BIOTECHNOLOGY
Growing pains for plant varieties
Is the ‘essentially derived varieties’ concept protecting plant varieties or chilling innovation, ask Joel Smith and Burkhart Goebel of Hogan Lovells.
Genetic engineering is revolutionising our understanding of disease prevention in humans, including the use of gene therapy to prevent or cure genetic defects.
However, in plants, the use of genetic engineering to develop new varieties with desirable traits is long-established. Indeed, the first “genetically modified” (GM) plant, a tobacco plant engineered for antibiotic resistance, was reported in 1983. This was followed by the first commercial GM crop, the Flavr Savr tomato, which was introduced in the US in 1994.
However, with the advent of genome-editing techniques, led initially by ZFNs and TALENs, and now by CRISPR-Cas9, we now have the ability to add, remove or alter genetic material at targeted locations within the genome, with precision, relative ease, at scale and at low cost. This is transforming plant breeding.
The traditional process of crossing and selection relies largely on unintended recombination of genes and random mutations occurring naturally, which are selected and developed further over many years, using multiplication techniques, with a new variety taking often ten-plus years to get to market.
New plant breeding techniques (NBTs), which involve development of new plant varieties with desired traits by modifying their DNA, can reduce the development time for a new variety to only two to four years. Potential applications include traits for disease resistance, herbicide tolerance, drought or salt tolerance, low anti-nutritional compounds, improved nutritional value, improved yield and improved biomass conversion.
Development of all new plant varieties (traditional or using NBTs) involves access to (and use of) plant material of existing plant varieties.
The international regime for protection of plant varieties set out in the International Convention for the Protection of New Plant Varieties (1991) of the International Union for the Protection of New Varieties of Plants (UPOV) is predicated upon an open model of innovation, which allows breeders to use plant material for the purpose of breeding a new variety, the so-called “breeder’s exception” (article 15[1][iii] UPOV).
For instance, this compulsory exception was adopted in section 8(c) of the Plant Varieties Act 1997 in the UK and §10a(1) No. 3 of the German Plant Variety Protection Act (Sortenschutzgesetz).
What is an essentially derived variety?
Recognising the advent of biotechnology, UPOV introduced a further compulsory limitation upon the breeder’s exception in respect of essentially derived varieties (EDVs). The main driver for the limitation was to prevent plagiarism of traditionally-bred varieties using new technologies, but it was also in response to erosion of the minimum distance requirement in phenotypical characteristics as part of the distinct, uniform, and stability (DUS) requirements for a new variety.
”It may be that the burden of proof should be reversed in that the developer of the derived variety may have better data about the gene edit.”
Joel Smith
Burkhart Goebel
The complex EDV concept was intended to prevent the commercialisation of a derived variety, without the consent of the owner of the plant breeder’s rights in the protected initial variety, where the derived variety fell within defined “scope” of the initial variety. The idea was that, given the significant contribution that the work in breeding the initial variety had made to the derived variety, the owner of the plant breeder’s rights in the initial variety should be entitled to license the material embodied in the derived variety and obtain a financial benefit.
It would stop the developer simply patenting the biotech trait and then commercialising the trait by inserting it into plant material already protected by plant breeders’ rights, to produce an improved variety.
The EDV concept is not intended to prevent the developer of a derived variety obtaining protection for the derived variety, if it otherwise satisfies the legislation as being DUS and new.
Article 14(5)(b) of UPOV 1991 sets out the concept of EDV (which can only be derived from a protected variety which itself is not an EDV): “A variety shall be deemed to be essentially derived from another variety (the initial variety) when
(i) it is predominantly derived from the initial variety, or from a variety that is itself predominantly derived from the initial variety, while retaining the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety;
(ii) it is clearly distinguishable from the initial variety; and
(iii) except for the differences which result from the act of derivation, it conforms to the initial variety in the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety.”
This complex definition throws up several issues, including what amounts to “predominantly derived” and whether it is relevant to the expression of which essential characteristics that the EDV has strong phenotypical similarity to, as well as genetic identity.
”The EDV concept is not intended to prevent the developer of a derived variety obtaining protection for the derived variety, if it otherwise satisfies the legislation as being DUS and new.”
Why does it matter?
The concept has polarised views and led to its implementation into national law in differing forms. For instance, article 13 of Council Regulation 2100/94 on the community plant variety in the EU, and section 12 of the Plant Breeder’s Rights Act 1994 in Australia both take non-literal implementations of UPOV.
China is rumoured to be considering adopting an EDV concept to update its 2014 Regulations, after it adopted UPOV 1978, but not the latest UPOV 1991 (which includes the EDV concept).
