Controversial ABS Issues in China

Guobin CUI （崔国斌）
Associate Professor
中国北京 清华大学法学院
Tsinghua University, School of Law, Beijing, China
Guobin@mail.tsinghua.edu.cn
www.law.tsinghua.edu.cn
June 25, 2010, Tokyo, Japan

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Contents:
1, Existing laws on biodiversity in China
2, Disclosure rules in the Patent Law
3, Access to Genetic Resources and Benefitsharing
4, Traditional knowledge2

1, Existing laws on biodiversity in China
Existing laws and regulations:
The Forestry Law(1984, latest revision 1998), the Grassland Law(1985, latest revision 2002), theFishery Law(1986, latest revision 2004), the Wild Animal Protection Law(1988), theEnvironmental Protection Law(1989), the Seeds Law (2000, latest revision 2004), the Stockbreeding Law(2005), the Regulation on Nature Reserve(1994) , the Regulation on the Protectionof Wild Plants(1997), the Regulation on the Protection of Wild Medicinal Resources(1987), theRegulation on the Import and Export of Endangered Wild Fauna and Flora(2006)……

The ownership of biological resources :Generally the State owns wild biological resources.
As exceptions, local communities , natural or legal person can own.
Subject to relevant laws, biological resources can be traded between the state and private sectors.

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1, Existing laws in China (cont’d)Benefit-sharing rules in existing laws:
Mainly focus on the ownership and conservation issues.
No benefit-sharing requirement in most laws.
Two exceptions:
The Stock-breeding Law (Art.16) : When exporting genetic materials on
Protected List, benefit-sharing arrangement and Governmental Approvalneeded. [“Animal Husbandry Law”]
The Regulation on Human Genetic Materials (Art.19) : Prior Informed
Consent of donators and Governmental Approval needed; Invention
derived should be co-owned by the Chinese researchers and internationalpartners.

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2, Disclosure Rules in the Patent Law
ABS and Patent Law
The Patent Law of 2008
Implementing Rules for the Patent Law (2010)
Guidelines for Patent Examination (2010)
Art. 5 para.2 of the Patent Law of 2008:
No patent right shall be granted for an invention-creation that is based on(developed relying on) the genetic resources which are obtained or utilized in
the way violating relevant laws or administrative regulations.
Art. 26 para.5 of the Patent Law of 2008:
For an invention based on genetic resources, the applicant shall state the direct source
and the original source of the genetic resources in the application documents. If theapplicant is not able to state the original source, it or he shall state the reasons.
52, Disclosure Rules in the Patent Law
Scope of Art.5 para.2:“Genetic resources”:
Implementing Rules for the Patent Law of 2010, Art. 26: Genetic resource referred to in thePatent Law means human, animal, plant or microorganism-derived material etc. containing
functional units of heredity and having actual or potential value.

“Relying on”:
The invention-creation made relying on the genetic resource referred to in the Patent Law
means an invention-creation that is accomplished by using (developed relying on) thefunctional units of heredity of the genetic resource.

“Laws or administrative regulations” :6

2, Disclosure Rules in the Patent Law“Laws or administrative regulations” :Only laws enacted by NPC and its Standing Committee, or regulations by StateCouncil .

Laws with specific ABS rules:
The Stock-breeding Law of 2005, Art.16

Low-level regulations, relevant but not applicable:
The Interim Measures on Human Genetic Resources (IMHGR) of 1998, jointlyissued by the Ministry of Public Health and the Ministry of Science andTechnology.
Other laws and regulations without ABS rules:
See “existing laws regulations”

Most important regulation in the future:
Regulations on Biological Genetic Resources.
72, Disclosure Rules in the Patent Law
The Stock-breeding Law of 2005, Art.16
Where any livestock or poultry genetic resource included in the protection list is to be exported
from China or is to be investigated and utilized within China in cooperation with any foreign
institution or individual, the applicant shall file an application with the stockbreeding andveterinary administrative department of the provincial people’s government and shallsimultaneously put forward a plan on sharing the benefits with the state.
……
Before a newly found livestock or poultry genetic resource is appraised by the National
Commission for Livestock and Poultry Genetic Resources, it shall not be exported from China
nor be researched and utilized within China in cooperation with any foreign institution orindividual.

<<<82, Disclosure Rules in the Patent Law
The Interim Measures on Human Genetic Resources (IMHGR) of 1998,Article 4 :The State adopts a reporting and registration system on important pedigrees and genetic
resources in specified regions. Any institution or individual who discovers or holds importantpedigrees and genetic resources in the specified regions shall immediately report to the relevant
departments. No institution or individual may sample, collect, trade, export human genetic
resources or take them outside the territory of the People’s Republic of China, or provide them toother countries in any form without permission.
Article 11 para.1:
Where human genetic resources in China are involved in any international collaborative project,
the Chinese collaborating party shall be responsible for going through the due formalities ofapplication for approval.

>>>

92, Disclosure Rules in the Patent Law
The Interim Measures on Human Genetic Resources (IMHGR) of 1998
Art.19 para.1 :Patent shall be jointly applied by both parties and the consequent patent right shall beowned by both parties if an achievement resulted from the collaboration is patentable. …
Article 12 :An application form shall be filled in and the following documents be included ingoing through the applying and approving formalities of an international collaborativeproject involving human genetic resources of China:(1)Informed consent form of the donor of the human genetic materials and/or his (her)legal representatives; [CuiNotes: No requirement for benefit-sharing with the donator](2) Draft contract; and(3)Other documents required by the examining and approving departments.
<<<102, Disclosure Rules in Patent Law
Art. 26 para.5 of the Patent Law of 2008:
For an invention based on genetic resources, the applicant shall state the direct source
and the original source of the genetic resources in the application documents. If theapplicant is not able to state the original source, it or he shall state the reasons.
Direct source: where the resources are obtained by the applicant
Original Source: where the resources are collected in situ.

