2. PART II: INTERNATIONAL IPR AGREEMENTS REGULATING PLANT VARIETIES AND PLANT BREEDERS’ RIGHTS

2.1. Introduction and overview

This section identifies and discusses the provisions of three different international IPR agreements that protect plant varieties and plant breeders’ rights.

The two major treaty systems that regulate these issues are the agreements established under the auspices of the Union internationale pour la protection des obtentions végétales ("UPOV"), and the TRIPs Agreement included within the family of treaties administered by the World Trade Organization ("WTO"). (see para. 1.3.5.2 above) These two treaty systems each contain a comprehensive set of rules for their members regarding IPRs over plant varieties.

In short, the UPOV treaties adopt a sui generis system of protection (that is, a system that is unique, or of its own kind) especially tailored to the needs of plant breeders. The TRIPs Agreement requires WTO Members to protect new plant varieties using patent rights, a sui generis system or some combination thereof. Because TRIPs provides states with this flexibility and because the treaty has an uncertain relationship to the previously adopted UPOV conventions, national governments face a wide array of options in choosing the intellectual property regime applicable to plant varieties. This section of the study outlines the requirements imposed by these two treaty systems, and Part III of the study then identifies and analyses these options.

2.2. The UPOV Acts

The first UPOV Act was drafted in 1961, principally by industrialized governments seeking to provide protections for plant breeders in their own and overseas markets. The UPOV was later revised in Acts adopted in 1972, 1978 and 1991.

As of July 2004, 55 states were parties to UPOV - 29 to the 1978 Act, 24 to the 1991 Act and 2 to the 1972 Act. (States Parties to the UPOV, Status on 30 June 2004). As a result, this study will focus on the two most recent UPOV Acts. Many of the accessions to these Acts are quite recent, with a number of developing states and countries in transition to a market economy acceding in the 1990s. The 1991 Act entered into force on 24 April 1998 and on that same date the 1978 Act was closed to future accessions except by a few states already in the process of adhering to it.

As explained in section 1.3.1 above, countries generally give domestic effect to the UPOV Act to which they are a party in one of two ways. In "automatic incorporation" states, courts and administrative agencies directly apply and enforce the Act, although implementing legislation is often needed to authorize administrative agencies to process applications to protect new plant varieties. In "legislative incorporation" states, by contrast, the UPOV Act does not become enforceable in domestic law until the state enacts a national plant variety protection law that conforms to the Act’s requirements.

2.2.1. The 1978 UPOV Act

The 1978 UPOV Act adopts most of the international IPR obligations set out in Part I above, including a definition of the applicable subject matter and protected material, eligibility requirements, exclusive rights, national treatment, reciprocity, terms of protection and exceptions and limitations to exclusive rights. It does not, however, contain any provisions on MFN treatment or enforcement.

2.2.1.1. Subject matter requirements

Limited number of protected genera or species. Not all plant varieties must be protected under the 1978 Act. Rather, article 4 provides that member states are to progressively extend protection to an increasing number of genera or species, beginning with five on the date the treaty enters into force for that state and ending with twenty-four within eight years. In addition, member states are free to limit the Act’s application within a particular genus or species to varieties with a particular manner of reproduction or multiplication, or a certain end-use.

Preclusion of dual protection with breeder’s right and patent. The 1978 Act permits its signatories to protect plant varieties either with a distinct breeder’s right or with a patent. However, article 2(1) precludes member states from granting both forms of protection "for one and the same botanical genus or species."

Protection of discovered varieties required. Although the 1978 Act focuses on plant varieties created through classical breeding methods, it is generally accepted that the treaty requires member states to protect varieties which have been discovered. This has been inferred from article 6.1(a) which indicates that a protected variety may result from a natural source of initial variation. (Crucible Group, 2001, p. 137)

2.2.2. Eligibility requirements

Assuming that a plant variety falls within a protected genera or species, it is eligible for protection under the 1978 Act only if it is: (1) new, (2) distinct from existing or commonly known varieties, (3) homogenous or uniform and (4) stable. (art. 6) When a variety fulfils these four criteria, it is listed in a national register or catalogue which publicly discloses that the variety is protected. (FIS/ASSINSEL, 2001a).

Novelty. To avoid protection for plant varieties that have already been exploited or are a matter of common knowledge, a new variety in which a breeder seeks protection must not have been sold on the market for more than a specified period of years prior to the date of application for protection. The 1978 Act specifies the maximum number of years during which such pre-application sales have occurred, with different periods of time set for different types of plants as well as for sales within the territory of the applicant state versus the territory of other states. (art. 6(1)(b)) (Leskien & Flitner, 1997, p. 50)

Distinctness. The 1978 Act states that a protectable plant variety must be "clearly distinguishable in one or more important characteristics from any other variety whose existence is a matter of common knowledge at the time when protection is applied for." (art. 6(1)(a)). Although the treaty itself does not further define distinctness, the Guidelines for the Conduct of Tests for Distinctness, Homogeneity and Stability (UPOV Guidelines) use both qualitative and quantitative plant characteristics, including such visible attributes as leaf shape, stem length and color, to determine if the difference between varieties is "clear and consistent." As explained below in the analysis of the UPOV 1991 Act, the concept of distinctness is critical to determining the scope of a breeder’s right in plants that are closely related but not identical to a protected variety.

Homogeneity. Under the 1978 UPOV Act, a variety has to be "sufficiently homogeneous, having regard to the particular features of its sexual reproduction or vegetative propagation." (art. 6(1)(c)). The UPOV Guidelines further clarify that to be considered homogeneous, the variation shown by a variety must be "as limited as necessary to permit accurate description and assessment of distinctness and to ensure stability." The homogeneity requirement has been criticized by commentators as discouraging variability in plant varieties that are often useful for sound agricultural practices and as denying protection to breeders of cultivated landraces that exhibit diversity traits. (Leskien & Flitner, 1997, pp. 51 and 52) It is thus one of the sources for the criticisms identified in paragraph 1.3.6.1 above that plant breeders’ rights are reducing plant genetic diversity by rewarding breeders of uniform plant varieties.

Stability. The stability requirement is a temporal one, requiring the breeder to show that the essential characteristics of its variety are homogeneous or uniform over time, even after repeated reproduction or propagation. (art. 6(1)(d)) In practice, what has been shown to be homogeneous is usually considered to be stable as well. For this reason, the stability requirement has engendered the same sort of critiques as the uniformity requirement in its preclusion of protection for cultivated landraces and other traditional plant varieties. (Leskien & Flitner, 1997, p. 52)

2.2.2.1. Protected material

The 1978 Act requires its signatories to protect a variety’s reproductive or vegetative propagating material. The Act does not require protection of harvested material, with the exception of ornamental plants that are used for commercial propagating purposes. (art. 5(1))

2.2.2.2. Breeders’ exclusive rights

Under article 5 of the 1978 Act, any person seeking to engage in the following three acts, with respect to a protected variety’s reproductive or vegetative propagating material, must obtain the prior authorization of the breeder: (1) production for purposes of commercial marketing, (2) the offering for sale and (3) marketing. The 1978 Act does not, however, require member states to extend these exclusive rights to harvested material or other marketed products.

2.2.2.3. National treatment and reciprocity

Member states must grant the three exclusive rights referred to in the preceding paragraph in the same manner to both national breeders and to breeders who reside in or are nationals of other 1978 Act member states. However, where a state extends legal protection to a specific genus or species, or where it provides more extensive exclusive rights to breeders than the rights required under the treaty, reciprocity is permitted. Thus, a state providing these additional rights may restrict protection to breeders from those member states that apply the Act to the same genus or species, or that provide such additional exclusive rights to their own nationals. (arts. 3 and 5(4))

2.2.2.4. Term of protection

The 1978 Act requires a minimum term of protection of fifteen years, with the exception of vines, forest trees, fruit trees and ornamental trees, which are protected for no less than eighteen years.

2.2.2.5. Exceptions and limitations.

Two major exceptions and limitations to exclusive rights exist under the 1978 Act: (1) a breeders’ exemption and (2) a farmers’ privilege. The Act also permits members to impose compulsory licences.

