to encourage the development of new products and processes arising out of applied research (for example, forms of intellectual property). But as research moves further from basic research toward product development, the government’s role in directing this process diminishes. For the most part, the market distributes investment resources much more efficiently than the government.

and how efficiently technology is diffused

from the basic level to commercialization:

112

(Emphasis added)

Latin America is a natural environment for the development of new agricultural

biotechnologies; however, research is characterized by massive levels of underinvestment

in the majority of developing countries.113 The continued development of agricultural

biotechnologies can be a valuable tool in alleviating food insecurity and promoting

sustainable development growth. At the same time, this growth potential in agricultural

biotechnology is also subject to “to increasing demands in terms of: food security,

socioeconomic development, promotion of conservation, diversification and sustainable

use of plant genetic resources as basic inputs for future agriculture”.114

111 Taxler supra note 12

This is a major

issue as food insecurity in the majority of the region is itself a consequence of poor social,

112 see Finston II supra note 52 at 198 113 Investment in agricultural biotechnology is less than 1% of GDP for most developing countries, compared with over 2% for developed countries. see IFPRI. Advancing Knowledge and Innovation in Food and Agriculture. Washington, D.C.: International Food Policy Research Institute, 2007 [IFPRI]. 114 Avila, Teresa. "Management of the Appropriate Agricultural Biotechnology for Small Producers: Bolivia Case Study." Electronic Journal of Biotechnology 9.1 (2006) . March 7 2010 <http://www.ejbiotechnology.info/content/vol9/issue1/full/4/4.pdf> [Avila] at 2

37

economic and technological policy decisions.115

Current biotechnology policies have failed to attract sufficient private sector

investment. Understandably, private companies will be reluctant to invest in research,

technology and human capital unless they see clear policies that welcome their

investment and address their concerns.

As such, one thing is clear: government

policies will play a significant role in providing the basic environment in which

biotechnological innovation can occur – strengthening higher education systems,

providing incentives for small businesses and developing the appropriate mechanisms to

commercialize research.

116 In general and across the region, the delivery of

new agricultural technologies has been relatively unsuccessful thus far.117 More

importantly, agricultural biotechnology has not impacted the poor small farmers who are

responsible for the majority of agricultural production. While the failure of small farmers

to improve agricultural productivity and participation in market formation can be

attributed to many factors, it is well settled that the lack of access to new developments in

agricultural biotechnologies has limited their productive and innovative capabilities.118

For the average small-farmer, access to new technologies is restricted by two things: an

underdeveloped agricultural R&D infrastructure and a weak agricultural industry

characterized by a lack of support for R&D investment and infant seed markets.119

There is a range of capacity for basic and applied biotechnological research across

Latin America. Countries such as Mexico, Brazil, Argentina and Costa Rica have been

relatively successful in generating and commercializing new agricultural research.

115 see Roca, supra note 7 116 see Taxler supra note 12 at 52 117 Ibid Taxler 118 see Hartwich supra note 10 at 9 119 see Taxler supra note 12 at 52

38

However, for most other countries, particularly those in Central America,

biotechnological research suffers from three primary constraints. First, any research

capacity that does exist is limited by a restrictive funding environment.120 Across Latin

America, private R&D funding has decreased due to underdeveloped markets and

comprises no more than 15% of total public and private R&D expenditures.121 By

contrast, developed countries such as Canada, the U.S, France and Japan invest

approximately 1% - 3.5% in R&D capacity.122 Investments in Latin America that are

made are funded primarily through national science and technology councils, with

support varying from country to country.123 Generally, public sector research is not

adequately supported by government policies concerning the key elements required for

biotechnological innovation i.e. project funding and coherent biosafety legislation.124 In

many countries, including Bolivia, this is due to a lack of strategic vision in prioritizing

the formulation of research and managing the different components in the information-

development-commercialization R&D pipeline.125 Until recently, many policymakers

have yet to take a concerted, firm policy position on biotechnology.126

120 Taxler supra note 12 at 7

This is a very

121 Private investment in Latin American biotechnology lags behind other major biotechnology centers, such as the United States, Canada and Australia, where private funding has actually increased significantly. Investment in Latin America was only 0.59% of IGP in research and development, with Brazil showing the highest levels. Where large potential markets exist in Brazil or Argentina, this is not such an issue. Chile and Cuba also ranked among the highest investors. see Taxler supra note 12 at 34. see also Roca, supra note 7 122 see Roca supra note 7 at 11 123 It was reported that 62% of the scientific and technological activities in LAC were funded through the states’ national science and technology councils, 28% by companies, and 9% by universities; funding coming from external sources was approximately 1%. In 1999, the Brazilian state funding was 0.86% of IGP, whereas lesser developed like Bolivia and Peru found themselves towards the bottom. see Dellacha, J., G. Lionel, and J. Ahumada. La Biotecnología En América Latina: Panorama Al Año 2002. Ottawa, Canada: CamBioTec, 2003. [Dellacha] 124 see Taxler supra note 12 125 Ibid Taxler at 48 126 The process for setting innovation policy is that top economists and scientists present policy options to policymakers and research funding agencies, who then will set policy with the help of consulting firms or in-house talent. see Taxler supra note 12

39

significant issue in biotechnological innovation as products have a long research cycle

and require sustained investments over the life of the project.127 For the majority of the

region, including Bolivia, “marshalling the technical expertise to even implement

functional biosafety and patenting systems will require a sustained effort over a period of

years, and a significant commitment of new financial resources”.128 Secondly, the basic-

level research coming out of the public sector is not finding its way to private companies

that can commercialize it.129 Most of the biotechnology products sold in Latin America

are transgenic seeds, followed by seedlings and the seeds of selected, virus-free crops.130

Brazil, Argentina and Mexico have been quite successful at attracting investment from

the private sector; but for others, agricultural seed markets remain small and

underdeveloped.131 Third, there is a general weakness in the region in terms of both the

quantity and quality of biotechnology researchers.132 The majority of agricultural

biotechnology research is concentrated in only a few countries, namely Brazil, Argentina

and Mexico.133

127 The Rockefeller Foundation’s International Rice Biotechnology Program, aimed at introducing transgenic rice into China, took 15 years and $100 million in investments before it reached the market, due to biosafety regulations and complex negotiations with IP rights to several genes and processes. While human capital and technology transfer were both increased, the direct impact of the technology remains limited. See Taxler supra note 12 at 31; See Horstkotte-Wesseler, Gesa. "Agricultural Biotechnology and the Poor: The Role of Development Assistance Agencies." Agricultural Biotechnology in Developing Countries: Towards Optimizing the Benefits for the Poor. Ed. Anatole Krattiger and Matin Qaim. Dordrecth, Netherlands: Kluwer Academic Publishers, 2000.

In many cases, researchers are merely biologists or agronomists and not

specialized in the scientific disciplines required for applied biotechnology research such

128 Taxler supra note 112 129 see Taxler supra note 12 130 see Avila supra note 112 at 3 131 Ibid Taxler supra note 12 at 28 132 see Food and Agriculture Organization of the United Nations. "FAOSTAT - Food Security." FAO. 2010. FAO. <http://faostat.fao.org/site/562/default.aspx>. [FAO study]; see also Roca supra note 7 133 see Hartwich supra note 10 at 6

40

as molecular genetics, protein engineering and bioinformatics.134 Addressing this lack of

research capacity means that the top priority of a government wishing to develop

biotechnology must make its first priority to strengthen its core policy-forming

capacities.135

2.1 The Brazilian Biotechnology Innovation Model

Brazil has demonstrated tremendous vision and leadership in designing the

appropriate policy environment not only for biotechnology, but also for many industries

ranging from aeronautics to automotive assembly to agriculture. Beginning in the 1950s,

