4 Analyzing the “Building Blocks” of the ABS Concept on the User Side

The world is not uniformly divided into “user countries” and “source countries,” since each country's role in ABS depends on the particular transaction involved. Any country may be a source of genetic resources. If the user is operating in another country (as explained in chapter 3), the country where the use occurs – whether highly developed or not – it is the “user country” of that transaction. In this respect, all source countries face the same problem – that user-country law does not require users to comply with ABS requirements as to the use of foreign genetic resources. Ultimately, then, all countries must adopt user-side measures under CBD Article 15.7, and all countries will benefit if such legislation is adopted and implemented.

As noted in Chapter 3, the lack of measures governing users of genetic resources after they have left the source country is seriously inhibiting the functionality of ABS. It is certainly not the only roadblock to a functional ABS regime. Even if all other obstacles were cleared, however, this lack of reciprocal measures would still prevent the system from operating.

From the perspective of the countries with the greatest number and variety of users,223 the lack of user-side measures is easily explained. The ABS concept is “disordered” – that is, it is legally ambiguous and uncertain. Most of the countries with high numbers of users possess legal systems that are functionally dependent on rigorous interpretation – laws must be based on a logical and internally consistent framework. If a law does not meet these standards, national constitutions, organic laws, judicial practices and mandates will deem it to be “unenforceable.” In that case, it will not be legally possible to take actions or enforce them under that law.

In drafting the CBD, it was expected that each country's national implementing legislation would resolve the Convention's ambiguities at the national level and that, over time, these national decisions would combine and grow into a systematic “international regime.”224 Several factors, however, have prevented this organic development process.225 At present, no consistent and rigorous analysis has been generally agreed that provides sufficient basis for adoption of user-side measures in these and other countries.

Although current negotiations are ongoing relating to the international regime, it is not clear whether it will result in a series of concrete conclusions (a kind of international instrument sometimes called “agreed interpretations”) or only in additional policy statements and stronger statements of national obligation regarding ABS. Either way, however, it will be necessary for each country to develop a clear analytical foundation for national user measures that will provide a regime-wide basis for a functional ABS regime. As noted in 2.7.4 and 3.5, above, there may be many ways of doing this, however, the current discussions focus on a system that is based on legal mandate (requirements) rather than incentives. This chapter analyses various necessary elements, beginning from the current paradigm and its ambiguities, and providing a credible legislative analysis that could be used to develop national legislation and other practices to satisfy countries' responsibilities as to users under their jurisdiction.

This chapter focuses on the primary application of Article 15.7:

Each Contracting Party shall take legislative, administrative or policy measures, as appropriate, and in accordance with Articles 16 and 19 and, where necessary, through the financial mechanism established by Articles 20 and 21 with the aim of sharing in a fair and equitable way the results of research and development and the benefits arising from the commercial and other utilization of genetic resources with the Contracting Party providing such resources. Such sharing shall be upon mutually agreed terms.

The ambiguities and inconsistent interpretations of this language cover a broad range. They grow out of three central undifferentiated concepts –

Although the words “genetic resources” existed prior to the CBD, they had not been used to describe a legally recognizable interest or property that can be the basis for granting exclusive or non-exclusive rights. Hence, it is central to any legislative development in ABS to clarify these three concepts in terms that both provide a legal basis for their application, and take into account the practical needs to ensure that the ABS concept is legally implementable. On the basis of that analysis, the chapter then conceptualizes legally the functional system of benefit sharing. That is, how that system is triggered, and how it might operate.

Interpretation and implementation of Article 15.7 (from both user-side and provider-side) turns on three primary questions: What are “genetic resources”? What activities constitute the “utilization of genetic resources” for the purposes of ABS? and When do “benefits aris[e]” from the utilization of genetic resources?

Unanswered up to now, either in law/policy or in expert literature, the answers to these questions must yield a basic framework that can be consistently applied in all relevant legal situations leading to replicable or predictable results.226 The ABS regime cannot function if neither user companies, source countries, researchers nor other providers have sufficient “legal certainty” regarding the nature and value of ABS rights or contracts. The following sections answer those three questions through the application of the principles of legal analysis and interpretation.227

4.1 Policy bases for benefits arising out of the utilization of genetic resources

4.1.1 The nature of “genetic resources”

The ABS framework as envisioned in the CBD is clearly bounded by one critical concept – the notion of “genetic resources” as a kind of material or interest that can be owned (whether exclusively or non-exclusively), controlled, transferred, or subject to other rights and controls.

Core questions in this regard concern the legal meaning of the term genetic resources and how, practically, genetic resources are treated among users and others. The use of this term has been spreading since its inclusion in the CBD, and it has appeared in numerous international discussions and documents,228 and in many national laws. Even so, however it still lacks the definitional clarity or regulatory development necessary for enforceable legislation. Posing the question “what is a genetic resource?” to any group will yield a variety of answers. None of these various usages have yet been able to clarify the meaning of the term, which is often used inconsistently.

An important first observation regarding “genetic resources” is its relationship to the continuing evolution in scientific knowledge. Genetic material is originally physically bound to and arises from a physical, identifiable source – a biological specimen of plant, animal, microbial or other origin. This is a primary difference from other intellectual properties, which are protectable because they arise from an intellectual source (human innovation). As technology advances, it is increasingly unnecessary to maintain any connection to the physical source, during the process of utilization of the genetic resource. Already innovations based on genetic and biochemical research have been created by persons who never had access to the physical material – only to information about its genetic and/or biochemical characteristics, for example through digitalization. Nanotechnology, as applied in the context of genetic use, will expand the number of ways that genetic resources can be utilized, and further reduce reliance on physical samples.

In general, analysis of a legal term begins from its stated definition,229 turning to other methods of interpretation only where (and to the extent that) the definition is unclear.230 To understand the term “genetic resources,” then, it is necessary to start with a set of three interconnected definitions from the CBD:

Read together, as many commenters have noted, these definitions do not provide a clear basis for determining which resources are “genetic resources.” Yet it is clear, both from a contextual reading of the CBD and from a historical analysis of the CBD negotiations, that Article 15 was clearly intended to apply only to “genetic resources” and that the Parties perceived genetic resources to be distinguishable from other biological resources which are acquired and used in bulk. Thus, a clear understanding of the meaning of this term should include an understanding of its positive and negative limits on the scope of Article 15.

Linguistic analysis of these three definitions suggests that the difference between “genetic resources” and the broader category of “biological resources” may depend on two distinguishing characteristics: the material must “contain functional units of heredity” and it must be of “actual or potential value.” These two basic concepts form the theoretical underpinning for determining the meaning and scope of the term “genetic resources.”

Both terms are difficult. Many non-legal analyses note that nearly all material of biological origin contains “functional units of heredity” and that, based on the objectives of the CBD, all biological material is of “actual or potential value.” From a legal perspective, however, the interpretation of these concepts is critical, because they provide strong indications of the negotiators' intentions regarding the role of genetic resources within the CBD. From this basis, it will be possible to determine how the limits of “genetic resources” can determine the scope of ABS, and how this concept integrates with the concepts of “utilization” and “benefits arising” to form the analytical and legislative basis for implementation of an ABS system.

4.1.1.1 “Containing functional units of heredity”

The first qualifying element – material that contains functional units of heredity – although problematic, provides an important legislative indicator of the nature of “genetic resources.” It is the integral link between the concept of genetic resources and the special properties to which Article 15 is directed.

The term “functional units of heredity” is not defined anywhere in the CBD. Its use mirrors the primary problem in any legislative document that uses technical terminology – determining how that term is understood, and by whom. Where the document's target audience is technical (technical experts and regulators) then the term will be understood and applied technically. Regulations will be developed citing particular scientific texts or statistics that will give a precise definition of the element and a standard for its measurement.232 Where the target audience is not highly technical, however, use of a technical term can be problematic, since it may mean different things to different audiences.