Breeders’ exemption. This exemption in article 5(3) precludes member states from granting to breeders of protected varieties the right to authorize or refrain from authorizing other breeders seeking to use the protected variety to create new varieties or to market those new varieties. States are permitted to grant breeders such an authorization right only if the repeated use of the protected variety is necessary for the commercial production of the new variety. According to the International Association of Plant Breeders and the International Seed Federation, this breeders’ exemption "is essential for continued progress from plant breeding." (FIS/ASSINSEL, 1999)

Farmers’ privilege. The focus of the 1978 Act on commercial exploitation of protected plant varieties has been interpreted to allow the use of seeds and propagating material for noncommercial purposes without the breeder’s prior authorization. (Crucible Group, 2001, p. 170) In national plant variety protection laws, this implicit noncommercial exception most frequently benefits farmers who purchase the seeds of protected varieties. The scope of this so-called farmers’ privilege varies widely, however. Some nations only permit farmers to plant seeds saved from prior purchases to be used on their own land holdings, while others allow them not only to replant but also to sell limited quantities of seeds for reproductive purposes, a practice often referred to as "brown bagging." (Leskien & Flitner, 1997, p. 61)

Compulsory licences in the public interest. Article 9 of the 1978 Act permits members to restrict breeders’ exclusive rights for "reasons of public interest." Where such restrictions are enacted to ensure the widespread distribution of the variety (such as where the breeder fails to supply the demand for the variety in a reasonable quantity and price or unreasonably refuses to license the variety to third parties), the breeder must receive equitable remuneration.

2.2.3. The 1991 UPOV Act

The limited scope of the 1978 Act led a number of member states of the UPOV to adopt a revised Act with enhanced rights for plant breeders. The major revisions of the 1991 Act are discussed below:

2.2.3.1. Subject matter requirements

Phased-in protection of all genera or species. Unlike its predecessor, the 1991 Act requires states to protect at least fifteen plant genera or species upon ratifying or acceding to the Act, and to extend protection to all plant varieties within ten years. (art. 3(2)) It also contains a definition of a plant "variety" as a "plant grouping within a single botanical taxon of the lowest known rank" which can be "defined by the expression of the characteristics resulting from a given genotype or combination of genotypes; distinguished from any other plant grouping by the expression of at least one of the said characteristics; and considered as a unit with regard to its suitability for being propagated unchanged." (art. 1(vi)) No definition of "variety" appears in the 1978 Act, which indicates that member states to that earlier treaty have greater discretion in defining the characteristics of plant groupings that qualify for protection.

Dual protection with breeders’ right and patent permitted. In response to demands from breeders in industrialized counties, the 1991 Act removed the 1978 Act’s ban on dual protection and now permits member states to protect the same plant variety with both a breeders’ right and a patent. (Watal, 2000, p. 149)

Protection of discovered varieties. The 1991 Act makes explicit the 1978 Act’s implicit requirement that discovered varieties be protected. It does so through article 1(iv)’s definition of a "breeder" as including a "person who bred, or discovered and developed, a variety."

2.2.3.2. Eligibility requirements

The four eligibility requirements that must be demonstrated to merit protection for a specific variety - novelty, distinctness, uniformity and stability - are preserved in the 1991 Act, subject to only minor changes in scope and wording. (arts. 7-9) Thus, the 1991 Act has received the same criticism as the 1978 Act for its encouraging of genetic standardization and its inability to protect more diverse plant varieties, traditional varieties or cultivated landraces.

2.2.3.3. Breeders’ exclusive rights in protected material

Extensive additions to the 1978 Act were made with respect to the exclusive rights enjoyed by breeders in protected material of plant varieties.

Enumerated exclusive rights in propagating material. The breeder’s prior authorization must be obtained for the use of reproductive or vegetative propagating material of the variety for (1) production or reproduction, (2) conditioning for the purpose of propagation, (3) offering for sale, (4) selling or marketing, (5) exporting, (6) importing and (7) stocking for any of these purposes. (art. 14) (Leskien & Flitner, 1997, p. 57)

Extension of rights to harvested material and products. These exclusive rights apply not only to propagating material but also to harvested material, where the harvest has been obtained through an unauthorized use of the propagating material and the breeder has not had a reasonable opportunity to exercise his or her right in relation to that material. In addition, member states are permitted but not required to provide additional rights to breeders, including rights in products made directly from harvested material.

2.2.3.4. National treatment required

Whatever the particular exclusive rights member states adopt in their plant variety protection laws, those rights must also be provided to the nationals of other 1991 Act member states. Unlike the 1978 Act, granting rights only on condition of reciprocity is not permitted. (art. 4) For example, if a 1991 Act member chooses to grant more expansive exclusive rights to breeders than the exclusive rights required by the 1991 Act, it must grant those rights to breeders from all other 1991 Act member states. The state cannot choose to grant such expansive rights to only those 1991 Act states that also provide the same level of rights protection to the first state’s nationals.

2.2.3.5. Terms of protection

The 1991 Act extends the term of protection to 20 years, and requires a 25-year term for tree and vine varieties.

2.2.3.6. Exceptions and limitations

A second area of major revision concerns the reduced scope of exceptions and limitations to breeders’ exclusive rights, which is found in article 15 of the 1991 Act.

Private, noncommercial exception. The 1991 Act makes explicit what was only implicit in the 1978 Act, namely that private, noncommercial activities with respect to new varieties are outside of the breeder’s control. This exception would presumably permit subsistence farmers to use protected seeds and other propagating material for their own consumption.

Research exception. The 1991 Act also recognizes that breeders cannot restrict "acts done for experimental purposes." This exception would permit research and testing of protected varieties for scientific purposes that does not lead to commercial exploitation.

Limited breeders’ exemption. Like its predecessor, the 1991 Act recognizes the right of breeders to use protected varieties to create new varieties. However, this exception is itself restricted in its application to such new varieties as are not "essentially derived" from protected varieties. (arts. 14(5) and 15) The drafters added this restriction to prevent second generation breeders from making merely cosmetic changes to existing varieties in order to claim protection for a new variety. The concept of essential derivation has proved highly controversial in practice, however. Breeders have been unable to agree on a definition of the minimum genetic distance required for second generation varieties to be treated as not essentially derived from an earlier variety and thus outside of the first breeder’s control. (FIS/ASSINSEL, 1999). Nevertheless, the overall effect of this provision of the 1991 Act has been to narrow the breeders’ exemption and expand the IPRs of first generation breeders.

Limited farmers’ privilege. The 1991 Act recognizes an explicit farmers’ privilege, but one that is limited in scope. In particular, each member state may enact a provision in its national plant variety protection laws permitting farmers to use for propagating purposes "on their own holdings" the product of the harvest which they obtained by planting a protected variety "on their own holdings." In addition, this privilege must be exercised "within reasonable limits and subject to the safeguarding of the legitimate interests of the breeder." (art. 15(2)) Several points can be inferred from this language.

First, unlike the 1978 Act, the 1991 version of the farmers’ privilege does not authorize farmers to sell or exchange seeds with other farmers for propagating purposes (Watal, 2000, p. 141), a limitation that commentators have criticized as inconsistent with the practices of farmers in many developing nations, where seeds are exchanged for purposes of crop and variety rotation. (Leskien & Flitner, 1997, p. 60)

Second, according to the International Association of Plant Breeders, the "reasonable limits" language in article 15(2) requires states to restrict the acreage, quantity of seed and species subject to the farmers’ privilege, while the requirement to safeguard breeders’ "legitimate interests" requires farmers to pay some form of remuneration to the breeder for their privileged acts. (FIS/ASSINSEL, 2001a) The latter assertion is controversial, however, and has not been enacted in the national laws of all the 1991 Act member states. For example, the EC’s Council Regulation on Community Plant Variety Rights, No. 2100/94 of 27 July 1994, requires such payments except in the case of small farmers, whereas the United States’ Plant Varieties Protection Act of 1994, 7 U.S.C. Sec. 2543, does not.

Compulsory licences in the public interest. Article 17 of the 1991 Act contains a compulsory licence provision similar to that found in the 1978 Act. It permits members to restrict breeders’ exclusive rights only for reasons of public interest and requires payment of equitable remuneration to the breeder whose rights are limited.