With the fast pace of change brought by genome-editing as part of NBTs to developing new varieties, there is a real concern for biotech companies that the legal uncertainty of the concept is stifling innovation. Yet, others remain concerned at the difficulty of policing use of plant material of their protected initial variety and the risk of damage to their business from competition in the marketplace from a derived variety.
The deployment of these technologies in plant breeding may be about to accelerate in the UK as the UK government reviews the post-Brexit regulatory landscape around the use of genome-editing tools, and the commercialisation of genome-edited crops and animals, after a decade of a largely EU-wide moratorium upon the approval and commercialisation of gene-edited crops.
The present situation is akin to the legal challenges often encountered with the adoption of new technologies (whether 5G or wifi) covered by standard-essential patents (SEPs), as part of ensuring products meet agreed industry standards and how businesses meet their obligations to license such patents upon fair, reasonable and non-discriminatory (FRAND) terms.
There are no FRAND obligations here, so if a business develops a new variety which amounts to an EDV, it faces the risk of being unable to commercialise the new variety, whether by being blocked outright (“hold up”) or from disagreements over the terms of royalties. It is unclear in such instances if a licensee can invoke compulsory licensing regimes.
The legal presumption may be upon the owner of the rights in the protected initial variety to prove essential derivation and then claim dependency, based upon the fact that the breeder of the initial variety will have access to development records and sequencing data for the initial variety. However, that breeder may not have access to the technical data for the derived variety. It may be that the burden of proof should be reversed in that the developer of the derived variety may have better data about the gene edit.
There is a role for the use of biochemical and molecular markers, although they need to be used cautiously, if used to determine whether a variety is an EDV. For instance, the Supreme People’s Court in the People’s Republic pf China has issued several “guiding” cases on plant breeders’ rights aimed to guide lower courts, including two on the use of molecular markers in cases of infringement (not EDV cases) where it balanced the results of genetic testing, with traits observed in field tests, to temper over-reliance upon molecular markers to reach a decision.
”There is a role for the use of biochemical and molecular markers, although they need to be used cautiously, if used to determine whether a variety is an EDV.”
Litigation has already occurred in this area, notably in the Dutch Courts, for example in the case of Danziger ‘Dan’ Flower Farm v Astée Flowers where the Court of Appeal, The Hague, held in 2009 that the gypsophila variety, ‘Blancanieves’, was not an EDV of Million Stars ‘Dangypmini’. Further cases have also been heard in the US, Australia, and South Africa.
We can expect more disputes in this area as the cost of developing a new variety using NBTs decreases, as compared to traditional varieties that may have been bred up to 20 years ago and are still in plant variety protection, and as companies look to recoup the high costs of that classical R&D breeding programme.
What is currently happening?
UPOV set up a working group on EDVs in December 2020 to revise the guidance on EDVs (EXN/EDV/2) following a seminar held by UPOV’s Administrative and Legal Committee in Geneva in October 2019. A draft text has been produced and is due to be discussed on October 19, 2021, with a view eventually to being adopted by the UPOV Council.
Potential solutions
There needs to be more certainty for all breeders, without the risk (and expense) of litigation before the courts.
Some experts are keen that the guidance provides a more practical framework to distinguish between the cases which are clearer instances of EDV or non-EDV and how borderline cases may be determined by reviewing the inventive contribution of both the initial variety and the derived variety expressed in their respective essential characteristics.
There may be a role for the plant breeders’ rights offices or patent offices to be able to provide an early declaratory decision (as in Australia), based upon receiving technical evidence. There may also be a greater role for alternative dispute resolution processes, such as expert determination or mediation, facilitated by an industry mediator.
There may also be value in developing industry-standard approaches to licensing and model form contractual clauses, perhaps drawing upon the expertise and learnings from other licensing regimes (such as SEPs) or perhaps even the fair and equitable access and benefit-sharing arrangements under the Nagoya Protocol for plant genetic resources.
Comment
Genome-editing brings huge benefits for plant breeding and meeting the challenges of food security and the climate crisis. However, the balance between this form of IP protection and the freedom to use another’s protected plant material is a delicate one, which requires improved guidance, model form approaches to licensing and improved dispute resolution procedures.
It is likely that we will see further disputes in this complex area at the interface of biotechnology and plant breeding.
Joel Smith is a partner in the intellectual property, media and technology group at Hogan Lovells. He can be contacted at: joel.smith@hoganlovells.com
Burkhart Goebel is a partner and global head of the intellectual property, media and technology group at Hogan Lovells. He can be contacted at: burkhart.goebel@hoganlovells.com
Images, from top: Shutterstock / luchschenF, Gorodenkoff, Kzenon, Lisic, Evtushkova Olga