In the CBD, the use of the term “functional units of heredity” was selected by policy makers, rather than genetic scientists. Consequently, it was not clarified scientifically at the time and appears to have been variously understood by the different negotiators. Interpretation of this term can come from three kinds of sources: technical definition, political definition, and interpretation by subsequent legal and legislative action.

Technical experts note a general view that “functional units of heredity” is not a standard scientific concept. When they attempt to apply it, they generally assume that it refers to DNA and RNA.233 Under this definition, many biological products (such as extracted oils), which do not contain either DNA or RNA, are not “genetic material.”

Recently, a much publicized project was completed, which mapped the entire human genome. That project, however, yielded unexpected results, which have led some scientific commentators to suggest that DNA and RNA are not so much “building blocks” of heredity as a bio-molecular database wherein the biological information about the entity is stored.234 These scientists posit that reproductive proteins fill much of the role conventionally thought to be assigned to DNA and RNA. Finding a scientific definition of “functional units of heredity” is made more difficult by the fact that the Convention does not use the term gene or DNA-molecule or any other more definite term, possibly in an effort to maximize the flexibility of Article 15 and enable it to cover the evolving state-of-the-art in the utilization of genetic material.

Unfortunately, however, it is not likely that a scientific definition alone would resolve this question, even if one could be agreed. ABS is not a technical or micro-engineering system, but a commercial and a legal one. ABS law and policy define the government's right and duty to control utilization of genetic resources and share benefits. Consequently, varying interpretations of the term are legion, based on very different conceptual pictures. Often, these conceptualizations focus on the layman's perspective that “functional units of heredity” refer to whatever biological component gives a particular species, sub-species or variety its unique physical/biochemical characteristics.235 As a result, many participants in ABS discussions include DNA, RNA, proteins, chemical properties and other factors as “genetic resources.” Noting that the genetic material or resource must “contain” functional units of heredity and that heredity is what defines the differences between various species/varieties, they assume that ABS applies to any unique characteristics of any species or variety. Discussions under this theory frequently speak in terms of “genetic and biochemical characteristics” and even more broadly.236

4.1.1.2 “Of actual or potential value”

The concept of actual or potential value is equally important in determining the intended scope of “genetic resources.” This term establishes a commercial or developmental element as the second and defining step in the ABS scoping process. The logic behind targeting Article 15 at a narrow category – genetic resources – rather than all biological resources, is clarified by this concept. It suggests that ABS applies only when the resource involved is perceived to be valuable as a consequence of its genetic characteristics – i.e., not when biological material is used for bulk purposes, such as food, construction materials, etc.

This conclusion is based on an extrapolation of the intent of the drafters. The definition of genetic resources emphasizes “value” – either actual or potential – that is inherent in the genetic material. This value must tie to the inherited characteristics and genetic components of the species. These terms were added into the Convention for the purpose of recognizing this value, as new technologies continue to make that value real rather than theoretical. Similarly, the ABS concept's overall focus on grasping a part of the revenues from these technologies for equitable (distributive) and conservation purposes is clearly value oriented. Thus, the definition of genetic resources appears to target a new value – the value that arises when material of biological origin is used in a way that takes advantage of the functional units of heredity.

4.1.1.3 “Genetic resources” in international and national instruments

Before concluding by accepting this approach to the meaning of “genetic resources,” it is necessary to briefly consider the questions of prior and subsequent official uses of the term.237 After an in-depth and detailed survey of this question,238 however, it is clear that only a small number of instruments are directly relevant to this question, and that they do not alter our analysis. The following overview is offered for clarity and to answer the most frequently raised points.

Global instruments: Although they cannot be considered primary juridical bases for the CBD (because they do not have the same Parties), the International Undertaking on Plant Genetic Resources for Food and Agriculture239 (in existence before the CBD), and the International Treaty on Plant Genetic Resources for Food and Agriculture,240 which replaced it (several years after the CBD's adoption) are generally thought to be important in addressing issues under Article 15. In particular, both of these documents use the words “plant genetic resources” very prominently, however, they use this term in a generic way which is nearly identical to the manner in which the term “biological diversity” is used in the CBD.241 The primary change made by the International Treaty when it replaced the Undertaking, apart from conversion into a binding instrument, is its creation of a multilateral system (MS) governing access to and use of certain “plant genetic resources for food and agriculture” which are held in international or national collections or otherwise brought within the scope of the Treaty. The use of “plant genetic resource” (PGR) as a term largely refers to accessions of plant seeds which are exchanged for plant breeding purposes. The FAO has recently commenced additional work on the issue – assessing whether there is a need for specialized measures for Farm Animal Genetic Resources (FAnGR).242

When the term “genetic resources” is used in WIPO forums, those discussions only refer to the CBD usage – there is no specific WIPO-approved or accepted definition. International patent law in general does not use the term “genetic resources” at all. When genes, cells or biochemicals are subject to patent protection, other language is used.

National and regional instruments: One of the unfulfilled expectations of the CBD's negotiators was the expectation that critical issues, including clarification of basic concepts of ABS, would be resolved by the development of a body of national implementing legislation, 243 which would slowly grow into an interconnected or interoperable set of instruments. This is a common way of developing international law. If all Contracting Parties had adopted ABS implementing legislation that clarified genetic-resource concepts within their own country, the combined information could eventually be used to create a conformed international understanding – a basis for the entire system. The collective analysis of all such practices would thus be a practical route to clarifying CBD provisions that are vague or ambiguous as written.244

As examined in detail by other authors,245 however, national legislative efforts have not generally specified or clarified the use of this term. In general, national definitions have taken one of two approaches – either omitting the entire “genetic resource” concept and developing legislative measures around other concepts246 or retaining the same language as the CBD definitions, without adding any language or interpretation to resolve practical implementation issues.247 A few countries have combined these approaches, using a different term, but giving them essentially the CBD definitions.248 Two particularly notable examples are the Costa Rican Biodiversity Law and regulations, which specifically regulates both “genetic and biochemical resources”249 and Brazil's Provisional Act N°2, which uses the term “genetic heritage” – and defines it in terms of “information of genetic origin, contained in samples.”250 Although both of interest, neither clarifies the concept with sufficient precision to enable interpretation and enforcement. Consequently, state practice does not appear to add markedly to the analytical determination of the functional role of genetic resources in ABS.

4.1.1.4 Summary – biological versus genetic resources

The basic definitional conclusion about “genetic resource” must be viewed in the broader context of the CBD, where the term genetic resources appears only in a few key provisions, specifically listed in the third objective.251 The rest of the Convention addresses a wide range of issues under the all-encompassing term “biological resources.” Based upon its usage in text, the term “genetic resources” appears to have been coined and defined for the sole purpose of enabling clarity and functionality with regard to the benefit-sharing provisions in the ABS system. Seen in this way, the function of the term “genetic resources” in the CBD is solely as a determinant of the scope of the ABS obligations.

For this purpose, the definition of genetic resources can be clearly explained. The focus on the “functional units of heredity” as the defining characteristic of genetic material suggests that legal interpretation must recognize some specific link to the hereditable interest in the material, beyond the biological properties of the organisms where it once was found. It also underscores the difference between genetic and biological resources – “biological resources” consist of many specimens, each of which may be owned or used individually, whereas “genetic resources” refers to a kind of material that is present in the entire species, but which the system will treat as a single disposable commodity under the sovereign control of each country where it has origin. The second interpretive step concludes that genetic resources are linked to a particular kind of actions and intentions – those that use or create “actual or potential value” out of the “functional units of heredity.”

Operationally, however, other key concepts (discussed in 4.2.2 and 4.2.3 below) are used more concretely in Article 15 – to create the clear distinction between situations which require ABS actions, and those which do not. The role of “genetic resources” is to identify the overall scope of the system – to determine what actions and situations should be included within the ABS framework. It will not be necessary (or possible) in applying ABS principles to make some firm determination that one item is a “genetic resource” and another is “biological.”