2.2.4. Resistance to the 1991 Act

Many developing nations, particularly those in Africa, have resisted ratifying the 1991 Act or adopting it as the standard for their plant variety protection laws. The foreign ministers of the more than 50-member Organization for African Unity (now the African Union) issued a statement at a January 1999 meeting calling for a hold on IPR protection for plant varieties until an Africa-wide system has been developed that grants greater recognition to the cultivation practices of indigenous communities. However, at a subsequent meeting of the Organisation Africaine de la propriété Intellectuelle (OAPIO), patent officials from sixteen francophone African nations recommended that their countries adopt the 1991 Act. (Machipisa, 1999). As of the date of this study, Tunisia, Kenya and South Africa are the only African UPOV member states. Tunisia ratified the 1991 Act in August 2003, whereas the other two countries are parties to the 1978 Act. Other developing states parties to the 1978 Act are Bolivia, China, Ecuador, Kyrgyzstan, Mexico, Nicaragua, Panama, Paraguay, Trinidad and Tobago and Uruguay. These and other developing countries are, however, under pressure to ratify the 1991 Act as part of bilateral or regional trade and investment agreements. (See para. 2.3.1.6 below)

TABLE 1 - Comparison of UPOV 1978 Act and UPOV 1991 Act

2.3. The TRIPs Agreement.

Although the UPOV Acts have provided IPR protection for plant varieties for more than forty years, their significance has recently been overshadowed by a different intellectual property treaty, the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPs" or the "TRIPs Agreement"). Adopted in 1994 as a treaty administered by the WTO, TRIPs is the first and only IPR treaty that seeks to establish universal, minimum standards of protection across the major fields of intellectual property, including patents, copyrights, trademarks, industrial designs, integrated circuits and trade secrets. Although the TRIPs Agreement devotes only minimal attention to plant breeders’ rights or plant variety protection and does not even mention the UPOV Acts, its adoption has done more to encourage the legal protection of plant varieties than any other international agreement.

2.3.1. TRIPs as a spur to plant variety protection.

TRIPs’ influence on plant variety protection stems from the following sources: (1) its link to other international trade agreements; (2) its widespread adherence by states in both the industrialized and developing world; (3) its novel enforcement, review and dispute settlement provisions; (4) the requirement in TRIPs article 27.3(b) that its signatories must provide protection for plant varieties "either by patents or by an effective sui generis system or by any combination thereof"; and (5) a formal review of article 27.3(b) which was scheduled to be held in 1999. The following paragraphs briefly address each of these five issues. Subsequent sections devote more detailed treatment to the protection of plant varieties with patents and to the elements necessary to create an "effective sui generis system."

2.3.1.1. The relationship of TRIPs to the WTO and the international trading system

Unlike all prior intellectual property treaties, TRIPs is not a free-standing agreement concerned solely with IPRs. Rather, TRIPs is linked to a larger family of trade-related agreements concerning subjects such as trade in goods and services, agriculture, textiles and health-related restrictions on imports. All of these agreements were adopted within the WTO during the Uruguay Round of trade negotiations held between 1988 and 1994. As such, TRIPs was part of a global "package deal." Industrialized nations secured a commitment from developing nations to provide minimum standards of effective legal protection to intellectual property products, and in exchange developing nations received a commitment from industrialized countries to open their domestic markets to goods and other products manufactured in the developing world. (Helfer, 1998, p. 377)

2.3.1.2. Widespread adherence to TRIPs

The result of this global bargain was widespread adherence to all WTO Agreements, including the TRIPs Agreement. As of July 2004, 147 states or customs territories were obligated to comply with TRIPs by virtue of their membership in the WTO. (Compare this to the 55 nations that were parties to the various UPOV Acts as of the same date, see para. 2.2 above.) In addition, many states (particularly those in the developing world) who became bound by TRIPs had not ratified earlier intellectual property treaties and were thus required to make significant changes to their national laws to bring them into compliance with the Agreement. In acknowledgement of this fact, TRIPs contains a phase-in provision pursuant to which most of the treaty’s substantive obligations became binding for developed nations in 1996, but did not become binding on developing nations and nations in transition to market economies until 2000. Least developed nations are given the most leeway and are not required to implement the treaty’s substantive obligations until 2006.

2.3.1.3. The enforcement, review and dispute settlement provisions of TRIPs

In addition to its widespread adherence, the influence of the TRIPs Agreement can be traced to its unique provisions relating to the enforcement of IPRs within national laws, the review of those national laws by the TRIPs Council and the mechanism for settlement of disputes between states leading to rulings backed up by the threat of trade sanctions.

Enforcement provisions. Unlike prior IPR agreements, TRIPs does not only specify the minimum substantive requirements for various forms of intellectual property. In addition, it requires WTO Members to adopt "effective" provisions within their national laws to permit the owners of intellectual property products to enforce their rights against those who infringe them. (art. 41.1) These enforcement provisions include detailed judicial and administrative remedies, border measures and criminal procedures. (articles 41 to 61) To take just one example applied to plant varieties, a breeder whose new variety is sold commercially without permission must be able to bring a civil judicial action seeking an injunction to stop the conduct of the unauthorized seller and to recover damages from him or her.

Review provisions. Article 68 establishes a Council for TRIPs to "monitor the operation of th[e] Agreement and... Members’ compliance with their obligations" under the treaty. Since its founding, one of the Council’s principal functions has been to formally review the national laws, regulations and judicial decisions of WTO Members in each area of intellectual property covered by TRIPs.

Several goals are served by the TRIPs Council’s review functions. First, the reviews create an incentive for governments to bring their national laws and practices into compliance with the Agreement so that they may present positive information to the Council. Second, the reviews identify for both the reviewed state and for other WTO Members areas of the law which may not be in full compliance with the treaty. And finally, TRIPs Council reviews provide a critical opportunity to publicize national laws and practices relating to IPRs which might otherwise be difficult to obtain.

In the area of plant varieties, the TRIPs Council has gathered and organized a considerable amount of useful information concerning national government practices. In December 1998 the Council prepared a detailed list of questions concerning plant variety protection. It asked WTO Members who were already obligated to protect plant varieties to respond to these questions by indicating the manner in which their national laws provide such protection, with other WTO Members requested to use their best efforts to furnish such information. The Council later received and published responses from 17 states and from the European Communities and its member states. (WTO Job No. 2689 of 7 May 1999). In 2001 and 2002, the Council reissued these questions and invited WTO Members that had not already done so to provide information on their plant variety protection practices. Additional responses were received from six states. (WTO Doc. IP/C/W/273/Rev. 1, pp. 1 and 2) Information distilled from some of these responses is discussed in section 3.3 below.

Dispute settlement provisions. Another significant innovation of TRIPs is its dispute settlement system. Although prior intellectual property agreements, including the UPOV Acts, contained provisions for filing of complaints against non-complying treaty parties before the International Court of Justice, no state ever invoked this dispute settlement option. It was widely believed that pursuing such a complaint would be perceived as an unfriendly act, would be time-consuming and costly and that states were unlikely to implement decisions of the court. (Helfer, 1998, pp. 375 and 376) The TRIPs Agreement removes each of these concerns by linking to a WTO Agreement known as the Dispute Settlement Understanding which contains a streamlined dispute settlement mechanism that is one of the most widely used and effective interstate dispute resolution systems in international law. Indeed, the mere existence of such a system creates strong incentives for WTO Members to bring their national laws into compliance with the WTO Agreements, including TRIPs, to avoid the possibility of dispute settlement proceedings.

