Clearing house for IPR- the cases of agricultural and medical biotechnology Gregory Graff David Zilberman Department of Agricultural and Resource Economics University of California Berkeley, California

Overview The case for Clearing house The MIHR and the AATF Agricultural biotechnology specialty crops Developing countries Implications

On IPR and Clearing houses Patents allow gains from innovation and access to and diffusion of new information. They are especially effective for product innovations - the public knows the principles behind a product and the innovators earns monopoly profits In cases of Process Innovations the exclusivity of patents may prevent further innovations, leading to the Tragedy of Anti Commons Clearing house are introduce to reduce this problem.

On Patents and innovations Patent are statements of concepts that are novel and useful. Commercialization of most patent requires significant extra investment. Most patents are not earning income. The patent system provide not only incentives for research but mostly for development and commercialization- Patent ownership is an asset essential for obtaining finance for further technology development

Division of labor among institutions Many innovations are originated in public research organizations ( Universities,CGIAR, ARS ) Sometimes start ups Develop innovations & multinationals ( agribusiness,PHarma ) commercialize them. Multinationals may also develop and do discovery research. Alternative Channels of innovation increase competitiveness and increase rate of innovation relative,to sole private sector activities.

Privatization of rights to patents & further development The Bayh-Dole act ( which allows U.S. universities to sell the rights to patents generated with public funding )contributed to commercialization of university generated biotechnology innovations- but transferred control of enabling technologies to private hands-who may restrict access to these innovations. Lack of access to technologies impede commercialization of innovations that use them.

Cohen Boyer vs Agri-bacterium The Cohen Boyer patent ( for the basic process of medical genetic engineering ) has not been licensed exclusively. It generated revenues ( close to $100 mil )and enabled further applications. Agri-bacterium ( a crucial process for planting genes in plants )was discovered at Wash State and exclusively licensed. Lack of access to this technology thwarted commercialization of some innovations. Innovators and OTTs wait to expiration of the patent before issuing dependent technologies (to avoid hold up).

Ownership of Patents vs licenses

More on Ownership of Patents vs licenses Number of ag biotechnology IP documents assigned to organizations Organization typeU.s.EUJPPCTTotal Private Sector: Companies3,1922,0922,9092,16910,362 Independent inventors Private sector subtotal3,2262,1293,0292,24210,626 Public Sector: Academic ,269 Government Management companies Public sector subtotal1, ,1543,410 Undetermined Total4,3192,9113,6853,47914,394

Ownership of patents and control of technology The Public sector owns a large percentage of ag biotech patents,yet we do not know the ownership of licenses that represents actual control of technology. Research vs commercialization licenses- Public sector may obtain research license to enabling technologies,but implementation of innovations resulting from research are difficult without license to commercialize.

Globalization and IPR Patents apply only where they are registered,so technologies can be commercialized in many developing countries without concern for most IPR, if resulting products are not exported. Globalization leads to introduction of IPR systems throughout the world, and IPR may be more constraining in in Developing countries in the future.

Private vs. public researchers and IPR The private sector recognizes IPR constrained as part of the cost of doing business. New projects are not introduced without “freedom to operate” Public sector researchers do not have the apparatus to address IPR constrains as they conduct their research. Therefore, the resulting innovations may not easily commercialized.

Objectives of clearing house for IPR Reduce transaction cost for the commercialization of innovations Increase transparency about ownership of IPR Provide mechanisms for fast negotiation of access to IPR Expand set of technologies accessible (for research and product development). Improve technology transfer mechanisms and practices ( mostly in public sector institution)

Management of Intellectual Property in Health R&D (MIHR) Motivation: to gain access to IPR to develop cures to diseases afflicting the poor (TB,Aids, Malaria) Areas of work :  Identification and codification of best practices for licensing to achieve the goals of the public sector.  The provision of training to scientists, universities and research institutes in managing IP to benefit the public sector, in both developed and developing countries.  Consulting services to developing and developed country groups concerned with research and product development.

Dimensions of of MIHR  Constituency:Developing country R&D institutions that may need assistance crafting the basics of a specific IP transaction or may seek general capacity-building training.  International R&D programs with a need for consultancy work.  Developed country R&D institutions that desire assistance to more effectively achieve their social objectives.  Partners Other organizations are complementing MIHR in developing public sector IPR portfolio for the diseases of the poor.

African Agricultural Technology Foundation Purpose: The African Agricultural Technology Foundation is being created to facilitate the development, testing, distribution and marketing of new, technologically sophisticated crop varieties that address the food security needs of subsistence farmers in sub-Saharan Africa. It will be run by Africans to address African needs Need: Scientists in public research centers currently face the complex and expensive proposition of approaching many companies and institutions to secure the use of research tools, technology components and expertise needed to develop new crops aimed at the public good. The purpose of the AATF is to facilitate the transfer of agricultural technology properties for use in public agricultural research and to reduce transaction costs by helping scientists navigate through issues such as intellectual property rights (IPR), regulatory requirements, and distribution

How AATF will work-1 The AATF will use a demand-driven approach to identify new traits that are needed to improve strategically important African crops. a need for new crop traits is identified, the AATF will determine whether companies hold technologies that could provide those traits. The Foundation will then work with appropriate parties to develop a feasibility study that will assess: 1) social and cultural acceptability; 2) technical feasibility 3) regulatory issues; 4) seed production and distribution problems; and 5) potential markets. Although the AATF will not be a primary funding source for most project Once activities, it will help finance the feasibility study and will help mobilize resources for other project components. If a proposed project is shown to be feasible and likely to have a significant food security impact, the Foundation will then help the parties develop a more comprehensive project business plan, including funding, research design, regulatory approval (if needed), and distribution strategies.