4.1.2 The nature of activities that constitute “utilization of genetic resources”

The second formative concept underlying the benefit-sharing obligation is the “utilization of genetic resources.” Within the Convention, “utilization” serves as the link between the scoping concept of “genetic resources” and the outcome concept of “benefit sharing.”252 In all its formulations on benefit sharing, the Convention focuses on utilization (rather than access to or export of) the material, as the action to be addressed. Thus, the second critical element underlying the benefit-sharing framework is the concept of “utilization of genetic resources.” Although primarily a tool of functional application (discussed in 4.3), it is necessary to briefly analyze it conceptually.

4.1.2.1 The hidden issue

Upon a closer legal analysis of the text of Article 15.7, it appears that the “utilization of genetic resources,” not the genetic resources themselves should be seen as the central element. This is appropriate, because utilization is, of course, the “value creation” element within Article's 1 and 15. (Before value can be shared, it must be created.) Existing legislation and the international ABS discussions have seldom focused on the point of value creation, but have centered instead on the various confusions and obstacles involved in trying to define “genetic resources.” However, a functional definition of “utilization of genetic resources” is potentially much easier to create, and produces a practically applicable concept based on externally confirmable criteria. In brief, it is easier to define a basis for recognizing that an activity is “utilization of genetic resources” than to guess whether a resource is “biological” or “genetic.”

4.1.2.2 Defining “utilization of genetic resources”

The CBD does not define or explain the meaning of utilization of genetic resources except to note in Article 15.7 that utilization includes both “commercial and other” activities.253 Presumably, the drafters assumed that the standard usage of the word “utilization” is clear without specialized definition. However, “utilization of genetic resources” is specialized. Only the manner in which a resource is used can provide the external means for determining whether that resource is a “genetic resource” or other biological material.254 If the special meaning of “utilization of genetic resources” is made clear, it can provide a practical basis for “grounding” the concept of genetic resources – genetic resources are not simply the biologically encoded information in species (nor the specific cellular material containing that information), but they are tied to utilization – realization of the value of the functional units of heredity of that material.

It may be easiest to develop this understanding by considering practical factors. For example, one difficulty with the concept of “genetic resources” is the need to distinguish some category of resources that are not covered by ABS – i.e., instead of asking “Which resources are genetic resources?” we are tempted to ask “When is a biological resource not a genetic resource?” Alas, the answers to this second question have also proven illusive.

By focusing on utilization, however, it should be possible to answer the more relevant question – defining “utilization of genetic resources” by identifying the activities that are and are not “utilization of genetic resources.” Many activities seem clearly to be excluded. For example, the harvesting, milling and sale of timber products, although utilizing the tree as a biological resource, are probably not utilizing its genetic resources.

The other list is also possible – kinds of activities that are unequivocally included within the concept. For example, making a new living modified organism using insertion of recombinant DNA (rDNA) from a donor organism into a recipient organism seems clearly to be the utilization of genetic resources. Synthesis of DNA from wild biological sources seems also be an activity that utilizes the intangible information in that biological source.

Although it leaves a large “middle ground” – activities which must be evaluated in more detail – this approach may be an effective tool for practical determination of when ABS applies. Unlike the distinction between genetic resource and biological resource, it is more feasible to differentiate utilization at the practical, observable level, using a rational objective standard rather than relying on one's ability to discern the intentions of a collector or holder of biological material before that material has been used or consumed.

4.1.2.3 Value of the concept

Few commentators have, as yet, considered the role of utilization of genetic resources as a linking concept between “genetic resources” and “benefits arising.” They have been focusing primarily on “genetic resources” and “benefits” and ignoring the active elements – “utilization” and “arising.” If the ABS regime recognizes “utilization of genetic resources” as a basis for its operation, it may be able to move away from irrelevant questions relating to the movement of specimens across borders, and eliminate the desire to force regulating officials to find (and to discern the intended use of ) each biological sample or part. It will also enable the system to address the problem of users who are utilizing genetic resources obtained without going through any legal process or scrutiny.255 “Utilization of genetic resource” could be determined without a speculative determination of the future of the specimen or other matter (i.e., whether the material is a “genetic resource”), looking only at whether the user took an action that is considered to be the “utilization of the genetic resources” – a question that can be answered objectively and documented by evidence.

This suggests the critical need to define and apply the concept of “utilization of genetic resources” as a core focus (perhaps “the core focus”) of the system, rather than to attempt to develop a tracking system for individual specimens and grapple with the need to determine when untracked specimens are transformed from normal biological specimens into “genetic resources” to be tracked.256 The simpler solution – focusing on utilization of genetic resources – is only possible where there are well functioning user-side measures under the ABS system.

4.1.3 The nature of “benefits arising” from the utilization of genetic resources

The benefit-sharing obligation is focused on the “benefits arising from the commercial and other utilization of genetic resources.”257 It is these benefits which must be shared equitably. Thus “benefits arising” is the third building block of the benefit-sharing system. Conceptually, the nature of “benefit” is not sufficient alone – the ABS system focuses specifically around “benefits arising from utilization.” This concept has a dual role in user-side legislation – both as a trigger of the user-side obligations (sharing benefits, results and other requirements) and as one part of the determination of the value and nature of what must be shared. To define this concept, it is necessary to ask three questions: “What constitutes a ‘benefit’ for these purposes?” “Benefits to whom?” and “Which benefits ‘arise from the utilization of genetic resources’?”

4.1.3.1 What are “benefits” for Article 15.7 purposes?

The CBD gives only three words of guidance regarding “benefits arising,” but they are very important to the formation of the ABS system, specifically stating that the concept includes “commercial and other benefits.”258 Supplemented by references to results of research and development, Article 15.7 indicates a very comprehensive scope of benefits that might arise from utilization.259 The Bonn Guidelines underscore this broad scope by including a long list of examples of benefits in Annex II. This point is very important to the system – it specifically includes non-commercial benefits among those that must be equitably shared.

In considering the inclusiveness of “benefits,” several facts must be remembered. First, many outcomes of the utilization process may be speculative, incomplete or intangible.

Second, it is not possible to evaluate the “benefits arising” question solely on commercial terms. Many benefits are not commercially oriented or valued, but are of ideal or factual or informational character. Under the CBD, it appears that information and research results are considered to be benefits arising for this purpose. In most cases, however, it will not be possible for the user to “liquidate” this type of benefits – that is, to determine its financial value, and pay the source country a monetary sum, as one would for financial benefits.

Third, in commercial utilization of genetic resources, the actual benefit-sharing obligations will often be triggered by the terms in the ABS contract (i.e., the mutually agreed terms that are negotiated through the prior informed consent process). The monetary and other forms of payment to satisfy the benefit-sharing obligation might happen at many stages – even before the benefits have actually arisen, since many users and most source countries will agree to a system of milestone payments, during the course of the research period, rather than a long-term share in the product, process or other innovation that is developed. A complication here, however, is that the amount, type and value of benefits that will arise from a particular utilization is unknowable at the time of the PIC and MAT processes. Contractually, this issue can be addressed in a variety of ways, one of which might be the inclusion of a dynamic process for determining the final amount of benefit-sharing obligations.260

The wording of Article 15.7 suggests that “benefits” should be broadly conceived – that the term should include all data, innovations, proceeds, rights and property which has been created or developed through any process which involves the genetic resource.

4.1.3.2 Whose benefits are considered?

The obligation to share benefits is general in scope. Fair and equitable sharing applies to all benefits that “arise” from the utilization of a particular genetic resource. There is no indication that this obligation is limited to persons who have signed ABS contracts – it appears to apply to all who have benefited from the utilization of genetic resources. This suggests a need for reasonable limits. As with utilization of genetic resources, there seem to be benefits that are clearly not included in the sharing requirement and those which seem clearly to be included. For example, the individual employees of a user company, research institute, or collection are not required to share the benefits of their individual employment (salary, etc.), even if directly tied to working on the particular resource. At the other end of the spectrum, consider a company that has developed a new pharmaceutical incorporating genetic material from a particular species in the product or in the process of its creation. The profits from this activity are clearly benefits arising from the utilization of the genetic resources, as is the information developed by the company about the species and its genetic and biochemical characteristics, and triggers the obligation under Article 15.7.

