The Nagoya Protocol – Convention on Biological Diversity

A new international treaty named the “Nagoya Protocol” will be giving some relief to India and other developing countries. The Nagoya Protocol on Access to Genetic Resources with the objective of ensuring access of genetic resources to the signatory countries and ensuring fair and equitable sharing of benefit to the local community and signatory country that provides genetic resources is a supplementary agreement to the Convention of Biological Diversity. The protocol signed in Nagoya, Japan on 29th Oct 2010 having 50 signatory states (ratification by 50 countries being the threshold requirement) as on today is all set to come in force on 12 Oct 2014.

Let’s look at the different perspectives of The Nagoya Protocol and how it would help the providers (country)/ local community, sourcing country, and users in the coming days after its implementation.

BACKGROUND

It all started in June 1992, when the Convention on Biological Diversity (CBD) was opened for signature. CBDs inspiration came from the world’s community growing commitment to sustainable development.

Genetic resources are the heritable characteristics of a plant or animal of real or potential benefit to people. The core idea of CBD is to allow its members to get easy access to genetic resources (GR) and provide an equitable share of derived profit to the sourcing country/ local community and to the people who have helped to grow and protect the genetic resources. The Nagoya Protocol was adopted after nearly six years of negotiations to provide a legal framework which will create transparency for both the country (provider) and users of genetic resources by establishing a unified system for allowing access to genetic resources, stopping illegal international trade of GR and by creating an equitable sharing model wherein both the user and provider can acquire equal benefits.

The Protocol has three main objectives i.e. access, benefit-sharing, and compliance which lets the users and provider establish more predictable conditions about the usage of genetic resources, and ensure that only legally acquired genetic resources are used.

Now for these above conditions to lay down in an appropriate manner a unified protocol system was required. The protocol should find a practical way in order to share these benefits since until now the lack of a coherent global standard has resulted in a high level of mistrust and obstacles to biodiversity research and its potentially valuable outcomes.

Parameters under which the Protocol gets Applied

The Protocol will be applied only when genetic resources pathogens are ‘accessed’ and ‘used’. Under the Protocol, the term ‘used’ also means to include research and development work on the genetic and/ or biochemical composition of genetic resources. In addition to genetic resources in its original form, the protocol also covers traditional knowledge (TK) associated with genetic resources. On the other hand, the protocol does not apply to genetic resources covered by benefit-sharing agreements and specialized access such as the International Treaty on Plant Genetic Resources for Food and Agriculture, or the framework for pandemic preparedness of the World Health Organisation. Also, it will not be applied to human genetic material, or to resources that were acquired before the Protocol comes into practice.

Ratification of Nagoya Protocol by India

India and other developing countries with biological diversity and natural resources will be benefited from the commercial use of these resources. India lead a group of nations for over two decades in UN negotiation to get the other developed countries signed the Nagoya Protocol in 2011 and the Union Cabinet ratified it in 2012. India is one of the megadiverse countries rich in biodiversity and traditional knowledge is expected to get maximum benefits as this protocol gets implemented this October.

It has also been seen that our country has been a regular victim of misappropriation of our genetic resources and associated traditional knowledge, which have been patented in other countries (well-known examples include Haldi and neem). It is expected that the Access Sharing and Benefit (ABS) Protocol which is a key missing pillar of the CBD, would rectify this problem.

Who will Be Affected

A myriad of industries globally is likely to get benefited due to easy access to genetic resources and associated traditional knowledge that was kept protected by the local community and was hard to procure in the absence of any established protocol. Because of the transparent, fair, and equitable sharing of benefits derived from commercial/R&D use of genetic resources, the local community or provider country would be motivated to offer their natural/genetic resources and traditional knowledge to industry. However, companies in the pharmaceutical industry, agriculture space, and FMCG/CPG are likely to get impacted due to the profit-sharing clause of the protocol and will have to carefully evaluate their long term sourcing strategies, new product launches, brand positioning, etc since they would be expected to share their profits with local communities for not only using the original resource but also for any derivative products developed from it.

Intellectual Property Rights (IPR’s)

As the genetic resources and traditional knowledge is transferred from the provider country to the user (industry), property rights including intellectual property rights (IPR), are the most relevant critical factors in the access and benefit-sharing of genetic resources (ABS) concept. There are two possibilities that exist for strengthening the property rights of resource managers. On the one hand, national governments can ensure that the local level participates in the property rights over biodiversity and the benefits that arise from their use. On the other hand, international and national patent law requires the disclosure of the origin of genetic resources when IPR’s are granted.

It is hoped that the Nagoya Protocol would address the imbalance arising from property rights distribution. The Protocol has strengthened the local level by asking the parties to take legislative, administrative, or policy measures to ensure that benefits arising from the utilization of genetic resources that are held by indigenous and local communities are shared in a fair and equitable way with the communities concerned.

High-Level observation

The industries that could get major impacted are Pharmaceutical Industries, Health Care Products, and its various verticals, fast-moving consumer foods (FMCG)/ Consumer Packaged Goods (CPG), Agriculture Products, Non-Commercial Research, and chemical industries, etc.

It will also definitely provide the R&D sector with the certainty they need to invest in biodiversity-based research. Further, the Indigenous and local communities may receive benefits through a strong legal system that respects the value of traditional knowledge associated with genetic resources.

Also, the provider (country) of genetic resources is obliged to receive either monetary or non-monetary benefits which will include a portion of the total revenue generated from the sales of the final product by user from the source (within that country/ region) to the end-user. Examples of the monetary and non-monetary benefits include Up-front payments; Payment of royalties; Joint ownership of relevant intellectual property rights; transfer of technology and expertise etc.

The exploitation of natural resources and small-scale players (farmers) is expected to decrease, and key constituents within the supply chain are likely to obtain higher benefits with the implementation of the Nagoya Protocol.

On the other hand, some of the drawbacks associated with this system will be with respect to ownership of patents since with the implementation of new rules and standards set up by various bodies including CBD, ownership of patents could become a serious threat. Also, problems associated with multiple patent ownership can erupt, because of a benefit-sharing scheme.

Companies might have to look up for alternative strategies of usage of genetic resources to ensure that it should not fall within the framework of the Nagoya Protocol and also assess the criteria on new product development costs and strategies surrounding it.

As the organizations are required to provide benefits to the provider country, the organizations may increase the market prices of the products obtained from genetic resources in order to sustain a higher profit percentage with shrinking operating margins. Further, there will also be an increase in the timeline involved for product development because of various documentation and approvals required to source the products.

Though protocol in its essence has a lot to offer, both to the provider and user, its enforceability and compliance may be a real challenge because of the complexity evolved in identifying the amount of profit to be shared, identification of beneficiaries, procedural requirements, technology transfer issues and overlapping property rights. It is yet to be seen how the signatory countries establish the procedures and comply with the articles of the protocol.

About the Author: Ms. Sugandhika Mehta, Patent Associate at Khurana & Khurana and can be reached at sugandhika@khuranaandkhurana.com.

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