Brazil instituted an aggressive science and technology policy that encouraged economic

development alongside an import-substitution development policy.136 In 1982, Brazil

created the national Council for Scientific and Technological Development, a central

office designed to promote innovation and public universities and encourage technology

transfer into the private sector.137 Since the establishment of the Council for Scientific

and Technological Development, more than twelve Technological Innovation Centers

have been established at Brazilian universities to encourage public-private cooperation.138

134 The FAO also found that of the limited number available, about 40% were postgraduates and only about 10% had doctoral degrees. see FAO study, supra note 131

As a result, public sector institutions have been patenting their research at a high rate with

very noticeable improvements: for example, the top 7 Brazilian universities, plus the

members of the Brazilian Agricultural Research Cooperation, received 153 patents in

135 Taxler supra note 12 at 52 136 Graff, Gregory. "Echoes of Bayh-Dole? A Survey of IP and Technology Transfer Policies in Emerging and Developing Economies." Intellectual Property Management in Health and Agricultural Innovation: A Handbook of Best Practices . Ed. Anatole Krattiger, R. T. Mahoney, and L. Nelsen. Mill Street, Oxford, U.K.: MIHR (Centre for the Management of Intellectual Property in Health Research and Development) and PIPPRA (Public Intellectual Property Resource for Agriculture), 2007 [Graff] at 174 137 Ibid at 174 138 Ibid at 174

41

2003 alone.139 By contrast, there were just 264 patents taken by the same group from

1980 to 1995.140 No other country in the region has the comparable scientific depth,

research capacity and market size.141 Brazil also ranks second in Latin America in terms

of GMO field-tests conducted by private companies.142

Crucial to this success has been the government’s emphasis on active, state-

supported participation in the basic scientific research that drives innovation.

143 Brazil’s

National Biotechnology Policy has demonstrated that a national government committed to

biotechnological innovation can be the most important factor in creating a collaborative

research environment. Policies place a clear emphasis on creating the necessary

conditions for the adoption of biotechnology.144

Our objective is to take up a leadership position in [the biotechnology field] similar to that already assumed by the biofuel area. This has become a partnership of indisputable success between the scientific community and the efficiency of the Brazilian entrepreneurial society. Our greatest challenge, my friends, is to repeat this successful collaboration in other areas of the economy and production. We must begin to produce affordable drugs and vaccines, biodegradable plastic, develop more effective and less polluting industrial enzymes, more nutritious food, medicines and cosmetics from our bio-diverse environment and techniques of environment recovery. In addition, in the future, we must focus on biotechnology by investing in DNA sequencing research, the neurosciences, stem cell research, nano-biotechnology, [and] biopharmaceuticals

In 2008, Brazil launched its

Biotechnology Development Policy, where President da Silva announced a concerted

national effort to make Brazil into a leading centre of the biotechnology industry:

145

139see Graff supra note 135 at 175

(emphasis added)

140 Ibid at 175 141 see Taxler supra note 12 at 48 142 GMO field tests are a useful proxy indicator for institutional research capacity and market potential for agricultural biotechnology. see Taxler supra note 12 at 26 143 Ibid Taxler at 132 144 see Octaviani supra note 96 at 5 145 Presidency of the Republic - Press Secretary. "Discurso na cerimônia de lançamento da Política de Biotecnologia, Palácio do Planalto." Presidency of the Republic - Press Secretary. 2010. <http://www.info.planalto.gov.br/>. [Discurso]

42

Brazil’s National Biotechnology Policy reflects “the Brazilian state’s belief that

collaborative partnerships in scientific research and development can yield benefits for

business and for society as a whole”.146 The national biotechnology policy is led by two

institutions representing both the public and private sector: the National Biotechnology

Committee, comprised of researchers, government officials and leaders of civil society

(including indigenous groups); and the Biotechnology Competition Forum, which

represents the interests of the private sector. The Brazilian government is committed to

funding public research institutions, contributing USD $3.5 billion to support biotech

research over the next ten years.147 The state is similarly committed to contributing

funding to biotechnology research and to crafting legislation that promotes public-sector

innovation in pharmaceuticals, forestry, energy and agriculture.148

Nowhere has the National Biotechnology Policy been more successful than in the

State of Sao Paulo, where The State of Sao Paulo Research Foundation (FAPESP) is the

government institution responsible for supporting Brazil’s Science and Technology policy

in the region.

This increased public

funding has been met with positive response from the private sector, which has also

contributed approximately USD $2 billion.

149 The idea behind FAPESP is the coordination of efficient, independent

and flexible decision-making and funding priorities through a single agency.150

146 see Octaviani, supra note 96 at 132

FAPESP

147 Ibid at 134 148 Ibid at 130 149 Sao Paulo is an academic research giant in Brazil, responsible for 53% of Brazil’s scientific output and home to many of the country’s top research institutes Sao Paulo produces more scientific papers than any other country in Latin America (except for Brazil itself) 150 One of FAPESP’s main goals is to broaden and strength the diversification of the research system in Sao Paulo by supporting new research centers and focuses. see Wagner, Vilegas. Brazilian Biodiversity Research: A Promising Future. Sao Paulo, Brazil: The State of Sao Paulo Research Foundation (BIOTA-FAPESP) <http://www.fapesp.br/publicacoes/nih_biotas.pdf.>. [Wagner]; see also FAPESP. "The State of

43

is publicly funded by the State (enshrined in the State Constitution). FAPESP is one of

the main funding agencies for scientific and technological research; in 2008, it invested

$388 million in fellowships and research grants alone151 and a further $31 million

towards the commercial application of research in 2008.152

The Brazilian innovation model emphasizes the development of scientific capacity

and human capital by forming dedicated linkages with the private sector. The majority of

government funding for agricultural biotechnology in Brazil has been devoted to projects

that develop research links and training initiatives between the public and private

sectors.

153 At the urging of the scientific community, not only does FAPESP emphasize

public research to advance knowledge production, but also jointly funds specific research

projects with private companies, resulting in more commercially usable research,

smoother technology transfer and risk-spreading.154

Sao Paulo Research Foundation (FAPESP)." FAPESP. <

The Science and Technology

Promotion Program, (funded with public money ($100 million, 2010) and directed by the

Ministry for Science and Technology) provides grants for scientific and technological

research in R&D for public and private institutions and supports risk sharing initiatives

within the private sector. Similarly, the Science and Technology Reform Support

program, (also funded with public money ($360 million) and directed by the Ministry of

Science and Technology) is designed to improve the quality of advanced research and

http://www.fapesp.br/en/materia/1/the-institution/fapesp.htm>. [FAPESP] 151 see Wagner supra note 149 152 FEPASP’s allotted funding also guarantees efficiency and low-cost operation: per the State Constitution that created FEPASP, administration costs cannot exceed 5% of its research investments. see---. Technological Innovation Prospectus. Sao Paulo, Brazil: FAPESP, 2004. [Technological Innovation]; see also FAPESP supra note 149. 153 Taxler supra note 12 at 18. 154 Such projects are developed through 11 FAPESP programs dedicated solely to Technological innovation Joint projects were successful mainly due to the requirement that private companies demonstrate real interest in transferring the technology that was being developed by the project. see Technological Innovation supra note 151 at 2

44

training and promote collaborative R&D between public and private institutions.155 Two

of the programs coming out of these policies - the Partnership for Technological

Innovation Program (PITE) and the Technological Innovation in Small Business Program

(PIPE) – have been very successful in commercializing new projects and encouraging

innovation in biotechnology in SME enterprises: for example, over 9 years, PITE has

approved over 72 projects and invested $27 million USD, with half of the funds coming

from its network of 55 companies.156 PIPE, which supports small businesses working on

scientific and technology projects with a defined commercial application,157 is designed

to: create the conditions to enhance the research system’s contribution to economic and

social development; stimulate a significant increase in private investment in technological

research; and, enable small businesses to associate with researchers in the academic

environment on Technological Innovation projects. Through joint collaborations, PIPE

has successfully brought to market projects ranging from biological pest control to early

cancer detection.158 FAPESP also has a program to match public sector projects with

businesses that might bring their products to market.159

155 Clive, James. Progressing Public-Private Partnerships in International Agricultural Research and Development. Vol. 4. Ithaca, NY: The International Agricultural Service for the Acquisition of Agribiotech Applications, 1997.