The immediate reaction to this example is to suggest that benefit-sharing requirements should be limited to direct benefits that are received by some defined class of “users” or to persons who acquired the genetic resources in specific ways. Before adopting such a definition, however, it is useful to consider experience in other commercial sectors. In some commercial situations, detailed laws are needed to prevent companies from bypassing legislative requirements that apply only to “direct users,” “direct owners” or “direct beneficiaries” of a particular type of contract or other legal arrangement.261 Such companies might transfer properties, data or rights to controlled entities or individuals, or take other actions that convert “direct” benefits (subject to benefit sharing) into “indirect” (not-shared) benefits.

4.1.3.3 Which benefits “arise out of” utilization of genetic resources?

The most difficult practical question relates to determining the linkage between benefits and genetic resources. This linkage is still a source of controversy internationally, and there is no clear majority view about it. Some questions that have arisen in discussions of this issue focus on the nature of the utilization process, for example:

These same questions have been posed regarding middlemen who perform initial screening of compounds and then sell them to other users. Answers may differ, depending on the technical level of the activities undertaken and/or information generated.

Even when linked to clear determinations of the meaning of “utilization of genetic resources,” the question may arise whether all information, products, processes, or other outcomes of those processes should be considered to be “benefits arising” from the utilization of genetic resources. A natural biochemical substance (“genetic resource”) being studied may be difficult to maintain in laboratory conditions, prompting the researcher to develop a new kind of container or container coating. Is this new innovation a “benefit arising” from the utilization of the genetic resource?

For clarity, it is necessary to note that the system-defining question – “which benefits arise out of utilization of genetic resources?” is quite different from the operational question – “what forms of payment may be made under benefit-sharing arrangements?” This latter question has been described in some detail in the Bonn Guidelines.263 It is important to look closely at the Guidelines and to understand their role in the national legislative process. Specifically, in developing these voluntary guidelines, the Parties were not discussing or interpreting the conceptual bases of ABS. Rather they were only considering and evaluating current practices used by countries and users seeking to apply existing understandings of ABS in transactions. Thus the Bonn Guidelines did not focus on what “benefits arise” from utilization, but approached the issue from a very different perspective – the administrative question of what forms of payment (money, joint venture participation, services, technology, etc.) may be useful in the drafting of ABS contracts. Although not answering the questions posed in this chapter, the work in the Bonn Guidelines constitutes one point of departure that can be used in developing the functional triggers of benefit sharing.

4.2 The functional relationships – the three triggers of benefit sharing

Building on the conceptual base described above, the functional process of benefit sharing can be expressed in legislatively relevant ways by considering how the three concepts described above interrelate with one another. Functional user-side measures can be built by considering the actions involved such as the collection, research, use, development and production based on genetic resources, and considering where and how the benefit-sharing obligations are triggered in regard to these actions. It appears from the analysis above, as well as the national legislation in existence, and national and global experience with ABS-related systems, that there will be two or three effective triggers of the users' benefit-sharing obligations. The following discussion addresses how that system is triggered, and how it operates legislatively within the user-side framework. It focuses on three primary questions:

4.2.1 The first trigger – “genetic resources” as a functional element

Policy clarity about the meaning of “genetic resources” is only the first milestone. A separate question – how this concept will be used in legislation – is more difficult. In this context, “genetic resources” fills the role of a meta-criterion – it is a factor that is used in developing the functional criteria of “utilization of genetic resources” and “benefits arising from genetic resources,” but is not a specific criterion to be applied to each individual user or claim. However, as a principle guiding regulatory development, the term can fulfill its CBD role of defining the outer limits of the benefit-sharing obligation.

Based on the international and national discussions to date, it seems likely that any new ABS-oriented system on either the user-side or the provider-side will have to include this specific “triggering” question for each transaction: Are genetic resources involved?

As the first “trigger” in determining whether an ABS obligation applies, the concept of “genetic resources” will have to be expressed in a concrete way that clarifies the functional distinction between “genetic resources” (to which ABS applies) and “biological resources” (to which ABS does not apply). This must be done in a way that does not encourage law- and policy-makers to presume that ABS legislation is simply the development of a series of rules applicable to “genetic resources.”

As noted above, however, most biological material contains functional units of heredity, making it hard to use this fact as a criterion for differentiating genetic resources, which are covered by ABS, from biological resources, which are not. Hence, two specimens of the exact same subspecies might be treated differently, based on two users' different intentions – a factor that is not externally verifiable. Moreover, at the time of in-country collection of specimens, collectors may intend only to sell the biological resource, and may not care whether the buyer intends to use it as a “biological resource” or as a “genetic resource.” Intentions related to a specimen may change over time. After the first sale, the specimen may come into the hands of one who intends to utilize its genetic properties. Thus, a system based on the movement of genetic resources would have to track all biological materials and information over its life and that of its progeny, in order to determine when or whether it eventually becomes a “genetic resource.”

The following discussion considers four different possible legislative views of genetic resources:

As demonstrated by the following summaries, it will be possible for legislative draftsmen to develop a functional ABS framework and take steps to maximize “legal certainty,” regardless of which view is chosen. This fact underscores the primary problem currently preventing ABS functionality – the issue is not that the Parties have chosen the wrong interpretation, but rather that they have not agreed on, adopted or applied any interpretation.

4.2.1.1 Option 1: “Genetic resources” as synonymous with “biological resources”

Assuming that the term “genetic resources” is coextensive with “biological resources” will partially solve some problems, while creating others. It has been suggested as a simple solution that will eliminate the difficult question of identifying which resources the ABS obligation addresses, by basically requiring ABS for all material of biological origin.264 But obviously, it would create a substantial problem, in that it would apply ABS to an extraordinarily large number of resources and activities. This could result in both intentional and unintentional restrictions and impediments to trade and exchange of biological material.265 Moreover, it might be conceptually necessary for developing countries to “share benefits” with developed countries which may be the original source of staple commercial goods that are internationally grown and traded.

For legislative regime developers, however, this approach merely moves the complex, detailed aspects to another part of the legislative framework. Instead of winnowing out “non-ABS-transactions” by determining that they are not transactions in genetic resources, the legislative developer would have to develop a more complex system that identifies many different kinds of compliance and applies different benefit-sharing systems, depending on other criteria (type of utilization, nature of benefit, etc.).

4.2.1.2 Option 2: “Genetic resources” as tangible “genetic material”

Another option would involve identifying specific tangible materials (genes, extracts, etc.) as “genetic resources,” addressed by the ABS regime only when they are transported in this physical form. This approach again attempts to eliminate the need to consider intangible factors, such as the intent of the holder or transporter of the material, but raises other concerns. The key question underlying this approach is whether (i) it applies only where the material is transported separately (as prepared samples), or (ii) it includes material that is mixed with or a part of some other item or product (including perhaps an entire animal or plant) which could later be raised or propagated, or whose genetic material could later be extracted and multiplied.

If the term “genetic material” applied only to the former, then implementation would be simple. There are certain methods of sample preparation that are clearly undertaken for purposes of scientific research into genetic or biochemical analysis, and it may be suggested that ABS should recognize only these samples as “genetic resources.”266 This approach could drastically limit the scope of the ABS obligation, if applied only to materials prepared in this way at the time of transport.

It is, however, perfectly possible to utilize live specimens, and even other parts of dead or preserved specimens to generate genetic material for study and utilization. Legislatively, the question would arise: At what point in time is the definition applied (before or after collection, exportation/transport, or even planting, breeding or multiplication)? This approach would focus on the point at which the resource user begins to take actions involving the value of the functional units of heredity of the resource.