These strong incentives notwithstanding, some countries may not comply. In such a case, where one WTO Member believes that another Member has failed to fulfill its obligations under the Agreement, it may initiate consultations under the Dispute Settlement Understanding with a view to resolving the dispute. If the parties fail to reach agreement, the complaining state may then request the WTO to convene a three-member panel of experts to review its allegations. Such panels generally issue a decision within six months. The panel’s decision is adopted by the WTO’s Dispute Settlement Body unless the losing party or parties elect to appeal the decision to the seven-member Appellate Body, a standing tribunal of seven trade experts who are authorized to review the panel’s findings and issue a decision within three months. If either the Appellate Body or an unreviewed panel decision concludes that a WTO Member has violated the TRIPs Agreement, the Dispute Settlement Body will recommend that the defending state bring its national laws into compliance with the treaty. If the state fails to do so, the complaining state may then commence an arbitral proceeding to specify the amount of compensation that the defending state must pay to remedy the violation, or in lieu of such compensation the complaining state may seek authorization to impose trade sanctions on the non-complying Member.

As of July 2004, WTO Members (mostly developed nations) had commenced 24 dispute settlement proceedings against both developed and developing nations concerning a wide variety of intellectual property issues. (WTO Dispute Settlement: Index of Disputes Issues: 15 July 2004) Approximately one third of these disputes were resolved prior to a decision by a panel, with the defending state agreeing to modify its laws to bring them into compliance with the Agreement. In other cases, however, WTO Members complied only after a panel or the Appellate Body had issued a decision against them. And in a few instances, Members that have not modified their laws instead have negotiated settlements involving the payment of compensation to the complaining Member. (Geuze & Wager, 1999)

As of the date of this study, there have been no TRIPs dispute settlement proceedings relating to intellectual property protection for plant varieties. Whether such proceedings will be brought in the future depends on a number of variables, many of which are still uncertain.

Three interrelated reasons suggest that a dispute settlement proceeding concerning plant variety protection is a likely possibility: first, the significant difference of views among WTO Members over the scope of legal protection to be provided to plant varieties (discussed in para. 2.3.1.4 below); second, the fact that developing country WTO Members first became obligated to protect plant varieties only in 2000 (see para. 2.3.1.2 above); and third, the absence of plant variety protection in many developing countries’ national laws prior to the 2000 deadline. (See para. 3.5.2 below) Taken together, these variables suggest that the plant breeders of a developed WTO Member who learn that their protected varieties are being exploited without authorization in developing WTO Members due to inadequate national laws will pressure their governments to file a complaint against such states to compel them to adhere to their treaty obligations.

Other factors, however, suggest that a complaint over plant varieties is unlikely to be filed, particularly within the next five to ten years. First, the initiation of the Doha Round of trade negotiations in November 2001 (discussed in Part IV below) is likely to cause WTO Members to show restraint in their dispute settlement strategies while the multi-year negotiations are proceeding. This is especially so given that the Doha Round will likely provide WTO Members with the first meaningful opportunity to harmonize other international obligations (such as those set forth in the CBD and the ITPGR) with the plant variety and other IPR protection requirements of the TRIPs Agreement. Second, past practice has shown that WTO Members are most likely to file dispute settlement complaints where they are pressured to do so by the owners of intellectual property products. It is unclear whether plant breeders can make a sufficient showing that their overseas markets are being harmed by other states’ failure to provide adequate legal protection for plant varieties. Third, WTO Members are generally reticent about filing complaints where their probability of success is unclear. Therefore, given the uncertain scope of protection for plant varieties currently required by TRIPs, if Members enact some form of plant variety protection in their national laws, other Members are unlikely to challenge those laws unless they can identify a clear violation of the Agreement. Nevertheless, the potential for dispute settlement proceedings (and the trade sanctions they can engender) will continue to provide strong incentives for states to enact plant variety protection laws.

2.3.1.4. The unique scope of plant variety protection required by TRIPs

Article 27.3(b) contains the only textual provisions of the TRIPs Agreement relating to plant variety protection. The article states in relevant part:

Members may also exclude from patentability: (b) plants and animals other than microorganisms; and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection for plant varieties either by patents or by an effective sui generis system or by any combination thereof. (emphasis added)

The meaning of this article has been the subject of significant debate among both WTO Members and nongovernmental organizations (NGOs) with differing views over the propriety of IPR protection for plant varieties. A detailed review of that debate and an analysis of article 27.3(b) is provided below. For present purposes, two overarching points are worth noting.

First, TRIPs’ provisions on plant varieties do not refer to or incorporate any preexisting intellectual property agreements, including the 1978 and 1991 UPOV Acts. This omission contrasts sharply with other fields of intellectual property, such as patents, copyrights and trademarks, for which TRIPs expressly requires WTO Members to comply with the standards of protection contained in preexisting IPR agreements, such as the Berne Convention for the Protection of Literary and Artistic Works and the Paris Convention for the Protection of Industrial Property. As a result of this omission, WTO Members are neither required to become members of UPOV nor to enact national laws consistent with either UPOV Act in order to comply with their obligations under TRIPs. (However, certain "TRIPs plus" treaties do impose one or both of these requirements, see para. 2.3.1.6 below) Although the drafting history of TRIPs does not explain this markedly different treatment of plant varieties, it seems likely that compliance with UPOV was not required because so few WTO Members were party to UPOV and those who were could not agree upon which of its two most recent Acts should serve as the standard for protection.

Second, article 27.3(b) permits WTO Members to protect plant varieties using one of three distinct approaches: (1) patent law, (2) an effective sui generis system or (3) a combination of elements from both systems. Thus, unlike most other areas of intellectual property protected by TRIPs, article 27.3(b) expressly grants Members significant discretion to choose the manner in which they will protect plant varieties and it contemplates that that discretion may be exercised differently by different states.

This discretion and the opportunity for divergent outcomes it engenders has significant consequences. On the one hand, TRIPs’ failure to incorporate and build upon the preexisting UPOV Acts may have "a deharmonizing effect," (Correa 1994a) with states within the UPOV system enacting one type of plant variety protection law and states outside of that system enacting a different kind of law (which may or may not resemble each other). This could create significant complexities and uncertainties for plant breeders seeking to market protected varieties in different jurisdictions. On the other hand, this sanctioned diversity of legal approaches allows WTO Members to balance the protection of plant breeders’ rights against the other important and competing societal goals identified in Part I, many of which are found in other international agreements. Seen from this perspective, article 27.3(b) provides a much needed "safe space" for governments to harmonize conflicting norms and policies - a space that is lacking in other areas of the TRIPs Agreement.

2.3.1.5. The review of TRIPs Article 27.3(b)

The last sentence of article 27.3(b) states that "[t]he provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement." Inasmuch as the WTO Agreement entered into force on 1 January 1995, the review contemplated by this article should have been conducted in 1999. The review was commenced but was not concluded, largely as a result of disputes between industrialized and developing nations over the scope of the review process. (GRAIN, 2000, pp. 3-5). Governments submitted additional information and proposals to the TRIPs Council in 2000 and 2001, but no formal action was taken. With the launching of the Doha Round of trade talks in November 2001, however, the review of article 27.3(b) recommenced in earnest.

In June 2002, eleven developing states submitted a detailed proposal to amend TRIPs to "prevent systematic conflicts with the CBD arising from the implementation of TRIPS." (WTO Doc. IP/C/W/356, para. 11) The proposal seeks to compel all WTO Members to require applicants for patents relating to biological materials and traditional knowledge to disclose certain information as a condition of obtaining legal protection. (Id., para. 10)

The European Communities and Switzerland responded to the developing states’ proposal with a compromise. The EU response calls for the negotiation of "a self-standing disclosure requirement," which, while not functioning as a new eligibility criterion for patent protection, "would allow Members to keep track, at [the] global level, of all patent applications with regard to genetic resources for which they have granted access." (EC Concept Paper, paras. 51 and 55; see also WTO Doc. IP/C/W/400/Rev. 1, p. 1) In June 2003, developing countries rejected this compromise and "reaffirm[ed] and strengthen[ed] their demand for a strong disclosure of origin mechanism" within TRIPs that would require "not only detailed information about who provided the [genetic] materials or the [traditional] knowledge used [in patent applications], but also positive proof of benefit sharing and of prior informed consent." (GRAIN, 2003, p. 1; see also WTO Doc. IP/C/W/404, pp. 4-6). African countries also proposed a new "Decision on Traditional Knowledge" to be incorporated into TRIPs. (IP/C/W/404, pp. 7-9)