FAPESP has links with research

funding agencies and universities in major countries all over the world, including Canada,

Germany, the United States and France. PIPE supports the SMEs that are so important to

driving innovation by providing access to venture capital through agreements with

156 see Technological Innovation supra note 151 at 2 157 Ibid; see also FAPESP website, online at http://www.fapesp.br/en/materia/299/pipe/technological-innovation-in-small-businesses-aims-and-objectives.htm 158 see Technological Innovation supra note 151 159 This is the Partnership for Technological Innovation (PITE) program. see FEPASP website, accessible online at http://www.fapesp.br/en/materia/300/pite/partnership-for-technological-innovation-objectives.htm

45

foreign venture capital firms.160 FAPESP also supports biodiversity research through

BIOTA-FAPESP. Through open, collaborative and decentralized research methods, such

as Biota Noetropica - an open-access electronic peer reviewed journal to encourage

collaboration on original biodiversity research161

At this point in time, the Brazilian biotechnology policy environment is

sufficiently advanced such that policies can also be directed specifically at increasing the

capacity for IP management. For example, in 2000, FAPESP recognized the need to

manage the IP resulting from the research it financed

- BIOTA-FAPESP is leading the way in

research on biotechnological issues including agrochemical pesticides and conservation

and sustainable use of biodiversity. The direction of the funded research is managed by

scientists and research is also peer-reviewed to maintain scientific standards.

162 and created the Program for

Support for Intellectual Property (PAIP) (supported by the Nucleus for the Patenting and

Licensing of Technology) which advises researchers on IP matters, including patent

defense and licensing.163

Two projects in particular stand out as prototypical examples of how Brazil’s

strategic policy guidance was instrumental in generating useable commercializable

research and strengthening knowledge capacity. In 1997, the Organization for Nucleotide

Sequencing and Analysis (OSNA) launched the Genome Project at the University of Sao

The objective here is to train and advise researchers on IP

management strategies leading to development in commercial markets.

160 Companies enrolled in PIPE submit scientific reports that outline their activities for a specific phase of the research cycle. Funding is provided jointly through the Program to Support Research in Small Businesses, a partnership between FAPESP and the Financing Agency for Studies and Projects and the venture capital firm. see FAPESP website at http://www.fapesp.br/en/materia/5415/agreements/fapesp-imprimatur-capital.htm 161 see Wager supra note 149 at 4 162 see State of Sao Paulo Research Foundation. "Nucleus for Patenting and Licensing of Technology." 2010. <http://www.fapesp.br/en/materia/298/papi-nuplitec/program-for-the-support-of-intellectual-property-nucleus-for-the-patenting-and-licensing-of-technology-nuplitec-.htm>. [Nuplitec] 163 see Technological Innovation supra note 151

46

Paulo. Supported by the FAPESP, the project had two primary goals: to discover “new

biotechnological methods for improving local agriculture”164and to increase the

understanding and research capacity of the university in the field of genomics. 165 R&D

took place under a highly decentralized, ABS model with open source principles that

allowed for the simultaneous coordination of multiple laboratories. By distributing

project funding upfront, there were the necessary incentives for universities with little or

no previous experience in genome sequencing to train researchers and scientists and join

the network. The Genome Project began as a network of 30 university laboratories that

collaborated on important agricultural research.166 The decentralized nature of the system

meant that public institutions could leverage their talents to participate in a project that

they could not possibly have completed on their own,167

The union of many laboratories developing their own broad-scope research with a single scientific objective was an important learning factor for generating expertise in refined molecular and genomic biology techniques. This research organization encourages the spreading of research throughout the whole State, which would not have happened if a single center had been set up.

allowing for synergies to arise

that would not have been possible if the Genome Project was coordinated by a single

research institution. As described by Brazilian innovation policy analyst Maria Ester Dal

Poz:

168

164 see Octaviani supra note 96 at 133 165 see Octaviani, supra note 96 at 133; see also Mertl, Melissa. "Lessons from Brazil’s Genome Project Go Global." SciDev Net (2010): May 28 2010. <http://www.scidev.net/en/news/lessons-from-brazils-genome-project-go-global.html>. [Mertl] 166 Laboratories would receive a set payment under contract based on each base pair of the genetic sequence, with up to 70% of the payment payable upfront, freeing up labs to use the money as they saw fit, with additional payment of 30% made upon efficient completion of the research. see Octaviani supra note 96 at 133; see also ---. "OSNA - Conditions for Belonging to the Network." FAPESP. 2010. <http://watson.fapesp.br/Conditio.htm>. [OSNA] 167 Ibid OSNA 168 Dal Poz, Maria. "Da Dupla à Tripla Hélice: O Projeto Genome Xylella." Masters of GeoSciences Universidade Estadual De Campinas, 2000[Dal Poz] at 28-29

47

The decentralized organization of the program made it easier for innovation to occur.

The use of shared digital depositories to store research reduced transaction costs and

improved time-to-market times.169 In just two years after its launch, OSNA finished

mapping the world’s first complete genetic sequence of a plant pathogen, leading to the

announcement that the project would pursue two new goals: the sequencing of 50,000

sugar cane genes and investigating their resistance to diseases and changing climatic

conditions.170 Also, technology could be more easily licensed out to the private sector for

increased commercialization opportunities, resulting in the birth of two new bio-

informatics companies founded by researchers and scientists who worked on the Genome

Project. Crucially, the project strengthened Brazil’s research capacity and human capital

foundation. From its inception in 1997 to 2002, “more than 450 researchers had training

and experience in DNA sequencing”.171 Brazil also has the highest number of scientists

working in biotechnology and the highest number of PhDs and MSCs.172 As such, it

comes as no surprise that Brazilian scientists are also responsible for the lion’s share of

knowledge creation in the LAC region, as evidenced by the sheer volume of its

biotechnology publications.173

Similarly, the successful development and diffusion of zero tillage (ZT)

technology in Brazil is another practical demonstration of the types of policies that

169 Ibid Dal Poz at 28-29 170 Ibid 171 Camargo, Anamaria, and Andrew Simpson. "Collaborative Research Networks Work." Journal of Clinical Investigation 112.4 (2003): 468-71. 172 see Taxler supra note 12 173 In 1991, Brazil published 175 biotech papers, almost double its near rival, Mexico (98). By 1999, Brazil was publishing 550 biotechnology papers. No other Latin American country has seen this increase in publication volume. This additional research and management capacity helped lay the groundwork for the national Biotechnology Development Policy of 2007. see Taxler supra note 12

48

encourage innovation.174 While ZT technology is not as sophisticated and scientifically

granular as biotechnology, the policies behind the innovation process are still instructive

to the key components of a collaborative, horizontal innovation system. ZT is a highly

complex technology developed by networks of farmers, public research institutions, input

suppliers, government agencies and private firms that co-evolved together in the

technology development process.175 Notably, the high adoption rates of ZT technology

were due to a decentralized, open and collaborative innovation process: an informal,

participatory and multidisciplinary research policy that encouraged strong collaborative

engagement between equipment manufacturers, farmers and research centers and

eventually led to major changes in farming practices across the region.176 These

collaborative networks had no central decision making body and self-organized through

the actions of their own members.177 Information exchanges and joint research projects

between different stakeholders were facilitated through formal and informal networks.178

2.2 The Bolivian Biotechnology Innovation Model

Agricultural biotechnology research in Bolivia is concentrated between the basic

and applied stages, though most of the university-generated research is unrelated to

private sector research projects and even to the needs of small farmers. 179

174 Zero Tillage has had the most impact than any other single piece of technology on Brazil over the last 50 years and has increased sustainable farming practices, reduced farmer costs for herbicides and insecticides and reduced the effects of soil erosion. see Ekboir, Javier M. "Research and Technology Policy in Innovation Systems: Zero Tillage in Brazil." Elsevier Research Policy 32 (2002): 573-86 [Ekboir]