Legal consequence for violating Art.26 para.5:
Implementing Regulation Art. 44 (preliminary examination), Art.52 (substantiveexamination): Application rejected.
Once granted, cannot be invalidated for failing to disclose

Patent Applications Affected :Very limited, about 1000-2000 applications per year?
Only applications involved “genes , cDNAs and their fragments”
112, Disclosure Rules in Patent Law
Challenges:
To what extent would a violation against Art.5 para.2 lead toinvalidation of a patent?
Agency problem:
Biological resources are usually collected by third party agencies, such as genebanks, brokers.
Patent applicants seemingly are not responsible for those agencies’ violation.

No teeth for disclosure requirement (Art.26 para.5)
The legal consequence for failing to disclose is not serious enough.
Better choices: invalidation of patents, or administrative liability .

Chemical synthesis
Chemically synthesized genes or compounds originally isolated or purified from
biological materials .
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3, Access to Genetic Resources and Benefitsharing
The progress of drafting China’s ABS regulation:
China is likely to adopt the CBD’s approach

CBD’s ex ante approach to biological resources
Property Right +Contractual Agreements
Re-confirm the ownership of biological resources as tangible property;
Base the benefit-sharing requirement on property right (actual control).

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3, Access to Genetic Resources and Benefitsharing
Why is CBD’s ex ante approach not a good law?
Costs for ex ante compulsory PIC and mutually-agreed terms:Procedural formalities before actual access to biological resources;
Difficulties in communicating with the provider of resources
Only very few projects finally achieve commercial success, thus have
distributable benefits.
Costs for policing the moving of genetic resources:
Once genetic resources were out of the control of a contractual party, theprotection would be over.
When multiple parties have access to a genetic resource, it is hard toknow who is breaching a contract by supplying the resource to a thirdparty.
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3, Access to Genetic Resources and Benefitsharing
Why is CBD’s ex ante approach not a good law?
Loopholes:
Those who do not seek IP protection: no benefit-sharing?
When the term of protection for intellectual property protection expires ;Third party who use the technologies relying on genetic resources.

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3, Access to Genetic Resources and Benefitsharing
A better alternative?
Property right + Sui generis right: an ex post approach
Create a sui generis right on biological resources to exclude a third party
from commercializing inventions relying on genetic resources .
Copyright-alike protection, no registration needed. (anti-copying)Sui generis right and property right co-exist in genetic resources.
Access to genetic resources is subject to traditional rules of property law,
not the sui generis legislation .

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3, Access to Genetic Resources and Benefitsharing
A better alternative?
Compared with CBD’s approach:No mandatory prior informed consent
No ex ante benefit-sharing agreements
Free to seek intellectual property protection
Free to trade genetic resources (subject to rules of property law)
May need to disclose the source or origin of genetic resources

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4, Traditional Knowledge
Definition:
WIPO: not workable at all.
TK refers to the content or substance of knowledge resulting from intellectual
activity in a traditional context, and includes the know-how, skills, innovations,practices and learning that form part of traditional knowledge systems, andknowledge embodying traditional lifestyles of indigenous and local
communities, or contained in codified knowledge systems passed betweengenerations. It is not limited to any specific technical field, and may include
agricultural, environmental and medicinal knowledge, and knowledge
associated with genetic resources. “Revised provisions for the Protection of Traditional
Knowledge Policy Objectives and Core Principles” WIPO/GRTKF/IC/9/5 (2006)

For purpose of this presentation:
Only knowledge having technological utility;
Regardless of whether it is related to GR or not.
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4, Traditional Knowledge
Types of traditional knowledge and possible models for
its protection (my method of classification)
TK privately-held
Trade secret model + patent model, no better choice

TK held by small communities or groups
Trade secret model + patent model, maybe.
May loosen the requirement for secrecy.

TK in public domain (well-known to the general public)Some moral rights, possible.
No cost-effective model to protect
Unfortunately, most advocates mean this type when talking about TK.

194, Traditional Knowledge
Difficulties in recapturing TK in public domain
How to justify TK protection in domestic context:
A property right based on its owner’s special social identity ?
Usefulness or Utility itself is not a justification: All basic scientific knowledge isuseful , but no protectable.
Direct finance aid to marginalized minority group should be more cost-effective
than protecting their TK.

How to reconcile the TK protection with patent law?
Inventions based on TK have a limited term of protection.
When the term expires, inventions will come into public domain or not?
The free availability of a technology in public domain would be threatened.
An Improvement to TK is still a TK or modern invention? Which model to protect
it ?
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4, Traditional Knowledge
Difficulties in recapturing TK in public domain (cont’d)
How to prove copying: the linkage between TK and derivative
inventions
Patent law: “all elements rule”
TK protection: “inspiration from TK “ is not easily traceable.
If not “all elements rule”, where is the end?

214, Traditional Knowledge
Difficulties in recapturing TK in public domain (cont’d)Threat to the competiveness of local research industries:
Joint research projects between international companies and local labs
An Example: Traditional Chinese Medicine, to compete with Japan, Korea,
Singapore, Hong Kong, and all other countries with significant oversea Chinesepresence!

Other difficulties:
The ownership of TK:
cost for distributing the benefit
When the delineating cost exceeds the benefit, no entitlement is more
efficient.
The term of protection:
Permanent protection?
Shall we assume that no one would re-invent a TK?
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The End !
Thanks for your attention!
☺☺☺

Guobin CUI
Associate Professor
Tsinghua University, School of Law, Beijing, CHINA
Guobin@mail.tsinghua.edu.cn
Tel: 8610-62795231
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