Preserving biodiversity the role of property rights

IAN WALDEN

Introduction

The accelerating depletion of our natural resources can be expressed along a continuum from species to individual segments of functional genetic code. It is the potential value of the genetic material that is at the core of our attempt to preserve biodiversity: the preservation of genetic material which has, as yet, undiscovered beneficial properties.

Increasingly it has been recognised within the environmental community that one necessary approach to encouraging nations to preserve their natural genetic resources, particularly among the developing nations, is through the provision of economic incentives. This viewpoint has been most forcefully expressed by Wilson:

The only way to make a conservation ethic work is to ground it in ultimately selfish reasoning ... An essential component of this formula is the principle that people will conserve land and species fiercely if they foresee a material gain for themselves, their kin and their tribe.

One such manifestation of this approach is the concept of 'debt swaps', where creditor nations agree to reduce the debt burden on developing countries in return for the implementation of environmental policies. Another obvious possibility has been the area of'property' rights, especially intellectual property rights.

In terms of a general legal definition, an item of 'property' is simply something in which an individual or legal entity can assert rights against others. Intellectual property rights are a specific form of property law available to protect the products of man's creativity, whether through interaction with nature or not.

In the first part of this chapter consideration is given to use of property law to protect the commercial exploitation of genetic material in naturally occurring biota. Next, attention is given to the extent to which intellectual property rights are currently being used by the biotechnology industry to protect their research investments. The final section reviews some of the issues underlying the creation of some form of'sui generis' property right in such genetic material.

Property rights

In nearly all legal systems, some form of property ownership forms the underlying basis on which the economic system operates. Individuals and legal persons (for example companies) are usually able to acquire rights in property and gain economic returns for their investment in such property through, for example, sale, lease or licence.

Land ownership, historically one of the main categories of property right, will usually convey an array of rights on the owner, such as the right to extract any valuable minerals contained within the earth. Such rights will also usually extend to the material existing on the surface of the land. A natural genetic material discovered on an area of land, which for example has an identified medicinal use, could therefore be exclusively harvested and marketed by the land owner. Such a fundamental right is reflected in the Rio Biodiversity Convention at Article 15, Access to Genetic Resource:

1. Recognising the sovereign rights of States over their natural resources, the authority to determine access to genetic resources rests with the national governments and is subject to national legislation.

This declaration has recently prompted the government of the Australian State of Queensland to propose an amendment to its Nature Conservation Act, 'to give the state outright ownership of its flora and fauna and guarantee that it shares in any profits made from exploiting them'. Such an action is seen as being essential to 'halt a "systematic search of our biota" by foreign laboratories and pharmaceuticals companies' (Dayton, 1993).

During the 1970s and 80s, the developed nations saw a significant rise in the value of land as an investment asset. This in turn led to the adoption of increasingly complex legal arrangements concerning the sale, leasing and subsequent use of land, such as joint ventures agreements between the land owner and the developer. It may be that developing countries could benefit greatly from the adoption of some of these legal mechanisms to ensure economic returns for investments in biodiversity which subsequently result in the 'discovery' of a useful genetic sequence.

INBio

A scheme based in the assertion of tangible property rights has been established by the Costa Rican government. The Government established a quango, INBio, which is a research organisation composed of scientists working on developmental projects. INBio has come to an exclusive agreement with the US pharmaceutical company, Merck, under which Merck is awarded all rights to develop and manufacture any 'useful' genetic resources discovered by INBio (independent prospecting is still permitted under licence from the Wildlife Department). In return, Merck has paid an up-front fee of $1 million for the exclusivity arrangement, and has agreed to pay royalties on any resultant commercial product.

The type of scheme outlined above, although not designed primarily as a mechanism for controlling the economic exploitation of national genetic material, does provide a useful case study of the type of policy that less developed countries could pursue.

In legal terms, the scheme is based on an assertion of legal ownership in the natural habitat as 'tangible' property. In addition, it permits the 'property owner' to establish a range of subsidiary legal arrangements, such as providing for contractual rights to carry out prospecting activities in a particular territory. Access to genetic material is therefore controlled both by legal agreement and in practical terms, through the separation between the party who 'prospects' for material and the party which develops any subsequent product.

Seed banks

In addition to countries appropriately asserting their tangible property rights, it is also critically important that the policies of such organisations as the International Plant Genetic Resources Institute (IPGRI) are reviewed. The IPGRI coordinates the activities of 17 international Agricultural Research Centres (IARCs). These centres operate as ex-situ gene banks to maintain copies of plant germplasm.

In terms of legal protection, one of the key issues raised by these ex-situ seed banks is the access that is provided to the stored germplasm. For example, the IARCs provide free and open access to the material being held, 'for the benefit of the world community' (CGIAR, 1992). Where germplasm is provided to private organisations, however, the organisation is required to sign a 'material transfer agreement'. This agreement states that in the event that the germplasm is to be commercially exploited, under

INBio

Land rights

Patent Copyright

Compensation-right Sui generis IP

Tangible

Intangible

Fig. 8.1. Property rights continuum.

a protective legal regime such as patent law, then the organisation is required to enter into negotiations with the relevant IARC, 'to ensure that any useful genes discovered in the material could not be withheld from the country from which the material originated'. Such provisions also envisage the payment of monies to the country of origin (Johnston, 1993).