Any research

that is supported by private foundations or companies is based more on vertically

175 Ibid Ekboir supra note 173 at 578 176 Ibid at 578-580 177 Farmers formed zero tillage societies that were funded by public and private institutions and these groups were crucial to filling gaps in research. Smaller teams were formed to address specific research issues and individual researchers from universities also participated by contributing research or private funding. see Ekboir supra note 173 at 581 178 Ekboir supra note 173 at 584 179 see Avila supra note 113

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integrated research patterns supported by conventional public institution research

methods.180 Agricultural biotechnology development in Bolivia has been constrained due

to several factors, notably a lack of funding, difficulty accessing markets, a lack of

research dedicated to targeted farmer needs and limited cooperation between public and

private actors.181 Most of these factors result from the lack of strategic direction from

state innovation policies.182 There is inadequate knowledge and expertise amongst policy

makers regarding how to best direct the innovation process, leading to a restricted

information and knowledge environment.183 Very simply, the lack of top-down strategic

direction makes it difficult to attract private sector investment, develop markets and

encourage competition among small biotechnology enterprises that are so crucial to

innovation and growth. Until very recently, science and technology policies left over

from the era of structural adjustment and liberalization have hampered the rate of

technological absorption.184 With low amounts of cash to spend on basic

biotechnological research, funding and priority setting functions, once coordinated by the

national government, were left to private industry.185 In this policy environment with

little funding for science and technology research, the assumption was that the private

sector would procure any research and technology that was fit to be commercialized.186

180 Ibid Avila

181see Hartwich at 10 182 Ibid 183 Ibid 184 Ibid Hartwich supra note 10 at 7 185 A US$21 million loan the country received in 1991 from the World Bank was earmarked for strengthening the country’s agricultural research capacity, but after the depletion of those funds the government could not identify sufficient funding sources to sustain the former level of activities. Underfunding and management problems caused by political intrusion, patronage and the consequent loss of motivation of staff led to further deterioration. Finally the inability to prove that investments were leading to the adoption of improved practices among farmers invoked the closure of IBTA in 1997. see Hartwich supra note 10 at 5, 40 186 see Hartwich supra note 10 at 5

50

Biotechnology in Bolivia is managed through several agencies: the Ministry of

Farmer and Agricultural Affairs (MACA) by way of the Technological Development

Board of the Vice Ministry of Agriculture, Livestock and Fishing; and, through the

Ministry of Sustainable Development by way of the Vice-Ministry of Natural Resources

and Environment and the General Biodiversity Board.187 In the past, the state-run

Bolivian Institute of Agricultural Technology (IBTA) was charged with the development

of agricultural technologies, even though IBTA’s focus was mainly on training scientists,

researchers and farmers. As IBTA gradually lost funding and eventually closed its doors,

Bolivia’s capacity to generate and absorb agricultural technology was reduced to an

ineffective level. Bolivia has attempted to strengthen its innovation system through a new

decentralized agricultural research institution called the Bolivian System of Agricultural

Technology (SIBTA).188 Similar to FAPESP in Brazil, the main function of SIBTA is to

prioritize R&D and then allocate funds, knowledge and technology accordingly.

Specifically, SIBTA’s objectives are to: alleviate rural poverty by increasing producer

incomes and ensuring food security for the rural population; increase the sector’s

competitiveness by providing modern and efficient technology packages; contribute to the

sustainable use of natural resources by implementing innovation projects corresponding

to national strategies; and assist in modernizing the institutional association of rural

producers so as to build a base for the process of demand-oriented technological

innovation.189

187 The Ministry of Sustainable Development is the competent local authority on issues regarding biosafety and access to genetic resources and has supported several activities to strengthen biotechnology and biosafety in the country. see Avila supra note 113 at 5

188 see Hartwich supra note 10 189 see Hartwich supra note 10

51

SIBTA is designed as a “demand-driven” research system, although a few projects

also focus on research that is of national interest.190 Most of the members of SIBTA’s

four foundations191 – approximately 70% - are farmer unions and producer organizations;

public institutions, such as local municipalities and public universities, comprise the other

30%.192 The direction of research is prioritized based on feedback in the form of project

profiles from farmers’ organizations.193 Project profiles are then put out for tender to

either public or private service providers.194 SIBTA has three main mechanisms through

which service providers operate: Applied Technological Innovation Projects (PITAs),

where SIBTA’s “four regional foundations (FDTAs) solicit bids from producers who

formed an alliance with knowledge providers to submit joint proposals”;195the National

Strategic Innovation Projects (PIEN), devoted to strategic research areas;196 and, the

genetic resources program (SINARGEAA) where universities and other public

institutions carry out basic research on genetic resources.197 Projects are funded through

a competitive fund furnished by the Bolivian government, the Inter-American

Development Bank and major international donor agencies.198

190 see Jansen, Heinz-Gerhard. "The Bolivian System for Agricultural Technology (SIBTA). Services for Rural Development." Rural Development News 6 (2006). [Jansen]

There is a mechanism

designed to encourage participation by the private sector as SIBTA projects require that

private service providers cover 15% of project financing.

191SIBTA distributes funding, research and technology into four regional foundations – FDTAs - representing the High Andes Plains, Valleys, Humid Tropics and Chaco. Setting global priorities for research, as well as monitoring and evaluation, are delegated to central government units in the Ministry of Agriculture. see Hartwich supra note 10; see also Jansen supra note 189 192 Ibid Jansen 193 see Hartwich supra note 10 at 44. see also Jansen at 30 194 Ibid Jansen supra at 30 195 see Hartwhich, Frank, and Heinz-Gerhard Jansen. The Role of Government in Agricultural Innovation: Lessons Learned from Bolivia. Vol. 8. Washington, D.C.: International Food Policy Research Institute. [Hartwich Gerhard] p. 4 196 Ibid Hartwich Gerhard 197 Ibid Hartwich and Gerhard 198 see Jensen supra note 189

52

However, despite having received mostly positive feedback from farmers, there

have also been several criticisms of SIBTA from expert commentators and academics. A

first criticism is that its funding structure ultimately results in a restrictive funding

environment that must satisfy the conditions set by international donors and development

banks. For example, the IDB provided Bolivia with funds in such a complicated

arrangement that IDB funding rules essentially became part of SIBTA’s funding rules.

This has complicated SIBTA’s relationship with its donors. Moreover, the way in which

SIBTA incorporates the private sector adds to these complications. SIBTA has charged

the private sector with two roles – implementing the system and generating income for

farmers.199 Experiences by international donor agencies have illustrated that the private

sector is biased towards pleasing the government first, and then generating income for

farmers, second.200 This creates an uncertain investment and market climate for private

donors – if a newly elected government conceives of SIBTA in a certain way, private

actors must also conform to this vision accordingly. In short, there is no concrete promise

of sustainable, market-driven solutions. Also, because the regional foundations – FDTAs

– are at the center of the decision making and priority-setting process, private actors end

up having little influence on SIBTA’s activities.201

Another issue is that the “demand-driven” nature of the system is limited by low

levels of education and technological sophistication among farmers. There are two

problems here. First, farmers might not know what the best solutions are: there was one

instance where potato farmers demanded that SIBTA provide them with tractors so they

199 Calvo, Jose. Market Access and Poverty Alleviation (MAPA): USAID Final Report on Bolivia. Ed. United States Agency for International Development (USAID). Vol. 806. Cochabamba, Bolivia: Chemonics Consortium, 2005. [Calvo] 200 Ibid Calvo at 70 201 Ibid Hartwich and Gerhard supra note 194 at 7

53

would not have to hand-cultivate their crop, where instead the issue ought to have been

identified as the need for methods to improve farmer incomes.202 This means that

accurately detecting and targeting the specific challenges facing small farmers can be

difficult203 and fuels the criticism that the Applied Technological Innovation Projects

(PITA) foundation, through which projects are coordinated, can be too responsive to the

demands of small farmers.204 Simply being responsive to the demands of farmers does

not necessarily produce the research and technology that will benefit them the most. This

is especially so in the development of agricultural biotechnologies where product

development cycles are measured in years, if not decades. SIBTA has been criticized for

being so responsive to farmer demands that it has “neglected the identification of strategic

problems and opportunities”.205 The criticism of being too responsive to long-term

farmer needs has also been extended to higher government officials.206 The second

problem with relying on farmers for research priorities is simply that demands for new

research and product should be coming from the market.207

SIBTA’s management structure is also heavily bureaucratic and this limits the

strategic coordination of research priorities. The system is managed by several agencies,

including the government, foundations for agricultural and forestry technological

development, international donors, technology and knowledge providers and local and

regional governments.