4.2.1.3 Option 3: “Genetic resources” refers to intangible “genetic information”

Increasingly, the use of genetic resources is seen to occur with minimal contact with the specimen in nature, and in some cases, with no contact with any physical specimens or extracts.267 This prompts the suggestion that “genetic resources” should be understood as genetic information or information about the gene's function in the organism – in other words, as information that can be transferred in a non-physical form (e.g. in digital form, or through other means of transferring research results and technical information) as DNA sequences (mapping DNA scientifically) or as chemical formulas (biochemical properties) derived from the variety/subspecies.

In one sense, this approach provides the clearest distinction between genetic and biological resources – one is physical, and the other intangible. It will also create a more durable basis for flexible application of ABS to new situations, as the technological state of the art continues to evolve. This definition could be robust enough to cover genetic resources even when they have not been directly collected from the source country. Detaching the definition of “genetic resources” completely from the tangible aspects would, however, create a serious problem of oversight and identification of users, as well as potentially narrowing the scope of the obligation. As such, it might increase attention to incentives and other mechanisms designed to increase user-transparency regarding the links between their various uses and innovations and their biological/genetic sources.

4.2.1.4 Option 4: “Genetic resources” combines physical and informational elements

The CBD's use of physical terms such as “material” in the definition may suggest that “genetic resources” encompasses both (micro)physical and intangible/informational elements – the information and its biological source. This option suggests that “genetic resources” should include any of the following:

This approach appears to integrate all of the positive elements of the first three options, keeping the range of the term relatively broad (option 1), but allowing it to focus on the points at which the resources move from being primarily potential (many options for how they will be used) to being clearly focused on value arising from functional units of heredity (option 2) – the point at which the user’s intention begins to be reflected in action. This approach retains the robust nature of the concept that may continue to apply when technology changes, and the potential value in the genetic material can be realized or communicated in new ways (option 3).

4.2.1.5 Summing up – the genetic resource trigger

Nature becomes a “resource” when it is mixed with human innovation and activity. Thus, it has always been recognized that “genetic resources” exist only where human activity is involved. A definition of “genetic resources” that recognizes both its physical and its intangible aspects, also recognizes the broad variety of human actions that might convert a natural specimen into a “genetic resource.” This dynamic understanding of “genetic resources” is closely linked to the next element in the trigger mechanism for benefit sharing: utilization of genetic resources.

4.2.2 The second trigger: “Utilization of genetic resources”

As shown in 4.1 and 4.2.1 above, it is nearly impossible to identify specific material as a “genetic resource” or to require controls on transboundary movement of materials on the basis of their identification as “genetic resources” regardless which alternative presented in section 4.2.1 has been chosen. Specimens crossing national borders as biological resources may be indistinguishable from those destined to be genetic resources. Specimens frequently change hands, and can be multiplied and shared with many different users, for different purposes and obtaining different types of results. After years of thought, the authors have concluded that one cannot directly regulate all “genetic resources” per se, no matter how they are defined, unless we are willing to impose some level of control on all movement of any biological material.

These facts strongly suggest that an ABS system cannot be based on a species-by-species or specimen- by-specimen oversight. For a regime to be functional, it must be based on something that may be empirically or at least externally determined – a process that may differ across the range of species, activities and objectives for which the material is obtained.268 Functionality requires that the concepts be defined in a robust manner which would be sufficiently clear and definite to enable clear determinations about when the ABS system applies. For this, the triggering concept must be practical and externally verifiable. “Utilization of genetic resources” meets both these needs and can thus be enforced by the contracts, agencies and courts.

The utilization-based approach seems to offer a much higher level of concreteness and a greater ability to serve as the engine that moves the ABS regime. In essence, this utilization can be a concrete grounding of the genetic resources definition, so long as it is based firmly on an agreed overarching perception of “genetic resources” and their difference from other biological material. More important, however, utilization of genetic resources is an objective standard. A number of activities can potentially be categorized and verified as utilization of genetic resources.

There are two decided advantages for legislators, in creating and applying legislation focused on the “utilization of genetic resources.” First, as noted above, utilization is an action, and as such may be externally verifiable most of the time. Second, and equally positive, the phrase has not been defined in the CBD. Thus, the Parties have the ability to craft the concept to fit experiences, practices and problems encountered in ABS-related activities up to now.

The functional challenge, therefore, is to determine what activities should be covered by the term “utilization of genetic resources” and draft legislative standards and criteria to encompass those activities. In technical legislation, this is accomplished using at least one of the following:

It is common to include both kinds of approaches in legislation, by providing that –

This approach would maximize legislative guidance to courts, agencies and users seeking to apply the law, and would provide concrete examples that might help clarify and solidify the concept administratively.

4.2.2.1 Lists or categories of utilization of genetic resources

The listing/category approach offers great potential for ABS, especially because it can provide a comfortable basis for compromise with regard to issues of current uncertainty. Thus, for example, there are many controversies about the inclusiveness of the concept of genetic resources (e.g., Do all activities that breed or reproduce a species constitute “utilization of genetic resources”?).

Categories might not only help in determining whether ABS applies, but can also provide a basis for differentiating ABS requirements. The ABS requirements of a particular use activity can be designated specifically and governed by activity-specific benefit-sharing provisions. Where there is a dispute about whether ABS applies to an activity, compromise provisions can be agreed between the affected industry or sector on one hand and source countries and providers on the other. Some categories might qualify for streamlined processes, simplified documentation or special incentives, and could be tied to specific types and levels of benefit sharing. Some of the activities that would benefit by this treatment include:

These categories could cross reference other relevant instruments, as discussed below, providing an added incentive for compliance with those instruments. This will enable the overall system to operate consistently with regard to these activities, while focusing its primary attention on categories that are subject to a different level of scrutiny and performance.

In this analysis, we have identified four possible ways to categorize utilization of genetic resources:

By sector:

Agriculture, aquaculture, pharmaceutical, neu-traceutical (agro-pharmaceuticals), cosmetics, ex-situ collections, basic scientific research, etc.;

By objective:

Food and food security; health and medicine; commerce; conservation; sustainable use; etc.

By specific genetic-related activity:

Breeding, cultivation/variety development, extraction and identification of characteristics or properties, taxonomic characterization, genetic manipulation, synthesis of sequence or formula, nanotechnological activities, etc.

By developmental stage and/or type:

It may also be possible to set a dividing line between genetic resource utilization and other activities based upon the position of that activity in the spectrum from collection to product development. Some activities that are typically undertaken in the source country may be “utilization” as well as those in the user country:

Activities that are most often done in source country:
biodiversity inventory,269 specimen collection; initial taxonomic or biochemical analysis.

Activities that are sometimes done in source country, but often taken “Beyond access”:
exportation or transport of specimens; taxonomic or biochemical analysis; laboratory extraction; research; finalization/publication of research results; transfer of specimens or results to other potential users; application for intellectual property right protections; development of commercial and scientific applications (of the discovered characteristic, gene or formula); production; sale.

Another factor that may have to be taken into account is the species’ conservation status. Protected species or collections often have special status in law, and this status may affect the rights and obligations relating to their utilization. A category approach may integrate any or all of these factors; it can establish a high number of detailed acts, or it can include a small number of broadly defined activities.

4.2.2.2 Plant genetic resources as a particular category

Some efforts directed at categorization have already received significant approval. One hundred twelve of the CBD’s 190 Parties (plus one country that is not a CBD Party) have ratified the ITPGRFA, a document whose purposes include the development of a mechanism for access and benefit sharing with regard to plant genetic resources. It creates effective categories as follows:

“Sector” (category): Agricultural plants (for food and agriculture)
“Objective” (subcategory): Utilization/conservation for food and agriculture270
1st tier Status: Species/varieties listed in Annex I of the Treaty
2nd tier Status (3 options): PGR in national/international collections; Varieties in the public domain held by Members; Varieties held by others offered through the MS.