How AATF will work-2 After the business plan is developed, the Foundation will work with the technology owners and other project partners to negotiate an overall license. The license will be granted directly to the AATF for a specific purpose and for use by specific institutions as set out in the business plan. The AATF will then grant a series of sub-licenses to different institutions for research, regulatory testing, and, finally, if found safe and approved by the country in which the crop will be used, for distribution Although the Foundation will not conduct research or regulatory testing, and will not be directly involved in distribution, it will facilitate partnerships and monitor participant institutions at each of these stages to assure that the terms of the licenses are respected.

Developing countries & minor crop Most ag biotech is developed for major crops in the north Private companies in developed countries hold IPR for many GMO innovations There is a risk that Africa will miss the gene revolution as it missed the green revolution. Specialty crops may not attract investment in agricultural biotech & under-utilize it

Clearing house to ag biotech- a generic approach ( Obtain rights to many enabling technologies and allow access to users in developing countries or specialty crops ( Provide the information about ownership of IPR and solution to IPR barriers) ( Serve as the middleman in transactions between owners of IPR and users. ( Identify and provide best practices for technology transfer to ensure precise technology transfer agreements. ( Provide education and training, particularly in developing countries, on the use of intellectual property and mechanisms to assure freedom of operation in developing new technologies

Rockfeller and Mcknight foundations perspective:Clearing house for Agricultural Biotechnology for Subsistence Crops-major issues How to obtain “freedom to operate” for new varieties?—. There is a need for expert advice on research choices (front-end questions such as which promoter or transformation system to use) as well as guidance at the end of the research process about how to expeditiously negotiate IP clearances for a finished product. How can researchers in developing countries gain access to the latest advanced agricultural technologies?— Researchers in developed countries are hesitant to share technologies with developing country colleagues for fear of jeopardizing important relationships with the private sector and/or placing their own institutions at risk. How can approvals for humanitarian use or other public benefit be streamlined?— Many licenses are broadly written to include multiple geographies and crop applications, either excluding potential humanitarian or public benefit use or requiring public sector researchers to make time consuming and costly requests that an exception be made on their behalf.

A two component solution Create a clearinghouse to advise researchers, administrators, and technology managers about practical IP management strategies that will result in quicker decisions, lower transaction costs, and ultimately, the development and dissemination of plant varieties using biotechnology that address hunger (subsistence crops) or contribute to more vibrant state economies (minor commercial crops). Create a mechanism such as a technology pool to grant researchers broader access to agricultural biotechnologies and materials for specific purposes.

Unsolved questions How should the clearinghouse’s services be developed? Who will provide the services? How should it be funded? How should the potential liability associated with the granting, and use of licenses be managed? How will issues such as biosafety (particularly in relation to the release of genetically modified crops in developing countries) be addressed?

Obtaining Access to Ipr from public and private sector Developing countries may have easier access to companies IPR than university IPR. Consideration for License distribution vary among owners of IPR. Therefor there are separate clearing house organizations are designed for public and private sector The organizational structure may change as technology mature. We may see in the longer run emergence of several blocs that will swap rights to enabling technologies

Bio-diversity &biotechnology Biotechnology was introduced in developed countries, relying on bio-diversity of developing country. LDC’s worry exclusion & high price of products based on their resources. LDC’s need access to the technology of developed countries. There is opportunity to arrange mechanism of trade of access to biotechnology with rights to utilize bio-diversity. Arrangement for payment for access to bio-diversity should be established. Local population should be given some of the proceeds to provide incentives for conservation.

Lessons for Economics Understanding of economic/ institutional details needed for relevant analysis ( in our case technology transfer institutions and IPR details ) We can make a difference by introducing proposals for institutional change and communicate them to practitioners and in interdisciplinary forums. Analysis of institutional design and impacts are important economic research topics.

A Perspectives on clearing houses, IPR and biotechnology IPR is part of the constraints for the adoption and development of biotechnology in minor crops and LDC’s. Consumer acceptance is a much more important issue. The two are related-some activists oppose Biotech because it is seemed to be “corporate technology”. Low profitability of minor crops may be the main reason for low interest in biotech,

The Future of IPR in BIOtech Resolution of IPR issues will reduce the costs and accelerate the introduction of new technologies when the economic conditions will be ripe. As patent rights for basic technology will expire some tensions will be reduced. More stringent patent requirement will reduce IPR pressures. Public sector institutions will develop technology pools and arrangements for swapping technologies with private sector players Still, access to Ipr will be costly, and private players will use their Ipr assets to earn income and promote their technologies