This is difficult, however,

given the level of rural poverty and immature markets in Bolivia.

208

202 see Calvo supra note 198 at 68

This has created a large bureaucracy that results in a time-lag

203see Hartwich supra note 10 at 45 204 see Avila supra note 113 205 Hartwich and Gerhard supra note 194 at 7 206 Ibid 207 Calvo supra note 198 at 68 208 Hartwich supra note 10 at 41-44

54

between project design and implementation; for early projects, there was a lag of nearly

12 months from the identification of the farmer demand to the initial stages of project

implementation.209 Both expert commentators and USAID’s experience with SIBTA also

illustrate that SIBTA also has a short institutional memory. From 2000-2005, there were

nine ministers of agriculture and even more turnover among SIBTA’s rank-and-file

staff210. New people need time to understand the system; sometimes, they might bring

with them their own agendas. Moreover, SIBTA was created with an executive decree,

meaning that it could also be undone by a rival political party.211 Until now, the

solidarity and vision between the members of the CAS (Comité de Acompanamiento al

SIBTA) has been the glue holding SIBTA together.212 This contributes to inefficiencies

in long-term strategic priority setting for research – which has been identified by SIBTA

stakeholders as a key concern regarding the system’s governance.213 For example, even

though the concept was for the system to be largely demand-driven, the idea was that

research priorities would also be set by the Ministry of Agriculture, which “has had a

strong responsibility in strategic orientation and priority setting” for SIBTA. 214 The CAS

is responsible for advising the minister of agriculture.215 However, a 2006 IFPRI study

on SIBTA’s organizational structure revealed that the lack of government participation in

priority-setting was a key issue in the effectiveness of SIBTA.216

209 Jansen supra note 189

While the Ministry of

210 Calvo supra note 198 211 Ibid 212 see Calvo supra note 198 213 see Hartwich and Gerhard supra note 194 at 6 214 see Hartwich supra note 10 at 38 215 The CAS is composed of representatives from international donors and aid agencies from the United States, Japan, Denmark the IICA/FAO and the European Union. see Calvo supra note 198 216 This is based on a study of SIBTA’s organizational structure conducted by the IFPRI between June and November 2006. 54 key actors in organizations operating under SIBTA were asked for their feedback. see Hartwich and Gerhard supra note 194 at 6

55

Agriculture was involved in setting up the system, decisions regarding project selection

and implementation were left to the four regional foundations which are also heavily

influenced by donor agendas.217

Both government units—the UTS and the UCPSA—were not comfortable with delegating responsibilities to lower hierarchies or nongovernmental actors. For example, the UTS set priorities for research and innovation on a national level and was at times unwilling to accept that the foundations prioritized other subsectors or commodities on the regional level. UCPSA was reluctant to delegate financial responsibilities to the administrative departments of the foundations. As a consequence, the government became wrapped up in minutiae, impeding its involvement in setting policies of wider strategic importance.

Decision-making functions in SIBTA were not

sufficiently delegated by the government, resulting in the exclusion of key public actors

from the priority-setting process:

218

In an effective R&D system, a crucial part of research management is prioritizing

among projects and ideas.219 Participants in a collaborative network are able to make

informed decisions with respect to where to allocate resources. The Brazilian innovation

system leverages several core competencies of collaborative models at three critical

junctures of the R&D value chain: coordination between universities and public funding

agencies; a decentralized and democratic organization of production; and, the virtual

publication of data over the Internet.220

217 Frank Hartwich and Jansen Heinz-Gerhard comment that “[i]n the nation and regional decision-making process, SIBTA’s bylaws and donor directives have often played a more important role than has dialogue with beneficiaries” see Hartwich and Gerhard supra note 194 at 6

Both in the case of the Genome Project at OSNA

as well as in the development of zero-tillage technology, Brazilian institutions were

autonomous and decentralized. The Genome Project at the University of Sao Paolo is a

concrete example of how State-supported innovation enhanced technology transfer and

218 see Hartwich and Gerhard supra note 194 at 7 219 see open source biotechnology supra note 25 at 285-286 220see Octaviani supra note 96 at 136

56

product development through low-cost integration. It is also a clear illustration of the

importance of state participation as the main catalyst in generating socially beneficial

technologies and knowledge. For example, coordination between universities and public

funding agencies has been facilitated by the open-source style contracts that governed

membership into the research group. A prospective laboratory would enter into a contract

with the Sao Paulo State Foundation for Research Assistance under which,

sequencing laboratories received DNA material, equipment, and training. In return, they were obligated to share sequence specific DNA fragments—assigned by a central research coordinator—at a prescribed standard of quality, within one year. The resulting mapped information would be fed back into a common repository associated with the project, which could then be accessed by any interested party. As soon as a laboratory successfully delivered a sequence, it could apply for a second assignment.221

The informal nature of OSNA allowed participants to maintain flexibility as to

which projects it could direct its energies. As such, they were able to develop effective

collaborative partnerships with international research centers and farmers’ organizations.

Innovation at this scale would not have been under agricultural biotechnology research

policies that addressed public and private sector needs independently of one another.

Similarly, the policy failures in the development of ZT technology illustrate that, even

where information exchange channels do exist, they will not operate efficiently unless

supported by adequate funding and strategic vision. For example, when public research

took place in separate silos, there was little collaboration between public research

institutions and research did not focus on the activities and needs of other stakeholders.222

221 see Octaviani supra note 96 at 137

This problem was amplified due to a lack of government funding and incentives as

researchers had to concentrate on producing goods with direct market value, thereby

222see Ekboir supra note 173 at 583

57

limiting their freedom to operate.223

Unlike FAPESP, however, SIBTA in Bolivia has not benefitted from its

supposedly decentralized structure and emphasis on the privatization of research and

extension services.

The incentive structures within public research

institutions also did not encourage innovation - promotion in the research networks was

based on seniority and the production of specific research outputs and projects. A similar

problem is observed in agricultural biotechnology where innovation requires risk-taking

and creativity. Tying government funding to very specific commercially driven projects

will not encourage the diversity of ideas to move research forward; rather, incentives and

funding structures should be based on the quality of research instead of specific case-

managed research outputs.

224 The system evinces a government committed to reducing rural

poverty over the long-term, but its focus does not appear to be on the explicit promotion

of scientific research, building knowledge capacity and developing markets that will

generate the private investment the country needs. Therefore, with respect to the

coordination of research priorities across regional and national institutions, SIBTA’s

decentralized structure might not be delivering the results policymakers were expecting.