Each of these categories is both inclusive and exclusive. To apply the Treaty's special standards, the utilization must be within the general category of agricultural plants and not apply to other taxonomic kingdoms or to plants which are not “agricultural.” It must also be within the food and agriculture objective, and must not involve uses that are only or primarily in the “chemical, pharmaceutical and/or other non-food/feed industrial” realm.271 In addition, the status of the specimens involved must satisfy the first-tier classification (a species or variety included in the MS) and one of the second-tier classifications regarding the ownership of the resource.

For those using this system, the ITPGRFA provides a streamlined process and a standard format contract governing both access and benefit sharing. Any activities that fall outside of the treaty's categories will be addressed under the overall ABS system. This approach – carving out segments of the overall body of genetic resources, whether by sector, by type of user or on some other basis – is continuing to develop, and has been recognized to some extent by the CBD COP, in its statement of support to the ITPGRFA.272

4.2.2.3 Further international development

The ITPGRFA's effort to create a separate ABS system for defined categories of resource and specific uses has been watched with interest by other sectors. For example, the FAO has recently commissioned studies on the relevance of Farm Animal Genetic Resources (FAnGR) to the ABS system.273 This issue, like agricultural crops and variety development, spans a broad range from the breeding and husbandry at the level of individual animals, which offers very little justification for inclusion in the ABS process.274 FAO's initial inquiries clearly posit the ultimate possibility of separate treatment for Farm Animal Genetic Resources – potentially through a specially adapted instrument.275 Similarly, the application of ABS to wild animal genetic resources has also been raised in international meetings as another potentially severable ABS issue.276

In the broadest approach, these separate treatments would create a categorization system that eventually includes all biological resources of all types. That system would specify a legislative taxonomy, dividing all resources into two groups: those which are covered by the ABS framework and those which are not. It would also potentially apply different levels of performance or different types of systemic requirements based on various factors. In the end, many other options and list-based approaches (both inclusive and exclusive) might integrate with one another through this system.

One challenge, common to all statutory lists, is that the list will become outdated as technology develops new methods of utilization of genetic resources. This is problematic if the list is internationally agreed in a treaty format. It is particularly difficult and time-consuming to change an international plenipotentiary instrument, unless that instrument contains special provisions for updating it.277 The loss of flexibility caused by a rigorous listing system could be an obstacle for ABS effectiveness, unless the categories are expressed in a flexible way, or a mechanism for management of the lists and categories is also developed. One such mechanism is the inclusion of a “criteria” basis for identifying other actions that constitute the utilization of genetic resources.

4.2.2.4 Descriptive criteria for identifying utilization of genetic resources

As an alternative or supplemental approach, ABS legislation could develop and apply a set of descriptive criteria to determine whether a particular activity constitutes the utilization of genetic resources. Such criteria can be applied by regulatory decision-makers, and used in developing or providing further guidance regarding the lists and categories described in 4.2.2.1. Obviously, the challenge of this approach will be to find a set of criteria which are sufficiently broad and descriptive to address new kinds of uses that arise after the legislation is developed, but also sufficiently focused to be legislatively certain. An overly flexible criteria-set would eliminate the value of legislative efforts to define the boundary between ABS-regulated activities, and those that are not covered by ABS. It is essential that these criteria enable users, governments, judges, and providers all to know with relative certainty whether a new kind of activity or technology constitutes a “utilization of genetic resources” or not.

The next question to be considered now is “What are the characteristics of ‘utilization of genetic resources’?” Obviously, the main characteristic is that it utilizes “genetic resources” (leading back to the question of what that term means). Apart from this, however, the Parties will be able to develop answers to this question based on their overall conception of how the ABS regime should work. As noted above, national delegates currently express a range of opinions from including all uses of all biological resources, to including only genetics laboratory work leading to the development of commercial or industrial products. As noted above, it is important to make some concrete and specific decisions about this question. If the term remains general and undefined, then laws regulating it cannot be implemented.

In the end, this is a matter for political agreement, whether at the national or international level. However, where user-side measures are being developed, there seems to be a strong recognition of the need for mechanisms for inter-functionality of national laws – i.e., for an international agreement.

4.2.3 The third trigger: “Benefits arising out of the utilization of genetic resources”

Where a user's activities have passed the first trigger (“genetic resource”), and the second trigger (“utilization of genetic resources”), indicating that he is subject to ABS responsibilities, the third trigger (“benefits arising”) comes into play. This trigger is important because it provides both the basis and the timing for the primary user obligation – benefit sharing.

4.2.3.1 Timing of “benefits arising”

In developing the benefits-arising trigger, the critical question is “When and how do ABS benefits arise?” This question can be difficult, both theoretically and practically. Theoretically speaking, the creation of a benefit happens in many incremental steps, from the creation of data through the marketing of a product. An analysis of the biochemical or genetic properties of a species, for example, is determined through a number of different texts and processes. While these activities are ongoing, users (whether academic researchers or commercial entities) have an interest in protecting their data, so that it can be analyzed and presented or used as an integrated whole. At the same time, source countries have a strong interest in having a share in this information.

Many kinds of benefits (data, processes, formulas, etc.) are protected by institutional secrecy – supported by laws affording privacy, freedom from unwarranted search, and the right to protect “trade secrets” even in documents which they are required by law to file. In some cases, the existence of a benefit simply cannot be externally discovered. In addition, it may not be possible for a source country or other external entity to discern the linkage between a known benefit (a new product) and the ingredients and processes by which it was created or is manufactured.

In general, the most effective approach to this question is to focus on determining when genetic-resource utilization activities result in capture of the “actual or potential value.” This will occur in commercial development when a commercially valuable commodity is created (whether a product on the market or an IPR or other marketable right). In non-commercial development, this could be defined as the point at which the research, analysis, cataloguing or other activity is completed and ready for publication.278 At this point, where a benefit exists, it will be possible to rationally determine the amount or nature of the benefit-sharing obligation.

4.2.3.2 Operation of the benefit trigger

Functionally, it is important to remember the role of the “benefits-arising” trigger. It triggers the statutory/CBD obligation to share benefits, but it does not control the sharing of benefits. This distinction is important for purposes of “user-side” legislation – the law must be able to answer the question “Have benefits arisen from the utilization?” as part of the determination of the user's responsibilities, especially in cases where there is no existing ABS contract. Even in provider-side measures, the sharing of benefits will often happen at some time other than the dates on which the benefits arise. In the best cases, both the date and the nature of such sharing will be specifically addressed not only in provider-side legislation but also in the mutually agreed terms that document the ABS relationship. Very often if there is an ABS contract, benefits will be liquidated (that is, the parties agree on a specific sum that will constitute the benefit share) and paid in advance, before the benefits arise, in the form of “milestone payments” or other contractual forms.279

The role of “benefits arising” is tied to the rights of the government, source country or other provider. When all three triggers are “triggered” then it is legally possible to ask the user the key question – Have benefits been shared? There are usually three possible answers:

Where he gives answer (i), there may be no further legal question. Answer (ii) may give rise to questions about whether the sharing was “equitable” (discussed in Chapter 5) and answer (iii) may trigger other mechanisms for enforcing the user-side legislation and for enabling the source country to obtain compliance with its legislation. In all three cases the user legislation must be sufficiently clear to allow courts and others to review these answers.

4.3 Applying the triggers – the CBD obligations to share benefits and research results

Functionally, the three triggers (or other provisions of an ABS Contract binding the user) all lead to a key event – the user's sharing, “in a fair and equitable way, the results of research and development and the benefits arising from the commercial and other utilization of genetic resources.”280 It is hoped that these responsibilities will be addressed directly in mutually agreed terms developed by the user and source country or other source. The fact is, however, that this will not always happen. Consequently, user-side measures must also consider two other purposes:

In this section, we briefly consider the obligations to share the benefits arising from utilization subject to mutually agreed terms governing that benefit sharing; and some implications of the obligation to share research results.