2.3.1.6. "TRIPs plus" bilateral and regional agreements

In the decade since TRIPs was first adopted, the United States and the European Community have negotiated a growing number of bilateral and regional trade and investment treaties with developing countries. Many of these treaties contain provisions concerning IPRs. Commentators have referred to these treaties by the appellation "TRIPs plus" because they (1) contain intellectual property protection standards more stringent than those found in TRIPs, (2) obligate developing countries to implement TRIPs before the end of its specified transition periods or (3) require such countries to accede to or conform to the requirements of other multilateral intellectual property agreements. (GRAIN, 2001; Vivas, 2003) As one study recently noted, "[t]o the extent that ["TRIPs plus" treaties] include these additional aspects, they are pushing harmonization forward at a pace that is greater than is apparently possible within the framework of the WTO." (OECD, 2003, p. 112) In addition, once a developing state enacts this higher level of IPR protection in its national laws, TRIPs’ MFN clause obligates that state to extend the same protection to all other WTO Members. In this way, bilateral agreements can be used to ratchet up the level of protection for IPRs beyond what is required in the TRIPs Agreement. (Drahos, 2001, pp. 794-807)

Several "TRIPs plus" treaties contain provisions relating to plant variety protection that go beyond the minimum level of intellectual property protection specified in TRIPs. For example, the recently concluded U.S.-Central America Free Trade Agreement (applicable to Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and possibly to the Dominican Republic), the 2002 U.S.-Chile free trade agreement, the 2000 U.S.-Jordan free trade agreement and the 2000 EU-Mexico free trade agreement, as well as certain Euro-Mediterranean Association agreements and the draft Free Trade Agreement of the Americas, all mandate UPOV as the appropriate mechanism to protect plant breeders’ rights. (GRAIN, 2004b) The treaties also require these countries to ratify the 1991 UPOV Act within specified time frames. (GRAIN, 2004b; OECD, 2003, pp. 118 and 119) Such obligations limit the discretion enjoyed by these countries to tailor their national laws to achieve policy objectives in tension with IPRs. (See para. 1.3.6 above and section 3.4 below)

2.3.2. Patent protection for plant varieties under TRIPs

The TRIPs Agreement mandates its signatories to provide patent protection for any inventions in all fields of technology, provided that the inventions are "new, involve an inventive step and are capable of industrial application." (art. 27(1)) However, with regard to plant-related inventions, TRIPs permits Members to exclude from patentability altogether "plants," "essentially biological processes for the production of plants" and "plant varieties." (art. 27.3(b)) Thus, as presently written, the TRIPs Agreement would permit WTO Members to decline to protect plant varieties with a patent (provided, as discussed in section 2.3.3 below, that they protect such varieties with an effective sui generis right).

2.3.2.1. Applicability of patent protection for plant varieties

For this reason, it may initially appear that governments can ignore patents as they consider how to protect plant-related innovations in their national legal systems. Nevertheless, a basic understanding of the patent provisions of the TRIPs Agreement and a comparison of those provisions with the plant breeders’ rights approach contained in the UPOV Acts is essential for a number of reasons.

First, extending patent protection to plant-related inventions and innovations remains an option for national governments. Recall that TRIPs’ "minimum standards" framework expressly contemplates that WTO Members may provide greater protection for IPRs than are mandated by the Agreement. (See para. 1.3.4 above) article 27.3(b) in particular invites Members to protect plant varieties with patents or with a combination of patents and a sui generis system. A number of governments in the industrialized world, including the United States, Japan, Australia, New Zealand, Sweden and the United Kingdom, have capitalized on this opportunity by permitting plant breeders to obtain patent protection in new varieties provided that the eligibility requirements for a patent have been met. (Watal, 2000, p. 149)

Second, because TRIPs does not require any patent protection for plant-related innovations, it follows as a matter of course that the treaty does not compel WTO Members to adopt any particular form of patent protection. This allows governments the option of including plant varieties within their existing utility patent statutes and/or of enacting a separate statute applicable exclusively to plants. (Utility patents are generally granted to "any new and useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof... " (See, e.g. 17 U.S.C. Sec. 101.) In making this decision, however, it will be useful for governments to understand the traditional elements of patent law and the ways in which they may be varied within the confines of the TRIPs Agreement. The United States, for example, has enacted multiple plant variety protection laws. It was one of the first nations to adopt, in the Plant Patent Act of 1930, a unique form of protection applicable to asexually reproducing plants. In addition, since the mid 1980s, U.S. courts and the U.S. Patent and Trademark Office have concluded that plant breeders may also seek standard utility patents under the U.S. Patent Act. In December 2001, the U.S. Supreme Court confirmed that breeders could apply for both forms of protection with respect to the same variety. (See J.E.M. Ag Supply v. Pioneer Hi-Bred, 122 S. Ct. 593, 2001). Such a result is prohibited by the 1978 UPOV Act but permitted under the 1991 Act to which the U.S. is a party.

Third, an understanding of patent principles is also necessary because of the difficulty in some nations of distinguishing between plant varieties (which are often excluded from national or regional patent laws) and other plant-related innovations (to which patent protection may be extended). In Europe, for example, article 53(b) of the European Patent Convention prohibits the patenting of "plant varieties" as such. Nevertheless, the European Patent Office recently confirmed that claims to patent protection that are broadly drawn to encompass "plants" or an invention broader than a single variety may be patented, even though such claims may encompass multiple varieties. (G 0001/98, Novartis II/Transgenic Plant, 2000; E.P.O.R. 303 para. 3.10; Janis & Kesan, 2001b, p. 35) As a result, it may be possible for plant breeders in Europe to fashion their claims to receive de facto patent protection for new plant varieties.

Fourth, as discussed in greater detail below and as summarized in Table 2 below, there are significant differences in approach between plant breeders’ rights and patents. In the case of plant breeders’ rights, the eligibility requirements for protection are not onerous, but the scope of protection granted is quite narrow, both in terms of exclusive rights and the various exceptions and limitations to those rights. Patent laws strike a very different balance. Eligibility requirements are high and difficult to meet, but once granted a patent conveys broad rights to exclude third parties from exploiting the patented invention. Depending on the needs and level of development of plant breeder industries within its territory, a government may decide that either or both forms of protection will provide the appropriate incentives to encourage plant-related research and innovation. (See para. 3.4.4.1 below)

Fifth, and finally, a review of the TRIPs Agreement’s plant-related patent rules will soon occur in the context of the Doha Round of trade negotiations. (See Part IV below). Such a review may produce an agreement to amend TRIPs to require WTO Members to extend patent protection to plant-related innovations or plant varieties. National governments which have thus far eschewed patent protection would then need to revise their national laws to make such protection available, in addition to or instead of the legal protection provided under national plant variety protection laws. At a minimum, therefore, governments interested in promoting plant-related innovations should be apprised of the relevant legal issues so that they may contribute in an informed way to the upcoming discussions.

2.3.2.2. Subject matter eligibility requirements

According to the text of the TRIPs Agreement and authoritative commentary interpreting it, plant-related innovations may be patented if they are "inventions" that are novel, non-obvious and useful. (TRIPs, art. 27(1); Leskien & Flitner, 1997, p. 7) Although commentators frequently assert that these cumulative requirements impose significant barriers to the patenting of plant varieties, in practice breeders have succeeded in patenting not only new varieties, but also hybrid plants and inbred and hybrid plant lines. (Correa, 2000, p. 183). As two commentators recently noted, since 1985 the U.S. Patent and Trademark Office "has granted hundreds of utility patents on all aspects of innovation relating to plant science: plants themselves, seeds, breeding methods and plant biotechnology." (Janis & Kesan, 2001a, p. 981)

Inventions. The TRIPs Agreement does not define the term "invention," thus leaving its precise meaning to national patent laws or regional patent rules such as those operating within the European Union.

All such laws recognize that an invention must be more than a mere discovery of a natural phenomenon or naturally occurring substance. Thus, for example, a breeder who merely identified the existence of a previously unknown wild variety or a cultivated landrace that was known only to an isolated indigenous community should not be permitted to patent that variety or landrace.

