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Reconciling private rights and public goods

Management of intellectual assets from public research in partnership with the private sector
March 22, 2019 By: Bram de Jonge
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CGIAR regards the results of its R&D activities as international public goods and is committed to their widespread diffusion to achieve the maximum possible access and scope of impact to advantage the poor, especially farmers in developing countries. At the same time, CGIAR and other public research organisations apply Intellectual Property Rights (IPRs). This article addresses the question how exclusive rights on new technologies can be reconciled with the production of international public goods.

The application of Intellectual Property Rights (IPRs) in agricultural research has been on the rise since decades. Public research organisations, including the CGIAR, are no exception to this trend although the total number of patents held by CG Centres remains rather small. IPRs such as patents provide the owner of a new invention with the exclusive right to use and exploit the patented technology, as an incentive to produce and spread ideas that will benefit society as a whole. The CGIAR, however, regards the results of its R&D activities as international public goods and is committed to their widespread diffusion to achieve the maximum possible access and scope of impact to advantage the poor, especially farmers in developing countries. This begs the question how exclusive rights on new technologies can be reconciled with the production of international public goods? How can the use of a market tool such as IPRs be relevant for an organization that aims to cater for the needs of poor people, particularly women, who, in general, do not constitute a strong market?

In 2012, the CGIAR Principles on the Management of Intellectual Assets (the Principles) were adopted to guide the search for such reconciliation. Herein, the organization acknowledges that partnerships with other organizations, including the private sector, are “critical  to  ensuring  access  to  the  best knowledge  and  innovation,  harnessing  efficiencies  in  product  development, and achieving maximum impact”.1 Intellectual Property (IP) protection is considered one mechanism that can incentivize such partnerships but the Principles affirm that “all Intellectual Assets produced or acquired by the [CGIAR] shall  be  managed  in  ways  that  maximize  their  global  accessibility  and/or ensure  that  they  lead  to  the  broadest  possible  impact  on  target  beneficiaries  in furtherance of CGIAR Vision.”

Restricted Use Agreement: facilitating the use of patented technologies

In practice, the Principles allow for two types of agreements which, although they place restrictions on global access, can be applied by CGIAR Centers. One is the Restricted Use Agreement, which allows Centers to accept downstream restrictions on the global accessibility of intellectual assets they acquire from a third party. This can be the case, for example, when a technology that a Centre needs for its own research is patented by another research organization or company. The CG Centre may enter into an agreement with the patent holder, even if the patent holder demands certain restrictions on future use of the patented technology. The CG Centre may only enter in such agreement if its unable to acquire equivalent Intellectual Assets from other sources under less restrictive conditions, and on the condition that the use of the Intellectual Assets will further the CGIAR Vision in the countries where they can be made available. As for the financial conditions of such agreements: in transactions between companies, a license is usually provided in exchange of a fee, but companies and universities may decide to waiver such fee when the technology is used for humanitarian purposes.

The CGIAR – International Potato Center (CIP), for example, has signed a research license with the Wisconsin Alumni Research Foundation (WARF), which provides CIP access to a late blight resistance gene (RB gene) from the University of Wisconsin. The CIP scientists have constructed a 3R-gene stack with two other genes that confer late blight resistance and have transferred this 3R-gene stack into several potato varieties that are popular in East Africa. Field trials are being undertaken in Uganda by the National Agricultural Research Organization, which show “extreme and potentially durable resistance to late blight”. This technology can be very beneficial for farmers because late blight or Phytophthora infestation is a major constraint for potato production worldwide, causing potato crop failures up to 60% and adding considerable costs on fungicides with all risks for human health and the environment. In anticipation of an eventual release of the late-blight-resistant potatoes in Uganda and other East African countries, CIP signed a license agreement with WARF that allows the commercialization of potato varieties containing the RB gene in developing countries, following approval by national authorities.2 So, in this example, CIP can use the patented technology for the benefit of potato farmers in East Africa (upon approval of the technology in these countries), where use of the technology may both reduce farmers’ production costs and increase their yields. CIP is, however, not allowed to exploit the same technology in developed countries where WARF may possibly license its RB Gene to a commercial partner.

