“Where large companies already have a monopoly on seeds and increasingly control natural resources, this would deprive farmers of all freedom of action by making them dependent on private companies. For this reason, patents on these products must be banned”
(source: European Parliament, Amendment 167)
The EU’s proposed ban on patents for plants obtained through 'New Genomic Techniques' (NGTs) calls into question who really profits most from patented technologies, and in particular patented crops? The EU Parliament suggests that farmers need protecting from monopolistic agritech companies – but what evidence is there for this?
I propose that the evidence for this issue can be found in a report for The Case of Ogura Oilseed Rape (Rapeseed) Hybrids.
The French National Institute for Agricultural Research developed and patented the Ogura hybrid system, one of the most important methods for hybrid seed production in crops. Using the Ogura system, a valuable crop type (so called, cytoplasmic-male sterile) is generated and can be used to obtain hybrid seeds with desirable traits. The Ogura patents were licensed out to numerous seed developers, who in turn used the technology to develop seeds for sale.
In a report, commissioned by CropLife International and Europa Bio, the outcomes of the commercialisation of report for Oilseed Rape hybrid seeds developed through the patented Ogura technology were studied and modelled depending on whether the technology was
1) not patented or protected by other intellectual property rights;
2) available by non-exclusive licenses (as in reality); or
3) available by exclusive licenses.
The report provided key insights regarding the commercialisation of hybrid seeds, and who stands to reap the profits. Here are four pivotal conclusions to take away:
1. “In reality, the market power of patent holders is constrained by the presence of alternatives and heterogeneity of individual farmer preferences”.
That is, a competitive market will naturally prevent patent holders becoming de-facto monopolists, as suggested by the EU.
2. Between 60% - 80% of the social benefit resulting from the patented crops accrued to farmers and end consumers – a figure that was 4x higher than the profits accrued to the technology developer.
Therefore, farmers and end users stand to enjoy significant benefits from patented agriculture innovations.
3. Farmers that switched to the patented hybrid plants turned a profit in the first year, while the break-even point for the seed producers was 10 years, and 15 years for the developers of the core technology.
In other words, a farmer’s uptake of a patented crop is reversible and relatively low risk. The investment for agritech developers is often high-risk and slow to return.
4. IP was modelled to be essential for enabling innovation – without IP, the chance of new innovations were modelled to be 100% less likely.
As such, in contrast to the EU Parliament’s suggestion, the evidence indicates that farmers, end-users and agritech innovators all stand to profit from agricultural advancements - but only if IP is available as an incentive for investment.
At Marks & Clerk LLP, we have a specialist team of experts in mechanical engineering, digital technologies, plant genetics and agrochemicals who would welcome the opportunity to help start or grow your IP portfolio. Head to our dedicated Agritech page where you can find out more, and get the latest insights from our expert team.