The trend among the industrialized countries, however, and in the United States, Japan and the countries of the European Union in particular, is to recognize that an isolated and purified form of a natural substance may be patented. (Correa, 2000, pp. 177 and 178; Leskien & Flitner, 1997, p. 8). For example, article 3.2 of the 1998 Directive on the Legal Protection of Biotechnological Inventions states that "biological material which is isolated from its natural environment or produced by means of a technical process" may be patentable. (Directive 98/44/EC of 6 July 1998, O.J. L213) Perhaps because this approach involves making a very fine distinction between discoveries and inventions, many developing countries have declined to follow it, instead choosing to deny patent protection to plant materials found in nature even if they have been isolated or purified by human intervention. (Correa, 2000, p. 186; Watal, 2000, pp. 155 and 156) According to one commentary, this patent ban is compatible with the TRIPs Agreement provided that it does not extend to plants with modified or artificial plant gene sequences, which often significantly vary from naturally occurring substances and thus are properly classified as inventions. (Leskien & Flitner, 1997, p. 9)

A second attribute of a patentable invention is that an applicant seeking such a patent must disclose the invention in a sufficiently clear and complete manner that permits a person skilled in the art to carry out the invention. (TRIPs, art. 29(1)). In addition to ensuring that the claimed invention in fact meets patent eligibility requirements, disclosure also permits third parties to access the invention for purposes of improving it or developing new inventions. In the case of plant-related innovations, national laws permit inventors to satisfy the disclosure requirement either by a written description of the invention and/or by a deposit of the protected material (i.e. seeds, germplasm or other biological material). TRIPs does not require national governments to adopt any particular form of disclosure, nor does it specify the timing, manner or conditions of third party access. As a result, national laws vary widely on this point. (Correa, 2000,,p. 191)

Novelty, inventive step and industrial application. These three cumulative eligibility requirements are mandated by article 27(1) of the TRIPs Agreement and are found in all national patent laws. Even among states with strong patent protection laws, however, the interpretation and application of each of these steps varies considerably.

Novelty. The principal objective of the novelty requirement is to ensure that the claimed invention cannot be found in the "state of the art" or "prior art" already in existence. These terms refer to the body of knowledge which is available to the public before the date of filing of an application for patent protection. Patent examiners establish both the novelty and inventive step requirements by comparing the claimed invention to the state of the art or prior art. A critical issue for plant-related innovations concerns the form in which prior art exists and the difficulty of accessing traditional knowledge as prior art.

Under United States patent law, for example, novelty can be negated if "the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country... " (35 U.S.C. Sec. 102(b)) The important point is description: foreign uses of claimed inventions are not considered as part of prior art. The Patent Cooperation Treaty (PCT) adopts a similar approach, limiting prior art to "everything which has been made available to the public anywhere in the world by means of written disclosure." (Rule 33.1 of Regulations under the PCT) Thus, in the United States and in countries following the PCT, even where foreign plant-related innovations are known, used or disclosed in other than written form, it may be possible for the inventor to obtain patent protection. (Correa, 2000, pp. 188 and 189; Dutfield, 2000, pp. 64 and 68)

Article 54(2) of the European Patent Convention adopts a different approach, defining the state of the art to encompass everything made available to the public by means of written or oral descriptions, by use or indeed in any other way, prior to the filing of the application. Nevertheless, the absence of systemic databases concerning traditional knowledge, including knowledge relating to plants, has led examiners in various countries to grant patents for inventions that were later revoked after they were discovered to encompass prior art. (WIPO, Progress Report on the Status of Traditional Knowledge as Prior Art, 1 July 2001)

Inventive step. The inventive step requirement looks to the state of the art to determine whether the claimed invention is not obvious to a person skilled in the art. Although the majority of international treaties and national laws defined inventive step in this way, the application of the standard to plant-related innovations varies and may be a significant hurdle to patent protection given "the enormous speed of technological progress" in the field. (Leskien & Flitner, 1997, p. 13)

Industrial application. The industrial application requirement is concerned with an invention’s practical utility, and in particular whether "it can be made or used in any kind of industry, including agriculture." (E.g. European Patent Convention, art. 7) This eligibility requirement does not appear to pose a significant obstacle to the patenting of new plant varieties, given their ready use in the fields of plant breeding, horticulture and agriculture.

2.3.2.3. Exclusions from patentability

As noted above, article 27.3(b) of TRIPs permits WTO Members to deny all patent protection to "plants" and "plant varieties." Nevertheless, a state that chooses to provide such protection may nevertheless choose to exclude from patentability a narrower category of inventions, "the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect... plant life or health or to avoid serious prejudice to the environment." (Art. 27(2)) Some commentators have asserted that this language grants states the discretion to exclude broad categories of inventions that further the erosion of genetic diversity on the theory that issues of public policy and morality include a state’s sovereign right to control its natural resources. (E.g. Cameron & Makuch, 1995; Crucible Group, 1994; Dutfield, 2000, p. 20) However, because WTO dispute settlement panels have strictly interpreted clauses in the WTO Agreements that permit states to derogate from protected treaty rights, the more persuasive view is that exclusions on this basis must be fact-specific, narrowly drawn and no broader than required to achieve their purpose. (Moufang, 1998) Resolution of this debate in the context of plant-related innovations will not occur until the WTO dispute settlement bodies issue a ruling on the matter, an unlikely prospect so long as Members are free to exclude plants and plant varieties entirely from patentability.

2.3.2.4. Exclusive rights

Once a patent is awarded, the owner of the patented product or process enjoys a broad panoply of exclusive rights. These include the right to prevent third parties from making the product, using the process or from using, offering for sale, selling or importing for those purposes the patented product or the product obtained by the patented process. (TRIPs, art. 28) States that choose to extend patent protection to plant-related innovations would thus be expected to protect products composed of plants and parts of plants and processes (including biological processes) for the production of plants. (Leskien & Flitner, 1997, p. 22) Although there is some dispute over whether traditional plant breeding methods (as opposed to creating varieties through genetic manipulation) can be protected by process patents, the practice of states that do extend patent protection to plants reveals that such methods have been protected. (Compare Correa, 2000, p. 187 with Janis & Kesan, 2001a, p. 981)

2.3.2.5. Term of protection

TRIPs article 33 imposes a minimum 20-year term of protection from the date the patent application is filed.

2.3.2.6. Exceptions and limitations

As compared to limitations on plant breeders’ rights permitted under the UPOV, the limitations on a patent owner’s exclusive rights permitted under the TRIPs Agreement are far narrower. These limitations can be divided into exceptions to exclusive rights and compulsory licenses, which permit certain uses by third parties but require remuneration to the patent owner.

Exceptions. Article 30 of TRIPs permits WTO Members to adopt "limited exceptions" to exclusive patent rights provided that they do not "unreasonably conflict with a normal exploitation of the patent" and "do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties." This three-part test is applicable to all patents protected by the TRIPs Agreement.

Canadian Patents Case. A WTO dispute settlement panel clarified the meaning of article 30 in Canada - Patent Protection of Pharmaceutical Products (Generic Medicines), WT/DS114/R (17 March 2000). The panel considered a complaint brought by the European Communities to two provisions of Canadian patent law. The first permitted uses of patented pharmaceuticals without the patentee’s authorization for the purpose of obtaining approval of a generic product before the patent’s term expired. The second permitted production and stockpiling of the generic product for release immediately after the expiration of the patent. Both procedures were designed to permit the marketing of generic versions of pharmaceuticals promptly after the expiry of the patent. The panel decision confirmed that only the first exception is consistent with TRIPs. More importantly, the panel concluded that any exception that results in "a substantial curtailment" of the patent owner’s exclusive rights is inconsistent with article 30. (WT/DS114/R, para. 7.36)

If TRIPs were amended to require patent protection for new plant varieties, the standard adopted by the Canadian Patents panel would preclude Members from enacting many of the exceptions that are permitted under plant variety protection laws, such as the breeders’ exemption and the farmers’ privilege. The same prohibition on these privileges already exists in several countries that currently protect plant varieties and other plant-related innovations in their national patent laws.