Limited Exclusivity Agreements: building on CGIAR Centers’ intellectual assets

The other permissible agreement is called a Limited Exclusivity Agreements through which Centers can grant limited exclusivity for commercialization of their own intellectual assets under certain conditions. These conditions include that the exclusivity must be as limited as possible in terms of duration and territory, and that the restriction to access is necessary for the further improvement of the intellectual assets, or to enhance the scale or scope of impact on target beneficiaries (see example below). The agreement should also contain exemptions for public research and food security emergencies, which means that the technology should remain freely available for public research and for use in case of food security emergencies.

One example are CIMMYT’s license agreements for the commercialization of its maize hybrids in specified countries. Through these agreements, CIMMYT provides confidential parental line combinations to its public or private partners for the production and commercialization of the CIMMYT-developed hybrids in a specific country and for a limited period of time. By providing such exclusivity – limited in time, geography and material – CIMMYT aims to create a competitive advantage for its partners in order to stimulate their investment in the release, multiplication and commercialization of the maize hybrids. 3 In case CIMMYT would provide its hybrid line combinations to anyone for free as global public goods no party may be interested to take the technology to market. This is because all investments in, for example, the marketing of the new varieties could be ‘lost’ if another party can free ride on these investments and start producing the same product once it comes into demand. The purpose of creating the limited exclusivity is purely to incentivize other public or private entities to bring the research products of the CG Centre to market and into farmers’ fields.

Total numbers of LEAs, RUAs, Plant Breeder Rights (PBRs) and patents reported since the CGIAR IA Principles came into force

 Year Limited Exclusivity Agreements Restricted Use Agreements PBR filings or authorizations Patent filing or authorizations
2012 7 8 0 0
2013 7 3 3 6
2014 4 1 0 6
2015 0 0 0 4
2016 4 0 0 8
2017 23 4 0 5
2018 71 5 5 1
Total 116 21 8 30

The Principles also allow Centers to apply for IPRs themselves but Centres are requested to “carefully consider” such applications and only if it is “necessary for the further improvement of such Intellectual Assets or to enhance the scale or scope of impact on target beneficiaries, in furtherance of the CGIAR Vision.” The reasons for this vigilant approach seems warranted since patents on plants are controversial. In 2014, IRRI applied for a patent on a method for producing a rice plant with improved grain yield, specifically replicating the ‘SPIKE’ gene – a gene which IRRI identified from a rice landrace stored in its genebank. The patent application was considered justified as per the Principles but IRRI was strongly encouraged to pursue a transparent and pro-active communication strategy with respect to this patent given the sensitivities surrounding the protection of a method related to a ‘native trait’. The SPIKE gene patent indeed triggered upheaval amongst FAO member states when a civil society organization published a critical report about IRRI’s doings in 2017.4 The FAO member states, after being informed more elaborately about the case, invited the CGIAR system to provide annual reports on the implementation of the CGIAR Principles related to the germplasm that CG Centers hold in-trust for the international community.5

The case shows that patents related to plant material that Centers hold in-trust for the benefit of the international community can trigger issues of reputational risk. It is crucially important that CG Centres – and probably any public research organization that patents the results of publicly funded research – communicate promptly and transparently about such applications and, in particular, clearly explain how the patent protection is applied to further the CG mission. By patenting a promising technology, for example, a CG Centre can trigger the needed investments to further develop the technology and to bring it to the farmers’ fields, even if currently, the revenues that most public research organizations receive from their IPR is minimal. More importantly, by holding the patent, the CG Centre has the power to decide who can use the technology and under what conditions, for example, providing the technology royalty free to poor farmers in developing countries while recapturing all costs in developed countries. In that way, Centres may use IP Rights as one of the tools to stimulate dissemination of new technologies amongst the poor, using private rights to reach its public goods mission.

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