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Understanding biological resources for access and benefit sharing (ABS) and Intellectual Property Rights (IPR)

Patent applications based on biological resources occurring in India are required to cross certain additional thresholds in comparison to patent applications not based on Indian biological resources, in order to proceed to grant. The Indian Patent Office (IPO), under Section 10 of the Patents Act, 1970 (PA, hereinafter), mandates complete disclosure of source and geographical origin of biological material disclosed in the application for Patent, and the application filed in Form 1 of the PA requires a declaration and information from the applicant under the PA regarding any biological material obtained from India.

India is a party to the convention on Biodiversity (CBD) that provides provisions on access, conservation and fair and equitable sharing of benefits of biological resource of a country.

The convention on Biodiversity (CBD) was enacted in 1992, with three major objectives1:

  • the conservation of biological diversity.
  • the sustainable use of its components
  • the fair and equitable sharing of the benefits arising out of the utilization of genetic resources, including by appropriate access to genetic resources and by appropriate transfer of relevant technologies, taking into account all rights over those resources and to technologies, and by appropriate funding.

The Parliament of India enacted the Biodiversity Act in 2002 (BDA, hereinafter) with the CBD's objectives in its preamble. However, the provisions under the BDA apply differentially to specific persons and there are varied restrictions and exemptions that exist based on the identity of the said persons (e.g., Indian or foreign; local or commercial enterprise) accessing and using the biological resource and, the activity being performed (e.g., research for IPR generation or collaborative non-commercial research under Section 5 of BDA2).

Section 6 of the BDA mandates filing of Form III before the NBA under its Rule 18, without which no Patent can be granted from the IPO. However, there is a lacuna of understanding and interpretation on the meaning of "biological resources" and as it applies to patent applications and ABS associated with the biological resources and exemptions thereto.

The term Biological resources is defined under Section 2(c) of the BDA as:

"Biological resources" means plants, animals and micro-organisms or parts thereof, their genetic material and by-products (excluding value added products) with actual or potential use or value but does not include human genetic material.

Prima facie, the definition seems comprehensive, where there are explicit exclusions for (a) value added products and (b) human genetic material. However, the application of the definition for various purposes including under the PA and ABS under the BDA is very difficult, owing to the lack of clarity provided by the Legislature for the recited terms in the provision.

A semblance of a definition to an otherwise unclear definition of 'biological resource' has been given by the Hon'ble National Green Tribunal (NGT, hereinafter) in BMC v. Western coalfields and others3 for the terms including, value added products, by products, while establishing the boundaries for defining a 'biological resource'.

According to the NGT, the CBD and BDA, only talk about 'living resources.' Under the CBD and its Nagoya protocol4, a genetic resource is genetic material which is of some actual or potential value. Genetic material means any material of plant, animal, microbial or other origin containing functional units of heredity, i.e., genetic material/DNA of the biological resource. Said unit has some attributes of life and they are renewable, sustainable and have the capacity to reproduce. A settled rule of interpretation is that a statute is an edict of the Legislature and the conventional way of interpreting or construing a statute is to seek the 'intention' of the maker5. A clear reading of the Long title and the preamble of the BDA leads us to the conclusion that the Act is made for the conservation of biological resources. Further, the NGT has also stressed upon the fact that biological resources (as used in the BDA) are synonymous with genetic resources (as used in the CBD). So, for the above-mentioned reasons, Coal in the said case was not considered by the NGT as a biological resource as it is "lifeless".

For the terms, "parts thereof, genetic material, by products", the NGT derived that parts of plants and animals are those, which when joined with the rest, forms the whole, i.e., that part of the biological resource which has the same genetic makeup as the resource.

For the terms, by products and value-added products as it appears in the BDA and the difference between them, the NGT first quoted the following definitions-

"The term by-product as defined in the Oxford Dictionary refers to an incidental or secondary product made in the manufacture or synthesis of something else. Similarly, the term as defined in the Law Lexicon (3rd Edition, 2012) refers to a secondary or additional product. The word byproduct is a common English word and is defined in Murray's English Dictionary as a secondary product, a substance of more or less value obtained in the course of a specific process though not its primary object."

The NGT gave the reasoning that the Legislature intended to give protection to those by products which are or have the potential to be exploited so much so that the said exploitation can threaten the very conservation of the biological resource it is derived from.

Value added products are defined under Section 2(p) of the BDA as "products which may contain portions or extracts of plants and animal in an unrecognizable and physically inseparable form."

The FAQ portal of the NBA gives the reason for removing value added products from the purview of "biological resources" as "to allay the fears of Indian industry so that export of value-added products is not hampered".

Therefore, as per the NGT, the main difference between a by-product and a value added product is that while, a by-product is an ancillary product that comes from the biological resource in question, it does not have the "functional units of heredity", but is just as useful. Whereas, a value added product on the other hand, is a product that contains extracts or portions of plants and animals in an unrecognizable and physically inseparable form, i.e., a product which is more valuable monetarily than the biological resource itself but has portions or extracts of it. So, while a cow is a biological resource, milk and cow dung are by-products, beef jerky is a value added product and hence, exempt from PA and ABS under BDA. Thus, value added product contains portions or extracts of biological resources only, not of by-products.

Another important question that remains pertains to whether 'extracts' of biological resources are by products, or value-added products? An extract is defined in the oxford dictionary as "a preparation containing the active ingredient of a substance in concentrated form". There are a lot of extracts which form the preliminary material for products that are used in daily routine as well as form part of compositions for products under an application for a Patent, for example, face washes, shampoos, oils, etc.