Research and experimentation exception. Most national patent laws permit third parties to engage in experimentation or research related to the patented invention. Some states, however, including the United States, narrowly construe this exception to preclude unauthorized commercialization of any products or processes that result from such research if they encompass the patentable invention. In such countries, commercial activities permitted under the breeders’ exemption found in plant variety protection laws are prohibited where the variety is protected by a patent. Thus, for example, a breeder would not be permitted to cross patented seeds to produce improved varieties. (Correa, 2000, p. 192) Even in patent systems in which the experimental use exception tolerates some commercialization (Cornish, 1998), such as those found in Europe, it is likely that the commercial acts allowed under a traditional breeders’ exemption would "conflict with a normal exploitation of the patent" and would thus amount "a substantial curtailment" of his or her exclusive rights in violation of TRIPs article 30. Thus, if patent protection of plant varieties were to become mandatory under TRIPs, a breeders’ exemption such as that found in article 22,V of Mexico’s patent law would be unlikely to survive a challenge before a WTO dispute settlement panel.

Farmers’ privilege. A similar fate is likely to befall the exception permitting farmers to save and reuse seeds on their own land without the patent owner’s permission, another exception traditionally allowed under plant variety protection laws. (See paras. 2.2.2.6 and 2.2.3.6 above) The United States does not recognize a farmers’ privilege under its utility patent laws. Although such an exception has been adopted in article 11 of the European Union’s 1998 Biotechology Directive (conditioned upon the payment of equitable remuneration except by small farmers), at least one commentator has questioned whether that exception is compatible with TRIPs article 30, because such an exception would unreasonably prejudice the "legitimate interests" of the patent owner. (Watal, 2000, p. 155 n.62)

Compulsory licences. TRIPs contains a complex set of rules that regulate when states may compel patent owners to license their products and processes to governments or to private parties. Although the TRIPs Agreement does not specify the grounds which justify the creation of compulsory licences (Gervais 1998, p. 165), because article 5A(2) of the Paris Convention is incorporated by reference into article 2(1) of TRIPs, it can be inferred that such licences may be granted only to prevent "abuses which might result from the exercise of the [patent owner’s] exclusive rights." Even where such abuses exist, TRIPs article 31 imposes further conditions upon the granting of compulsory licences, including individual consideration of each case, prior negotiations with the patent owner seeking a voluntary licence, limitations on the scope and duration of compulsory licences and requiring their termination when the circumstances leading to their creation are no longer in effect. Most importantly, patent owners must receive "adequate remuneration," taking into account the value of the rights licensed.

One area in which compulsory licences may affect plant breeders is that of dependent patents, which are defined as patents whose use requires the authorization of an earlier patent owner. Such patents are prevalent in plant breeding, where the creation of new varieties often occurs incrementally in the form of adaptations and improvements of existing varieties, as opposed to radically new innovations. (Correa, 2000, p. 194). Because incremental innovation often requires access to protected varieties, governments may seek to impose compulsory licences in favour of third party breeders who are unable to negotiate voluntary access to patented plant varieties. However, the compatibility of such licences with TRIPs is untested and governments seeking to impose them should ensure that they comply scrupulously with each of the many requirements set forth in article 31.

Because the patent compulsory licence provisions of TRIPs are far more detailed and narrow than the compulsory licences permitted under the 1978 and 1991 UPOV Acts, commentators are divided over their usefulness in the area of plant-related innovations. Some argue that such licences will be largely irrelevant to the field (Leskien & Flitner, 1997, p. 25), whereas others claim that governments may adopt such licences "to ensure access to patented materials in order to attain specific agricultural objectives (e.g. availability of a given material for farmers) or food security...." (Correa, 2000, p. 194) Even if licences to achieve these objectives are permitted, however, the restrictions that TRIPs imposes significantly limit the ability of WTO Members to grant such licences in favour of third parties

TABLE 2 - Comparison of principal differences between plant variety protection under UPOV 1978 Act, UPOV 1991 Act and TRIPs-compatible patent laws

2.3.3. Sui generis protection for plant varieties under TRIPs

As noted above, TRIPs authorizes WTO Members to eschew patent protection for plants and plant varieties and adopt instead an "effective sui generis system" of protection. The following discussion identifies the core requirements of such a system, laying the groundwork for Part III which outlines the permissible options available to WTO Members seeking to grant IPRs to plant varieties while simultaneously seeking to achieve other objectives.

2.3.3.1. Identifying and evaluating competing proposals for sui generis systems

TRIPs does not define the term sui generis as it appears in article 27.3(b), nor does the treaty’s drafting history shed any light on its meaning. (Gervais, 1998, pp. 147-151) As a general matter, the term sui generis is understood to mean "of its own kind" or "unique," a definition which does little to identify what sort of unique legal systems are permitted under the treaty. This lack of definitional clarity has allowed advocacy groups and commentators to advance different and often competing proposals for how effective sui generis protection should be structured, producing significant confusion for governments seeking to understand and implement their obligations under the TRIPs Agreement.

The discussion below identifies and evaluates the competing proposals. In brief, it concludes that if WTO Members choose to protect plant varieties using a sui generis right as opposed to a patent, they are required to create a distinct IPR applicable to plant varieties that complies with the core requirements and objectives of the TRIPs Agreement. Sui generis systems that do not contain these core elements or conflict with them are not TRIPs-compatible and expose the WTO Members who adopt them to challenges under the WTO dispute settlement system. Nevertheless, the mandatory requirements of article 27.3(b) preserve significant leeway for national governments to work out the precise manner in which they will balance protection of IPRs against other international obligations and national objectives.

2.3.3.2. Sui generis systems as defined by the UPOV Acts

Several commentators assert that a state adopting national legislation in compliance with either the 1978 UPOV Act or the 1991 UPOV Act has satisfied its obligations under article 27.3(b). (e.g. Gervais 1998, p. 151) Those advocating for compliance with the 1991 Act stress the more extensive IPR protections it provides to plant breeders, while commentators endorsing the 1978 Act as the appropriate sui generis standard stress that only the earlier Act was in force at the time TRIPs was being negotiated.

In fact, however, the protection required by the two UPOV Acts is neither necessary nor sufficient for an "effective sui generis system." It is not necessary because article 27.3(b) does not require plant variety protection laws to contain the same subject matter, eligibility requirements, exclusive rights, terms of protection or other detailed provisions of either of the two UPOV Acts. And it is not sufficient because TRIPs requires WTO Members to structure their national IPR laws in ways that the two UPOV Acts do not.

Note, however, that developing counties that are parties to a "TRIPs plus" bilateral or regional trade or investment treaty may be required, by virtue of those treaties, either to join UPOV or to implement the standards set forth in one of the UPOV Acts. (See para. 2.3.1.6 above) A country that has undertaken such obligations does not possess the same flexibility in designing a sui generis system to protect plant varieties as a country which has not undertaken such obligations. (For a more detailed discussion of the consequences of this reduced flexibility, see section 3.4 below.)

For example, as explained in paragraphs 2.2.2.4 and 2.2.3.4 above, both the 1991 Act and the 1978 Act adopt the principle of national treatment, the same principle required by TRIPs. But under the UPOV Acts such treatment need be extended only to the nationals and residents of other UPOV member states and to legal persons having their headquarters in such states. Any WTO Member that limited national treatment in this way would unquestionably violate article 3 of TRIPs, which requires extension of national treatment to all other WTO Members whether or not they are also UPOV members.

However, to comply with article 3, a state whose plant variety protection law contains a UPOV-specific national treatment rule can easily amend its law to expand the number of states to which national treatment applies. Other UPOV-sanctioned rules may require more extensive changes. For example, the 1978 Act allows a state to impose a reciprocity requirement in certain circumstances, limiting the right to apply for protection of a new variety to nationals or residents of those member states which also apply the Act to the genus or species to which that variety belongs. (See para. 2.2.2.4 above) This reciprocal protection is incompatible with TRIPs’ national treatment rule, and possibly its most favoured nation principle as well, both of which are inconsistent with a system of reciprocity. (Watal, 2000, p. 141; TRIPs, art. 4(d))

That TRIPs’ drafters did not intend either UPOV Act to be the exclusive model for sui generis protection of plant varieties is confirmed by their failure to refer to the Acts anywhere in the Agreement. By contrast, where the drafters intended Members to comply with standards found in preexisting international IPR treaties, they stated so expressly. (See, e.g. TRIPs, art. 2(1), which incorporates enumerated provisions of the Paris Convention for the Protection of Industrial Property.) Nevertheless, as explained in sections 3.3.1 and 3.3.2 below, most provisions of the two UPOV Acts are fully consistent with an effective sui generis system, and most countries have in fact adopted plant variety protection laws that are consistent with one or both UPOV Acts.