With its current climate of technological innovation, it might not come as a surprise that

there are no biotechnological enterprises making important investments in Bolivia.225

223 Ibid at 584 224 see Hartwich and Gerhard supra note 194 225 see Avila supra note 112 at 4

58

CHAPTER 3: Lessons Learned from the Innovation Systems in Brazil and Bolivia

There is a clear consensus among expert commentators that “the direction and

intensity of public investments in biotechnology will play a critical role in how benefits

reach small producers”226

[g]overnments have a significant role to play in identifying which areas of innovative research can and should be promoted…governments also have a role in moving inventions from the theoretical level to the applied level (government-funded research drives a good deal of this movement) and in providing incentives to encourage the development of new products and processes arising out of applied research (for example, forms of intellectual property)

and how efficiently technology is managed and diffused from

the basic level to commercialization:

227

Despite the limited success of a few SIBTA projects, Bolivia’s innovation model does not

focus on the wider scientific research required for sustained R&D. Countries with

emerging agricultural biotechnology industries should focus on developing research

capacity, linkages with regional and international research institutions and encouraging

market formation before addressing intellectual property issues through collaborative

licensing instruments: “policy options for smaller countries should probably focus on

putting in place the proper institutional structures for a safe technology transfer process.

Regional initiatives aimed at facilitating basic capacities, training and lowering the costs

of biosafety and IPR access and management could play a critical role”.228

226 see Taxler supra note 12

For a country

such as Bolivia with limited capacity for biotechnology and whose agricultural research

227 see FinstonII supra note 51 at 198 228 see Roca supra note 7

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system is predicated on the alleviation of rural poverty, developing these research links is

absolutely crucial. However, there is little evidence that the Bolivian government is

addressing the link between innovation and policies that strengthen research capacity and

create linkages with the relevant institutions conducting research. A 2006 survey of the

plant breeding and biotechnology capacity in Bolivia, completed by Julio Gabriel at the

PROINPA Foundation (a respected Bolivian non-governmental organization that works

closely with SIBTA), concluded that there are very few researchers with a Ph.D. in plant

breeding and virtually none with expertise in biotechnology.229 In fact, the highest level

of education for most biotechnology researchers is a B.Sc.230 Research areas are

concentrated on the development of plant lines and germplasm development, with few

institutions working in biotechnology.231 The survey also found that research is limited

by a lack of infrastructure; specifically, there is a significant deficiency in laboratories

equipped for work in molecular biology and techniques.232 The research that is

happening is directed towards conservation, sovereignty and food security and increasing

the competitiveness of the agricultural sector. For example, the technology transfer

activities at PROINPA occur at a basic level, focusing on non-formal adult education,

organizing local farmers’ committees and ensuring that agricultural research keeps pace

with the needs of farmers.233

229 Gabriel, Julio. Final Report on Plant Breeding and Biotechnology Capacity in Bolivia. Ed. PROINPA Foundation. Food and Agriculture Organization (FAO), 2008. [Gabriel]

The Laboratory of Molecular Biology and Genetic

Engineering at PROINPA was only recently created in August 2003, and is still focusing

230 Ibid Gabriel 231 Ibid Gabriel 232 Ibid Gabriel at 26 233 PROINPA website. Available online at http://www.proinpa.org/adminweb/link.php?a_search=E&z_idioma=LIKE%2C%27%25%2C%25%27&x_idioma=Castellano&z_categoria=LIKE%2C%27%25%2C%25%27&x_categoria=01+Quienes+Somos&z_subcategoria=LIKE%2C%27%25%2C%25%27&x_subcategoria=01.3.3+Tercer+Objetivo&psearch=&Submit=Buscar%A0%28*%29&psearchtype=#. [PROINPA]

60

on training in biotech methods, statistical analysis of genetic data and the detection of

GMOs in food.234 There is no evidence that biotechnology research is progressing

beyond the basic stage. By contrast, the Brazilian national Biotechnology Policy

explicitly identifies the link between technological biotechnology innovation in biotech

and the strength of human capital. Human capital is fundamental to sustained technology

transfer, which requires a strong base of scientists, researchers and lawyers to acquire and

manage intellectual property and increase research capacity. Once enough scientists,

researchers and administrators have been trained, policy objectives can focus on

leveraging intellectual property management to encourage innovation. This process is

reflected in several principles of Brazil’s biotechnology policy: to provide scientists and

technicians with the necessary skills in technological management and in strategies for

protecting intellectual property and technology transfer; to harmonize practices for

managing the intellectual property of the federal and state research and development

support agencies so as to facilitate the transfer of the technologies developed by science

and technology institutions to the private sector, while preserving the rights and

remuneration due to such science and technology institutions and, when applicable, to the

supporting agencies; to encourage the development of individual and managerial skills for

the effective use of intellectual property rights.235

234 Ibid PROINPA supra note 231

Over time, links to international

research centers strengthened Brazil’s ability to produce high-level research. They were

also instrumental in the training and development of dozens of researchers, scientists and

professionals working in agricultural biotechnology fields. Bolivia’s failure to join the

new international agricultural research system has also limited its own research and

235 Chamas, Cláudia. 2008. “Propriedade intellectual e genômica” IacominiVanessa (coord.). 2008. Propriedade intellectual en biotecnologia. Curitiba: Juruá. P 87-88 [Chamas]

61

scientific capacity. For example, one might consider the contrast between Bolivia and

Brazil on the level of involvement with the CIMMYT International Maize and

Improvement Center (CIMMYT). Brazil has worked closely with CIMMYT since the

1960s; for example, by pioneering research on maize cytogenetics through joint research

partnerships236. EMPRABA has collaborated with CIMMYT’s Applied Biotechnology

Center since the early 1990s.237 Brazil has also sent scientists and researchers to

CIMMYT for training in agricultural research and technology courses; beginning in the

early 1980s as Brazil’s focus shifted more towards biotechnology research, researchers

received specific genetics and biotechnological training. Bolivia has enjoyed a much

lower level of involvement with CIMMYT. An important consequence of Brazil’s

involvement with CIMMYT was an increase in knowledge capacity among Brazilian

scientists. Interestingly, though, like Brazil, Bolivia began working with CIMMYT in the

1960s, when CIMMYT agronomists collaborated with Bolivian wheat farmers on a

shuttle breeding program.238 Only 41 Bolivian visiting scientists and 84 Bolivian trainees

have also passed through CIMMYT’s capacity development programs since 1966.239

In addition to capacity for research and human capital development, two crucial

building blocks are missing from the Bolivian agricultural biotechnology system:

Granted, Bolivia’s unstable national history might be a good reason for this; however, my

research has uncovered no evidence that Bolivia is involved with CIMMYT’s Applied

Biotechnology Center at the present time.

236 Brazil and CIMMYT: a history of Innovation. CIMMYT Publication. May 1998. <http://www.cimmyt.org/index.php/en/about-us/partnerships/countries?start=10> [Brazil CIMMYT] 237 Ibid Brazil CIMMYT 238 Boliva and CIMMYT. CIMMYT Publication. Available online at http://www.cimmyt.org/index.php/en/about-us/partnerships/countries?start=10 [Bolivia CIMMYT] 239 Ibid Bolivia CIMMYT

62

strategic guidance from the state (through the Ministry of Agriculture) in the form of

research priority-setting and a concerted national biotechnology policy. Beyond the small

success SIBTA has had in getting the private sector interested in a system that is designed

to help small farmers, there is little evidence that Bolivia has plans to introduce any type

of incubator-style model that will help re-position public institutions as the progenitor of

biotechnology research. Without such a scheme, it is very likely that private companies

will not find the incentives they require to make sustained, long-term investments in R&D

through partnerships with the public sector. In contrast, Brazil recognized the need to

incorporate both the private and public sectors in its incubator-style innovation system.