The centres have been established to conserve plant germplasm but the manner under which they operate their 'open access' policy is seen by some as having 'essentially disenfranchised the host country from their genetic assets' (Swanson, 1992).

In order to protect countries against such disenfranchisement, genetic databanks will need to operate on commercial grounds, otherwise the opportunity for the host/land owner to gain economic returns for exploitation rights would be removed. One possibility would be a royalty-style charge levied on users. This type of arrangement is currently being operated by some ex-situ seed banks, for example the Royal Botanic Gardens (UK) requires royalty returns on any commercialised product, half of which are returned to the donor country (Johnston, 1993).

An alternative, or supplementary, solution would be to adopt some form of 'experts solution' whereby samples are only provided to persons who give some form of legal (that is contractual) undertaking not to use the sample except for experimentation or make it available to third parties.

The creation of a 'compensation-style' sui generis (i.e. new) right is a potential alternative to what has been discussed previously. Such a right could be classified as a 'negative' property right, existing somewhere between positive tangible land rights and intangible intellectual property rights (Fig. 8.1). In its simplest form, a 'compensation-style' right would operate through international recognition that the country which sourced a particular type of genetic material would have a 'right' to a royalty-style payment from the organisation that had developed and marketed the

Compensation right end-product. A comparable principle could be seen to operate under copyright law. Under the Berne Convention on international copyright, Article 6, authors have a set of 'moral rights' which are retained even after the economic rights have been transferred. In terms of a 'genetic resource right', some form of remuneration (moral licence?) would need to be attached to the right, payable by the economic right owner.

A 'compensation-style right is categorised as 'negative', because it would be designed to provide economic returns only if a product resulted whereas returns on 'positive' property rights are usually asserted by the right-holder from 'first-use'.

In 1987, a UN Food and Agricultural Organisation (FAO) meeting of the Commission on Plant Genetic Resources adopted a call for the right to compensation of source states for donated germplasm. To date, this concept (International Fund for the Conservation and Utilisation of Plant Genetic Resources) has yet to be fully established as a practical proposition, as a method of funding the scheme has not been agreed. If widely adopted, however, it would address the issue of providing countries with an economic incentive to preserve in situ genetic resources.

Bearing in mind the political issues surrounding the creation of an international compensation arrangement, it should be noted that the compensation-style solution could be enforced at an individual level, through contractual agreement. Such a scheme would again be on the basis of controlling access to the genetic material and assertion of 'land rights' with respect to its collection and use. The contractual agreements under which organisations would be permitted to prospect within a habitat could also include provisions stating that, in the event that a marketable 'economic product' resulted from the source material, then the 'land owner' is entitled to a percentage payment from the sale of that product. The amount could be the subject of a pre-agreed mechanism, such as use of an independent expert. Similar such 'compensation' provisions are regularly used in property law when land is sold for development purposes.

Overview

It can be seen that the assertion of property rights, in conjunction with contractual arrangements, can act as an effective control over the exploitation of genetic material. Such control enables the owner of the material to gain economic rewards from the successful commercialisation of such material.

In the past, developing countries have not made adequate use of such rights, thereby potentially disenfranchising themselves from those resources which have already passed to ex-situ seed banks. The recent debate that has grown up in this area would seem, however, to be altering such perceptions; for example, the US National Cancer Institute, which prospects for genetic material in some 25 countries, has currently only entered into contractual agreements with four nations, but expects that number to substantially increase in the future (Miller, 1993). It can be expected, therefore, that countries will increasingly make use of legal mechanisms, such as the INBio project, to preserve their control.

It should also be noted that contrary concerns can be raised with regard to a property rights approach to conserving biodiversity. When countries assert their property rights, it tends to operate at a national level, such as INBio. Much of the genetic material currently being prospected by the biotechnology industry currently comes from traditional materials used by indigenous tribes situated within or spanning national boundaries. The pursuance of a property right approach therefore needs to consider the diverse legal entities that should be encouraged to assert such ownership. In the Rio Convention, the Brazilian government successfully opposed an earlier draft which referred to the 'common concern of all peoples', on the grounds that this could be used as a means of conferring rights on indigenous peoples. Therefore, the assertion of property rights by one entity could mean the disenfranchisement of alternative groups.

A second potentially conflicting concern arises between the legal principle of property rights and alternative legal approaches that recognise the right to free access or the common ownership of natural resources. The policy of the IPGRI can be praised as well as criticised because, as has already been noted, the policy of free access is based on the 'universally accepted principle that plant genetic resources are a heritage of mankind and consequently should be available without restriction' (FAO International Undertaking on Plant Genetic Resources). In addition, other international treaties covering natural resources, such as those covering the sea-bed, outer space and Antarctica prohibit the assertion of national territorial claims. Any such 'common ownership' approach, however, is objected to by both developing and developed countries because of the current possibility of asserting intellectual property rights over genetic material.

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