2.3.3.3. Core requirements of an effective sui generis system

According to a 1997 report prepared by two leading commentators, there are four core elements that any national plant variety protection law must contain in order to qualify as an "effective sui generis system" within the meaning of TRIPs article 27.3(b):(1) the law must apply to all plant varieties in all species and botanical genera; (2) it must grant plant breeders an IPR, i.e. the exclusive right to control particular acts with respect to those protected varieties, or at a minimum, the right to remuneration when third parties engage in certain acts; (3) it must provide national treatment and MFN treatment to breeders from other WTO Members; and (4) it must contain procedures that enable breeders to enforce the rights granted to them under such a law. (See Leskien & Flitner, 1997, p. 26) The paragraphs that follow discuss each of these four requirements.

Protection of all plant varieties. Although both UPOV Acts require protection of only a specific number of plant varieties (paras. 2.2.1.1 and 2.2.3.1 above), a careful reading of the TRIPs Agreement reveals that WTO Members are required to protect all varieties. (Leskien & Flitner, 1997, pp. 27 and 28) article 27.3(b) states that "Members shall provide for the protection of plant varieties" (emphasis added) without any further qualification or limitation. Inasmuch as article 27.3(b) is included in a provision of the TRIPs Agreement which carves out numerous and specific exceptions to patent protection, if the drafters had intended to allow states to limit the number or type of plant varieties subject to protection, they would have said so expressly. Indeed, the drafters were aware that both UPOV Acts permitted precisely such limitations, yet they chose neither to refer to those Acts nor to their limited scope of protection. As explained in paragraph 3.4.2.1 below, however, the obligation to protect all varieties does not require states to provide the same level of protection to each and every variety.

Protection of plant varieties with an IPR. If protection granted to plant varieties must take the form of an IPR, WTO Members would enjoy virtually unbounded discretion to choose the manner in which to protect plant varieties, for example through a system of taxation on seeds. (Leskien & Flitner 1997, p. 32). The WTO’s Appellate Body recently interpreted the text of the TRIPs Agreement, however, to require protection through an IPR. Nevertheless, because some commentators and NGOs have questioned whether plant variety protection is in fact a form of intellectual property included in the TRIPs Agreement (Correa, 1994, p. 26 n.58; GRAIN, 1998), a brief discussion of this point is needed.

Article 1(2) of TRIPs defines "intellectual property" for purposes of the Agreement as "all categories of intellectual property that are the subject of Section 1 through 7 of Part II" of TRIPs. Protection for plant varieties appears in Section 5 relating to patents, and is thus a form of intellectual property protected by the Agreement. This interpretation is confirmed by the United States - Section 211 Omnibus Appropriations Act of 1998, AB-2001-7, WT/DS176/AB/R (2 January 2002). In that case, a WTO panel concluded that trade names were not a category of intellectual property protected by TRIPs because they were not expressly referred to in article 1(2) (an omission that also applies to plant varieties). The Appellate Body reversed this finding. As an example, it referred to Members’ option to protect plant varieties "by sui generis rights (such as breeder’s rights) instead of through patents," and concluded that sui generis rights were in fact a form of intellectual property protected by the treaty. (Id., para. 335)

The significance of this conclusion is that IPRs for plant varieties must take the form of other IPRs protected by the TRIPs Agreement. Specifically, governments must either grant to the owners of protected varieties (1) the right to exclude all third parties from engaging in certain activities with respect to those varieties (an exclusive rights approach) or, (2) at a minimum, the right to receive equitable remuneration when a third party engages in such activities (a compulsory licence approach). (Leskien & Flitner, 1997, p. 29)

Nothing in TRIPs requires states to adopt the exclusive rights approach, nor does it indicate which exclusive rights must be granted to new varieties. Nevertheless, the vast majority of IPRs are protected by exclusive rights, with compulsory licences used only in limited areas such as new industries or distribution networks, abuses of monopoly powers or where high transaction costs preclude private licensing mechanisms from developing. (Helfer, 2000, pp. 106-109) In addition, a number of economic studies have suggested that granting exclusive rights to the owners of intellectual property products is a more efficient mechanism for creating incentives to innovate than a compulsory licence approach, in which political factors or government inertia are likely to produce skewed incentives. (Merges, 1996)

National and MFN treatment applicable to rights granted. At least one respected commentator has argued that national and MFN treatment are inapplicable to a sui generis system protecting plant varieties. The theory advanced is that these two forms of treatment are inapplicable to IPRs not covered by the TRIPs Agreement and that plant variety protection is an IPR that is not covered by TRIPs. (Correa, 1998, p. 5) However, the text of TRIPs article 3(1), as interpreted by WTO dispute settlement jurists, indicates that plant variety protection must adhere to such obligations. Thus, in the United States - Section 211 Omnibus Appropriations Act of 1998, AB-2001-7, 2 January 2002, the WTO Appellate Body stressed the critical importance of the national and MFN treatment rules in multilateral trade agreements (paras. 242 and 297), and it concluded that the obligation to grant such treatment applies to all subjects of intellectual property protected by TRIPs, a designation that includes sui generis protection of plant varieties. (See id. para. 360) As a result, in the area of plant variety protection, each Member must grant "no less favourable treatment" to the nationals of all other WTO Members than it grants to its own nationals and it must also grant to such foreign nationals "any advantage, favour, privilege or immunity" provided to any other country. (TRIPs, arts. 3.1 and 4) Applied to plant varieties, this would mean that any IPR that a state grants to its own plant breeders must be granted to breeders from all other WTO Members, and that any IPR granted to breeders from one WTO Member must be granted to breeders from all WTO Members.

Enforcement of rights by private parties. The only qualification that article 27.3(b) imposes upon sui generis systems for protecting plant varieties is that they be "effective." Although TRIPs does not define this term, it refers to it in Part III dealing with enforcement of other IPRs against acts of infringement by third parties. For this reason, a WTO dispute settlement panel is unlikely to find a sui generis system to be effective unless it provides a meaningful opportunity for private parties to enforce their rights in protected varieties. (Leskien & Flitner, 1997, p. 32) Specific enforcement measures are not mandated by the Agreement, however. Had the drafters intended greater specificity, they could have easily made a reference in article 27.3(b) to the detailed enforcement rules applicable to other IPRs in Part III of TRIPs. Although a sui generis system must be "effective," this does not mean that a state must devote a particular level of resources to enforcement measures. In particular, article 41.5 of TRIPs makes clear that the treaty does not create "any obligation with respect to the distribution of resources as between enforcement of intellectual property rights and the enforcement of law in general." As a result, what qualifies as "effective" in a state with abundant resources and well-developed systems of law enforcement will not be required of states with more limited resources or weaker law enforcement systems.

Additional requirements of an "effective" sui generis system? Beyond effective enforcement measures, it is uncertain whether a WTO dispute settlement panel would find that article 27.3(b) imposes additional requirements for a sui generis system to qualify as "effective." In general, international tribunals have concluded that rights granted in a treaty must be interpreted so as to make them effective rather than illusory. (Helfer, 1998, p. 403) Thus, if a WTO Member were to grant very limited and weak rights to breeders together with broad and extensive exemptions in favour of farmers or other users of plant germplasm, its plant variety protection law might not survive WTO scrutiny. Such a possibility is likely to arise only in extreme cases in which a WTO Member has enacted a plant variety protection system that is functional in theory but non-functional in practice. States that implement the core TRIPs requirements in good faith - that is, states that grant breeders intellectual property rights and enforcement measures applicable to varieties in all species and botanical genera and that provide those same rights and measures to breeders from other WTO Members - are unlikely to have their laws challenged successfully.