Incubator models are crucially important in the development of agricultural

biotechnology technologies that yield a broad social benefit but do not yet provide

sufficient incentives for the private sector to become involved at the initial stage of

R&D.240 Private companies can contribute their expertise after the initial research has

been made and technologies are ready for further commercialization. Incubator policies

also enhance competition in markets by lowering barriers to entry for smaller firms that

face high R&D costs.241

240 According to a report on Brazil’s biotech industries “incubated biotech companies account for 35.2% of the total number” operating in Brazil. see Gerais, Minas. Brazil – A Wealth of Opportunities for the Biotech Industry. Brazil: Biominas Foundation, 2008. . [Gerais]

Re-positioning public sector research as an incubator of cutting-

edge R&D upstream of the private sector requires a shift in the collaboration patterns and

strategic policy of SIBTA because “as research moves further from basic research toward

product development, the government’s role in directing this process diminishes. For the

241 Market entry costs can be lowered by providing alternate sources of biotechnology products or pre-competitive technologies or research. see Taxler, supra note 12 at 42

63

most part, the market distributes investment resources much more efficiently than the

government”.242

For example, a 1998 comparison undertaken by the International Service for

National Agricultural Research on the biotechnology innovation systems in Mexico,

Kenya, Indonesia and Zimbabwe revealed that all four countries lacked a comprehensive

national biotechnology strategy. The result was an inefficient information-development-

commercialization system where the private sector was incentivized to only focus on

technology that is near the commercialization stages, agricultural research institutes

focused only on the basic stages of biotechnology (due to a lack of human capital and

research capacity) and funding for biotechnology comprised a small proportion compared

to total agricultural research expenditures.

243

conditions for technology transfer acquisition process, including the regulatory environment necessary for that to take place; that is, a transparent IPR regime - (which is mandated by the trade agreements that most countries are signatories of) and an operative biosafety mechanism. Without these capacities no country will be able to access the benefits of the new technologies because it is very unlikely that private or public entities able to offer technological capabilities will enter into a technology transfer agreement, either because the lack of IPR protection will endanger the likelihood of recuperating the investment

Similarly, it is possible that Bolivian

agricultural innovation policies are creating an environment that is not entirely conducive

to the formation of public-private partnerships and technology transfer. As a country with

a National Agricultural Research System (NARS) with limited but functional capacities

for basic research (crop breeding) and seed distribution systems, Bolivian policy

objectives should be focused at establishing

244

242 FinstonII supra note 51 at 198 243 Falconi, C. A. "Measuring Agricultural Biotechnology Research Capacity in Four Developing Countries." AgBioForum 2.3 (1999): 182-188. [Falconi] 244 see Roca supra note 7

64

Brazilian President da Silva has made strong public commitments to strengthening

Brazil’s biotechnology capacities; these statements are important signals to researchers,

companies and investors, that Brazil welcomes their investments. The psychological

effect of such top-down, public statements cannot be underestimated in terms of attracting

foreign investment and encouraging the development of public-private partnerships.

Recent policy directions from the Bolivian government call for the state to assume control

over the country’s main industries and natural resources.245 For example, the Morales

administration is still in the process of re-capturing private oil and gas companies lost

during the spate of privatizations that took place in the 1990s. Similarly, with respect to

biotechnology, the new Constitution uses strong language with respect to the rights of

indigenous peoples to access and manage genetic resources: for example, Article 100

holds that the State has an obligation to maintain an intellectual property registry to

safeguard the intangible rights of indigenous peoples;246 and article 56 states that private

property is permitted so long as it does not harm the “collective interest”.247 Furthermore,

in 2007, the Bolivian government also passed Supreme Decree No. 29004, which requires

prior consent in a product patent application or a pharmaceutical invention process.248

245 In May 2008, President Morales nationalized the telecommunications sector, followed by the gas transport industry in June 2008. Article 359 of the new Bolivian Constitution stipulates that all hydrocarbon deposits belong to the state of Bolivia. see The Office of the United States Trade Representative. USTR Bolivia Report 2010 U.S. Trade <

In

addition, in the case of a conflict with a foreign company, the Bolivian state must side

with local communities. Granted, the full repercussions of the new Bolivian constitution

have not been fully digested by industry and policymakers alike; however, such vague

www.ustr.gov/sites/default/files/uploads/.../2010_NTE_Bolivia_final.pdf> [USTR] 246 GRAIN. “The Struggle Against IPR in the Andes” <http://www.stwr.org/latin-america-caribbean/the-struggle-against-ipr-in-the-andes.html> [GRAIN] 247 Ibid GRAIN 248 WIPO Collection of Laws for Electronic Access (CLEA). Bolivian IP laws on genetic resources and patents. Available online at http://www.wipo.int/clea/en/details.jsp?id=6776

65

policy direction does not encourage the level of private biotechnology investment that

Bolivia might like to see. For example, in 2007, Bolivia withdrew from the World Bank’s

International Centre for Settlement on Investment Disputes (ICSID).249 Also, according

to the Office of the United States Trade Representative (USTR), recent Bolivian

government policies, stemming from the enactment of a new constitution in early 2009,

have created barriers to private foreign investment. For example, there is a limit placed

on the ability of private companies to access international arbitration mechanisms if there

is a conflict with the Bolivian government.250

The Bolivian government has given the strongest signs of a deep commitment to the needs, views and demands of local communities, but the fact that the concept of intellectual property is included in the Constitution creates unavoidable contradictions and potential conflicts. …the Constitution recognizes the concept of intellectual property rights, which are incompatible with its underlying principles; their contradictory inclusion is bound to create tensions.

As such,

251

(Emphasis added)

By comparison, Brazil’s innovation system was not based around state “control”

over resources, but rather for the state to assume a larger and more defined role in

management and use of resources. Ministers in the highest levels of government,

including President da Silva, explicitly called on the public sector to be the birthplace of

new research and, subsequently, for the private sector to enter the market and

commercialize this research. Indeed, many experts have commented that “incentive-

based” innovation systems can promote agricultural biotechnology innovation – where

the government merely guides the direction of private sector research through creating

249 Ibid USTR supra note 244 250 Ibid USTR 251 see GRAIN supra note 245

66

appropriate incentives (i.e. tax breaks or competitive funding research grants)252. In this

model, the government carries out less research and technology transfer on its own, but

creates an open-learning, flexible and decentralized environment in which the private

sector can assume a bigger responsibility.253

There are many similarities with respect to Bolivia’s and Brazil’s respective choice

of regulatory and intellectual property regimes that are responsible for managing their

genetic wealth and agricultural biotechnologies. And, if we follow the development

trajectory of Brazil’s intellectual property rights legislation, we can observe that it is only

recently – within the last 10-15 years – where Brazil has made its biggest strides in

enacting domestic legislation and ratifying international agreements that provide strong IP

protection for genetic resources. In fact, many commentators argue that making such

international commitments is actually retarding the growth of Brazil’s biotechnology

industries. For example, Brazil and Bolivia have both signed the Trade Related Aspects

of Intellectual Property Rights (TRIPS) Agreement. As is the case with many mid-level

developing economies, Brazil is heavily influenced by the regulatory pressures of global

IPR harmonization, most notably through international treaties; however, where there was

room for flexibility, the Brazilian government developed a policy environment that

favoured its specific development agenda.

254

252 see Hartwich supra note 10 at 18

For example, Brazil and Bolivia have both

used the flexibility provided under Article 27.3(b) to exclude plants, animals and

253 Ibid Hartwich at 10. see also Organization for Economic Co-operation and Development (OECD). Governance of Innovation Systems. Vol. Vol. 1. Secretary-General of the OECD, 2005. [OECD Governance] 254 For example, using the flexibility found in TRIPS, Brazilian law holds that no patents may be granted over living organisms.