For the sake of clarification, for example, we take an extract from the eucalyptus tree, will it be a biological resource, a by-product, or a value added product?

  • To be a biological resource, the resource in question should fulfill the test discussed above by the NGT, i.e., the resource must have a DNA/functional unit of heredity.
  • To be a value added product, the product as a whole must consist of an extract of the biological resource, of which the extract just forms an unrecognizable and physically inseparable part. The phrase "unrecognizable and physically inseparable" must be given a literal meaning. So, an extract cannot be a value added product either. Further, value added products are excluded from the definition of biological resources for the purposes of trading, as they fetch a higher value in terms of trade than the biological resource itself. An extract, being a preliminary product, cannot be usually traded in the market. So, from no angle can it be a value added product.
  • A by product, as defined by the same case, indicates that it is not part of the biological resource, but is an ancillary product of enough importance which would lead to the depletion of the bio resource it comes from. An extract is not an ancillary product of the bio resource, but something that is derived from the bio resource itself. Thus, an extract is not a by product either.

From the above paragraphs, it can be concluded that a eucalyptus extract is neither a biological resource, nor a by product. It can be a part or a component of the value added product, but it in itself is not one. However, since there is no determinative ruling in this regard, litigation cannot be ruled out. Hence, there is a great need for the Judiciary and Legislature to define the and interpret the term "value added product". Further, no provisions exist for bio-wastes or synthetic biological resources.

A recent, landmark judgement in this regard is Divya Pharmacy v. Union of India, where Uttarakhand High Court dismissed Divya Pharmacy's challenge to fair and equitable benefit sharing (FEBS) from Uttarakhand SBB and asked Divya Pharmacy to share 0.1-0.5% of its annual sale since 2014 despite being an Indian entity6. While the defendant ayurvedic pharmacy company argued that being an Indian company, it was exempt from the provisions under FEBS, as under Section 2(g)7 and Section 38 of the BDA, only a foreign entity requires permission from the National Biodiversity Authority (NBA) before they undertake any activity using India's biological resources. However, the HC, taking a broad and purposive interpretation relying on the Nagoya Protocol (does not distinguish foreign and national entities for benefit sharing) for FEBS definition, ordered that both foreign and Indian entities are obligated to share benefits with the local and indigenous communities in a welfare state such as India, when accessing and commercially exploiting its biological resources.

Another exemption exists under the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA) or commonly known as the International Seed treaty, which basically puts 64 major food crops and forages into a common pool that could be shared across borders after the signing of a material transfer agreement that contains few restrictions on how the biological material can be used. The ITPGRFA has implemented a multilateral system of ABS among the countries that ratify the said treaty for sharing the benefits arising from the use of major food and forage crops and their genetic resources for food security and interdependence and the realization of farmer rights.

Section 6 of the BDA also provides an exception to ABS for an arm of the IPR, i.e., the Protection of Plant Varieties and Farmers' Rights Act, 2001, where the sub-section (3) of the said Section 6 states that "The provisions of this section shall not apply to any person making an application for any right under any law relating to protection of plant varieties enacted by Parliament."

An additional exemption in the form of Normally traded commodities (NTC's) is defined under Section 40 of the BDA gives the Central Government powers to exempt certain items from the provisions of the Act, called the Normally traded Commodities (NTC's). A list of 426 species/ biological resources/ items are covered under the said NTC notification, which are exempted from regulating by the BDA for commercial utilization.

Thus, for the purposes of the BDA and as it influences the patentability requirement under the PA, a 'biological resource' under Section 2(c) of BDA, as propounded by the NGT, is-

  • Plants, animals, microbes- having genetic material- DNA and showing attributes of life like sustainability, renewability and the capacity of reproduction
  • Parts thereof- parts of the bio resources which have the same genetic makeup as that of the bio resource
  • Their genetic material- DNA
  • Their by-products- ancillary products of bio resources whose demand poses a threat to the conservation of the bio resource itself.

Complete exclusion-

  • Value added products- products containing parts or extract of bio resources but not in a form which is recognizable or physically inseparable.
  • Human genetic material.

Partial exemption-

  • NTC's- commodities usually traded- under section 40 of the Act, ONLY for trade purposes
  • ITPGRFA crops.

1 Article 1, the Convention on Biodiversity, 1992

2 http://nbaindia.org/uploaded/Biodiversityindia/Legal/31.%20Biological%20Diversity%20%20Act,%202002.pdf

3 Original Application No. 28/2013 (CZ)

4 https://www.cbd.int/abs/doc/protocol/nagoya-protocol-en.pdf

5 D.M. Aravali Golf Club v. Chander Hass 2007 (14) SCALE 1, Appeal (civil) 5732 of 2007

6 Divya Pharmacy vs Union of India And Others on 21 December 2018, Writ Petition (M/S) No. 3437 of 2016, 2018 SCC OnLine Utt 1035

7 "fair and equitable benefit sharing" means sharing of benefits as determined by the National Biodiversity Authority under section 21.

8 Section 3: The following persons/entities seeking access and/or obtainment of biological resources occurring in India, for commercial utilization, research or bio-survey and bio-utilization shall have to seek prior approval from the National biodiversity Authority before such access and/or obtainment: Non-Indian Individual; Any company, society, trust, organisation, association, institution etc., registered or incorporated outside India; A Non-Resident Indian; Any company, society, trust, organisation, association, institution etc., registered or incorporated in India, having non-Indian participation in its share capital and/or management.