4.3.1 Source-country agreement to benefit-sharing terms

In ABS discussions, one key fact is frequently overlooked: Article 15 provides for two separate MAT requirements – one for access (paralleling the PIC requirements), and another for benefit sharing.281 The inclusion of a second MAT process seems to indicate that simply sending some “benefit” to a source country is not enough – the benefit must be shared in accordance with provisions that are agreed by both sides. An official mechanism is needed for determining the reasonable expectations of the source country, and setting a basic standard of “equity,” where the user has not obtained PIC/MAT or where the ABS contract is deemed inequitable.

It is useful to recall that, in the actual benefit-sharing process, different types of benefits occur at different stages of resource utilization. For example, during specimen collection and identification, basic benefits (the collection and labeling of samples for study) already arise. Benefit sharing at this level is usually reflected by a contractual requirement that the bio-prospector provide the source country “reference samples” – duplicates of all specimens collected. At this point in the ABS process, the contribution of the genetic resources to the benefit obtained is very high. Hence, source countries usually expect an equal share – a duplicate or reference sample. At later stages of ABS, however, even though the source country's contribution to the result is less, the kinds of intangible and informational benefits that arise cannot be divided – one either obtains the information or not. Thus the source country's “share” in this kind of benefit is probably the entire benefit. This in turn raises questions of whether his use of that benefit may be restricted, and what those restrictions may be, and other potential legal controversies (as described in the next section).

In addition, the second MAT, specifically focused on benefit sharing, emphasizes that mutual agreement on benefit sharing may be required in the cases where there was no initial ABS contract at the time of “access,” tying into the problems of applying source country law to persons in the user country.

4.3.2 Sharing research results

The obligation to share research results has not yet been discussed in sufficient legal detail, although it has potentially far-reaching consequences for both the user and the source country or community. Both Article 15.7 and the Bonn Guidelines recognize that research results are a benefit to be shared. One problem with this type of sharing, however (further discussed in chapter 5), relates to the user's interest in exclusivity of the information he obtains. Exclusivity or complete confidentiality is often a primary value of the resource at this stage of R&D. A researcher forced to share preliminary results loses the trade-secret protection of those results, and may lose the ability to generate commercial benefits. Conversely, a researcher who publishes results (genetic sequences, biochemical formulas and other analytical results) non-commercially without the permission of the source country may have essentially eliminated the source country's ability to obtain any commercial benefit from those genetic resources, since users can use the published information, without coming to the source country.

A right to share in “the results of research and development,” if unequivocal, could mean that the source country has a right to all data (preliminary and analyzed), whether public or not. This is not a small matter. Such a right could enable a much greater ability of developing countries to participate in technical industries and even in global commerce involving the use of genetic resources. In some ways, right to such information is significantly more valuable than the right to a share of the user's financial benefits from a development perspective. Where a new discovery of a particular chemical component is kept secret, it has value as a discovery which can be sold or transferred to another entity. Once the compound and its properties are known, however, the would-be buyer will have no reason to continue to deal with the discoverer.

Research and development results are thus most valuable when they are “closely held” (known only to a few). Even a non-commercial publication of these results could seriously diminish their value as a potential source of commercial or exclusive benefits. On one hand, it is inequitable to require the researcher to completely devalue his results (and his ability to obtain appropriate return on his efforts) by sharing them in an unrestricted way with the source country. On the other, it may be inequitable to allow him to dispense information (research results) of potential commercial value in a way that prevents the source country from obtaining any share in future benefits derived.282 The sharing of benefits must strike a balance or find a compromise between these various needs.

These dilemmas emphasize the importance of including a clear benefit-sharing obligation in user-side measures, as a “background” law that can prevent inappropriate uses of this type by users who are not acting on the basis of MAT. A user-side mechanism to ensure benefit sharing can enable such balancing while closing the potential loopholes.283

Particular mechanisms could cover a broad range, and may in some cases be complex. One approach would define the researcher's benefit-sharing obligation in terms of a reasonable return on the value of the information. This definition would still allow information results to be used by other companies. A different mechanism would require other users of the data to share benefits with the source country, even though they did not actually contact the source country or obtain physical material in their research and development processes. A third – the use of diplomatic communication between the governments – may be too difficult and time-consuming to be considered as a national measure, but may be applied via an informal international mechanism (between National Focal Points or Competent Authorities from the two countries).284 As further discussed in Chapter 6, none of these options would be easy, but some mechanism or approach to these issues seems essential.

4.4 Identifying an end point for the benefit-sharing obligation

One critical issue that has come up only obliquely is the question of when the benefit-sharing obligation ends. This is a difficult issue, both politically and technically. To the genetic-resource user, the value of the resources will diminish greatly if it is linked to an eternal obligation to make payments to the source country, or if there are permanent restrictions on his use of the products and discoveries that arise from that use. The terminus of the benefit-sharing obligation has been indirectly addressed in three types of discussions: ABS contractual responsibilities, transfers of genetic resources and research results, and the application of ABS to “derivatives” of genetic resources.

4.4.1 Fulfillment of the ABS contract

Like any other kind of contract, a well drafted ABS contract will provide clear indications of when and how the user will complete or fulfill his benefit-sharing responsibilities. To date, there has not been significant experience with benefit-sharing agreements; and it is not clear how they will terminate, or what contractual practices will be most appropriate.

One fact is clear, however – these contracts may be very long-lived. Invention and development in the field of genetic resources require a long lead time. This may imply the need for a similarly long duration of the contractual obligation. Since 1992, few ABS contracts have actually produced any payments based on “benefits arising.” This suggests that source countries may prefer “liquidated benefits” clauses – that is, developing a specific benefit-sharing amount based on a pre-estimate of (i) the chance of benefits arising, (ii) the possible value of such benefits, and (iii) the “time value” of getting a smaller payment sooner, rather than waiting for a possibly larger payment later. This approach is based on averages. As to resources that do not eventually produce a benefit, the source country may receive a larger payment per resource. For those that eventually do produce valuable results, the user may pay less per resource. The important lesson is that the ABS contract should ideally clarify when and how the benefit-sharing obligation will be concluded.

4.4.2 Transfers of genetic resources to third parties

An important issue at the heart of many current ABS concerns is the user's subsequent transfer of the genetic resources themselves and/or of the research results (information) obtained. From the source country's perspective, a transfer of genetic resources may effectively end the benefit-sharing relationship, where the original collector is the only party known to the source country, unless some control or oversight measure exists. On one hand, users, researchers, collections, taxonomists and even middlemen feel that they have a right to transfer materials which are under their control, and to make a profit or other benefit out of the sale or other transfer. Users who obtain materials from such persons and entities often assume that, since they did not directly collect the resources in the source country, no benefit-sharing responsibilities apply.285 A similar view applies to foreign-origin biological materials that have been growing in the user country for many generations. The user's failure to get permission from the source country for the use of these materials may seem to the user to be a minor omission at most.

Legally, however, it would create an enormous loophole in the ABS system to decide that a user has no benefit-sharing obligations unless he collected the genetic resources directly in the source country. Any non-user collector could acquire samples and transport them out of the source country or cultivate a subsequent generation before selling them or passing them on to a user, to escape benefit-sharing obligations. The fear that users are commercializing products through such perceived loopholes is one of the reasons that source countries have sometimes imposed strict limitations on bioprospecting and other research activities. The wording of article 15.7 does not enable these loopholes since it talks about sharing “benefits arising” and does not limit that obligation to a specific group of contractual relationships.

The “utilization focus” may offer one solution to this issue. It would base the sharing obligation on whether the activity of the transferee (third party) is a “utilization of genetic resources” (as discussed in 4.2.2). If so, his activity triggers benefit-sharing responsibilities, even if he has not been in the source country or touched the original biological material. This approach, however, presupposes clear legislation in the user country. It also cannot be reasonably applied, unless the law determines a reasonable and well-defined end point for the benefit-sharing obligation.

4.4.3 Application of ABS obligations to “derivatives” of genetic resources

The term “derivative” is not used or defined anywhere in the CBD. Nevertheless, the question of how ABS should apply to derivatives286 has become one of the most contentious issues relating to the further development of the international regime. In ABS discussions, “derivatives” is perceived in several different ways:

This conceptual confusion means that people with different understandings are using this term in negotiations, as if it were clear and defined. Consequently, discussions are at “cross purposes” (non-communicative and unlikely to result in a shared understanding and agreement).