67

“essentially” biological processes from patentability.255 At the 2001 Doha round of trade

negotiations, Brazil and Bolivia were part of a group of countries (including Thailand,

Colombia, Peru, Dominican Republic, Ecuador, among others) that sought to introduce

further amendments to the TRIPS agreement that would ensure that patent applications

must disclose the country of origin of genetic resources used in inventions and also that

the users of genetically-derived technologies produce evidence of “prior informed

consent” and evidence of fairly distributing access and benefits.256 Moreover, in 1999,

both countries decided to protect plant life through their own sui-generis patent system in

accordance with the principles of the International Union for the Protection of New

Varieties of Plants (UPOV) Act of 1978.257 In addition to a similar approach to managing

IP rights, Brazil and Bolivia have also taken similar steps to manage their biodiversity

and genetic resources: both countries have signed the Convention on Biological

Diversity258 (CBD) and both are also members of REDBIO/FAO, a technical cooperation

network of 738 laboratories in 32 countries in the Latin American region.259

255 Rocha-Lackiz, Alma. “Biopiracy: Is the Patent system a solution?” Dynamics of Institutions and Market in Europe (SPRU – Science and Technology Policy Research. )<

In fact, both

Brazil and Bolivia are part of a group of mega-diverse developing countries that

demanded the introduction of an International Regime on Access to Biodiversity and

http://www.dime-eu.org/files/active/0/Rocha-Lackiz.pdf> [Rocha-Lackiz] 256 World Trade Organization. Background and the current situation on TRIPS Article 27.3(b). Accessed online at http://www.wto.org/english/tratop_e/trips_e/art27_3b_background_e.htm 257 It is significant that Brazil and Bolivia have signed the UPOV 1978 and not the UPOV 1991. The UPOV 1978 Act is regarded as being more favourable to the rights of small farmers in developing countries. It was revised twice since European countries signed on in 1961 – first in 1978, and the second time in 1991. Each revision was aimed at strengthening the rights of commercial breeders. see Cullet, Philippe. "Farmers Rights in Peril." Frontline 17.7 (2000): 71. . see also "Membership in the UPOV." 2010. <http://www.upov.int/en/about/members/>. 258 Bolivia ratified the Convention October 3 1994 and ratified the Protocol September 11 2003. see Conventional on Biological Diversity Country Profile (Bolivia). Accessed online at http://www.cbd.int/countries/profile.shtml?country=bo 259 REDBIO/FAO website. <http://www.redbio.org/html/institucion_menu.htm> [REDBIO/FAO]

68

Benefit sharing, which would create binding guidelines to protect genetic resources and

indigenous knowledge under the CBD.260

Interestingly, however, there is one main international agreement that Brazil has

signed and Bolivia has not: the International Treaty for Plant and Genetic Resources for

Food and Agriculture (ITPGRFA). Brazil ratified the agreement in May 2006.

261 Bolivia

has still not joined the new international research system and this shows Bolivia’s lack of

strategic and formulaic vision for how its biotechnology industry will grow over the long-

term. The ITPGRFA represents a real attempt by the FAO at creating the type of

international collaborative framework through which new technologies can be developed.

In fact, the motivations behind the ITPGRFA – the recognition that Access Benefit

Sharing (ABS) in agricultural biodiversity must be treated differently from how it is

traditionally managed through plant and biodiversity laws262 - are the same motivations

that have caused Bolivia to ratify international agreements such as the CBD and enact

domestic legislation protecting its genetic resources. Bolivia is still clinging to the

CGIAR research system, considered by most expert commentators to be outdated and

underfunded. Consider that basic and strategic research in SIBTA is supposedly carried

out at the international research institutes, such as CGIARs,263 and agricultural research

depends on help from international institutions to keep its laboratories fully staffed and

running.264

260 Mega diverse countries possess 60-70% of the world’s biodiversity, and specifically include Brazil, India, Costa Rica, Bolivia, China, the Democratic Republic of Congo, Colombia, Ecuador, South Africa, Indonesia, Kenya, Madagascar, Papua New Guinea, Venezuela and the Philippines

This reliance on the CGIAR system constrains product development because

261 Food and Agriculture Organization (Legal Office). "International Treaty on Plant and Genetic Resources for Food and Agriculture." FAO. November 2001 2010. <http://www.fao.org/Legal/treaties/033s-e.htm>. 262 see Halewood supra note 76 263 see Hartwich supra note 10 at 44 264 see Avila supra note 113 at 4

69

of the CGIAR’s limited resources for scientific biotech innovation. More importantly, it

demonstrates a lack of strategic, long-term guidance from the Bolivian state.

The following table summarizes the comparison between the two countries:

Innovation Factors Brazil Bolivia Research progresses beyond the basic stage

Yes No

Explicit emphasis on human capital and research capacity development

Yes No

Strategic Policy Guidance Yes Yes – although focused on state control of resources; Ministry of Agriculture

must play a bigger role in setting research priorities for agricultural research

National Biotechnology Policy

Yes No

Membership in International Research Network

--

--

REDBIO/FAO Yes Yes ITPGRFA Yes No

Intellectual Property Regimes

--

--

Domestic Patent Legislation Yes yes TRIPS Yes Yes UPOV Yes Yes CBD Yes Yes

70

CONCLUSION

The comparative analysis presented in this paper demonstrates that novel IP

management techniques, such as the use of open-source licenses or patent-pools

arrangements, have less of an effect in creating a stable technology transfer environment

than is currently being proposed by some academics. Neither was the goal of this paper

to discuss what form such policies might take nor to propose new forms for IP licensing

strategies such as humanitarian-use exemptions or compulsory licensing. The analysis

might be criticized for being a bit simple and unsystematic; however, the goal of this

paper was always quite modest - to draw attention to the larger forces at work other than

IP instruments and the forms of intellectual property regimes. Both academics and

professionals working in the field of agricultural technology transfer, including Anatole

Krattiger and Susan Finston specifically, suggest that the three core elements of a

successful technology transfer environment are directly related to the external policy

environment: a durable government commitment to science, education, research and

related infrastructure; broad rule of law protections, including strong IP protections; and,

a reliance on market forces as the engine for technology transfer.265

issues are not within the control of the research institutions. Rather, they are within the control of national ministries, and, at least, indirectly, of the strategies of the International Financial Institutions in their assistance to and policy conditionality for the poorer nations, within which subsistence farmers are especially likely to be found

It is important to

remember that these

266

265 see Krattiger supra note 10 at 15; see also Finston supra note 1 266 see Barton supra note 2 at 17

71

The conclusions drawn from this analysis reflect both contemporary literature and real-

world observations.

Brazil’s successful implementation of the National Biotechnology Policy is an

example of how national governments can create the right economic, technological and

legal policy environment for the widespread adoption of agricultural biotechnology. The

Brazilian innovation system demonstrates that a strategic, horizontally coordinated

innovation policy, implemented through explicit guidance from the state, can ensure that

SME biotech firms, universities and research centers maximize the generation of pro-poor

research. The efficacy of information-development-commercialization channels is a

function of creating a culture of scientific innovation through strategic policy direction

and not of licensing method; and, it is the responsibility of executive-level authorities to

create a “cultural framework within which use of the technology is acceptable”.267 This

strategic policy focusing is a function of “new institutional frameworks tailored to ensure

good accessibility for small farms and to provide adequate incentives for the private

sector to invest in local innovation and technology transfer”.268 As such, the paradigm

shift that Bolivia needs to encourage the development of agricultural biotechnology

research must occur at the policy level and involve coordination among research

institutions, public universities and specific government funded agricultural projects.269

267 see Barton supra note 2 at 7

Novel licensing strategies can form a part of the policy environment; but their

contribution to the efficiency of technology transfer will only be effective if collaborative

information-development-commercialization channels have been established:

268 see Karapinar supra note 109 at 31 269 Hartwich supra note 10 at 15

72

[e]enhancing accessibility of and increasingly incentivizing the production of pro-poor biotechnologies through sound IP systems is certainly not enough to result in effective use of pro-poor biotechnologies in developing countries. However, PPPs together with a suitably adapted IPR system setting legal standards for contractual negotiations; creatively using public domain possibilities; and a proper contractual balance might be critical in making agricultural biotechnology pro-poor.270

At the early stages of development, it is important that strong IP legislation simply

exists; meaning, that the state enacts the appropriate patent, confidentiality and trade

secret laws that welcome private sector investment. Once sufficient technical and

capacity has been developed and markets have matured, the IP regime can be tailored to

specific national interests such as the protection indigenous rights and genetic resources.

Prioritizing the role of IP rights management without the requisite degree of national

strategic vision and capacity development policies is putting the cart before the horse.

270 see Karapinar supra 109 note at 31

73

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