At the substantive level, the whole discussion of derivatives stems from a static understanding of the term genetic resources. The use of a non-static approach (see options iii and iv, in 4.2.1) would essentially eliminate the need for a derivatives discussion, since each use, whether direct or through another interim product, would be separately evaluated as a possible “utilization of genetic resources.” If the Parties ultimately decide to utilize a more static definition, then the derivatives question must be fully resolved, beginning with a clear and shared definition of “derivative.”


223 Generally reckoned to be the US, Japan, the countries of Western Europe, India and Australia.

224 See, Hendrickx et al., 1993; and Glowka, 1998 assumes this without stating it.

225 Discussed in Young, 2006b, at 17.

226 For another discussion of the concepts “genetic resources” and “utilization of genetic resources”, see Tvedt, 2006.

227 Even in carefully negotiated international legal instruments, it is frequently necessary to engage in the process of legislative interpretation – to study the language, content and intention of the instrument to obtain a legally specific understanding of the meaning and intent of particular provisions. In addressing this issue, the authors have undertaken a legal analysis in accordance with the rules promulgated by the Vienna Convention on the Law of Treaties, 1969, regarding the manner in which international binding instruments should be interpreted, where there are issues of unclarity or insufficient understanding, or where the treaty is to be applied to a situation or question not directly answered in the language of the treaty.

To ensure that the document is readable and accessible to the target audience, however, we have summarized our longer legalistic analysis, which will appear at some point in a legal journal. In the meantime, this footnote sets forth the Vienna Convention's eight components of interpretation process, in order of their legal effect:

The order of precedence is clearly set by Vienna Convention at Art. 32. If the first method (linguistic analysis) yields a clear interpretation which answers all relevant legal questions, then the remaining steps are not needed, however, as noted below, they may still be used to confirm the meaning that has been determined by the interpretation.

228 See, e.g., the Intergovernmental Commission on Genetic Resources, Traditional Knowledge and Folklore (IGC), the discussions in the WIPO Standing Committee on Law of the Patents (SCP), in FAO and the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA) and in the TRIPS Council of the WTO. These four processes have generally attempted to utilize (i.e., to wait for clarification of) the CBD definitions and concepts. A fifth international process, focused on marine genetic resources, is the deliberations of the UN Intergovernmental Consultative Process on Oceans and the Law of the Sea (UNICPOLOS). In this process, however, the meaning and application of CBD terminology has not been used, so that much of the “marine genetic resources” discussion has focused on applying limits on the taking of samples – a “sustainable use” matter – rather than on actual issues of ABS and the CBD's third objective. See report of the 8th Meeting, at http://www.iisd.ca/vol25/enb2543e.html.

229 A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. Vienna Convention on the Law of Treaties, 1969, Art. 31.1. Where a word is not defined in a treaty, it is given its “standard definition” – a process that can be problematic where there are many “original versions” of the treaty, in different languages.

230 Vienna Convention on the Law of Treaties, 1969, Article 31.4, reads: “4. A special meaning shall be given to a term if it is established that the parties so intended.”

231 CBD Article 2 (definitions are unnumbered, but appear in alphabetical order in each version. They are therefore in a different order in each of the official texts).

232 The problem of developing agreed scientific and technical standards to be applied by all countries is not uncommon in international technical negotiations. Wherever the international community seeks to create a single scientific definition or concept that can be applied in all areas or in transboundary relationships, it is necessary to address both the needs of the scientific community that will apply the standard, the governments that will adopt it, and the regulated communities (industry and the private sector) that will be governed by it. An example of this level of detail and specificity is found in the Cartagena Protocol on Biosafety, where negotiations of technical issues were long and difficult, and implementation of the resulting standard has posed additional challenges.

233 A standard work on this subject is Watson, J., 1987, Molecular Biology of the Gene, The Benjamin/Cummings Publishing Company (4th ed.). Seizo Sumida, for example, notes that it remains the commonly held scientific perception: “I am sure, as a biochemist, that the functional units of heredity are DNA and RNA, not protein, if molecular biology has not changed the definition since my time as a researcher.” (Personal communication, 9 Mar 2007.)

234 The genetic mapping resulted in far fewer possible combinations than expected, leading to the conclusion that DNA may not be the “building blocks of life,” but rather in the nature of a record or library of the specimen's cellular information. Commoner, 2002.

235 Or in the most extreme case, a particular specimen of extraordinary characteristics, such as a winning race-horse or other desirable breeding animal.

236 Note, for example, the African Model Act, which would apply benefit-sharing requirements to all uses of biological resources.

237 In Article 31.3, the Vienna Convention on the Law of Treaties specifies as a principle for the interpretation that:

    3. There shall be taken into account, together with the context:

    (a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its
         provisions;

    (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its
         interpretation;

    (c) any relevant rules of international law applicable in the relations between the parties.

238 In addition to the instruments mentioned in this section, we have reviewed all national laws and regional instruments contained in the CHM's ABS database as of 1 September 2006, as well as the outputs and deliberations of the post-CBD processes considering questions of genetic resource issues before the World Intellectual Property Organization (particularly through its Intergovernmental Committee on Genetic Resources, Traditional Knowledge and Folklore) and the World Trade Organization.

239 International Undertaking on Plant Genetic Resources for Food and Agriculture (1983), adopted as FAO Conference Resolution 8/83. As a non-binding instrument, the Undertaking did not have Parties, but Countries (called “Adherents”) submitted documents indicating that they would adhere to the undertaking.

240 International Treaty on Plant Genetic Resources for Food and Agriculture (Rome, 2001). The Treaty was approved under Article XIV of the FAO Constitution.

241 The term “genetic resources” was not used anywhere in the Undertaking in a way that could be applied to a specific item or category of items that could be devisable or excludable in any way. Instead, it was a basis for the primary “requirements” of the Undertaking, to wit: identification of plant genetic resources, and especially those that are “in danger of extinction” (Undertaking, at Article 3, directly foreshadowing CBD Article 7), in-situ and ex-situ conservation (Undertaking, at Article 4, foreshadowing CBD Articles 8 and 9), capacity building (Undertaking Article 6, covering capacity building, technology transfer, international technical assistance and financial support, foreshadowing CBD Articles 12, 13, 17 and 18); and networking and data-sharing (Undertaking, at Article 7, foreshadowing CBD Article 17, and the CHM). The Undertaking's provisions for access do not apply to “genetic resources,” but only to samples of particular varieties, and in fact call for them to be provided “free of charge, on the basis of mutual exchange or on mutually agreed terms.” (Undertaking at Article 5.) These obligations continue to be the base obligations under the International Treaty, supplemented by the MS provisions. The overwhelming similarity between the concept of “plant genetic resources” in the IT and that of “biodiversity” within the CBD is discussed in Young, 2006b.

242 Hiemstra et al., 2006 and Tvedt et al., 2007.

243 See Glowka et al.; Hendrickx et al., 1993. State practice is one important element in customary law. Statutes of the International Court of Justice, Article 38.1 b.

244 Vienna Convention on the Law of Treaties, 1969, Article 31.3 (b).

245 See, for example, Cabrera Medaglia and López Silva, 2007, Book 1 in this Series.

246 For example, the proposed US measures on benefit sharing with regard to National Parks would apply to “research projects involving research specimens collected from units of the NPS that subsequently resulted in useful discoveries or inventions with some valuable commercial application.” US NPS, 2006, Draft EIS, presented as Alternative B. Malawi's law applies only to “plant germplasm” – a very limited category that appears to be completely “physical” (not informational) in nature. (MALAWI: Environmental Management Act, Art. 36). The African Model Act, by contrast, would apply benefit-sharing concepts to all biological resources. African Union Model Legislation for the Protection of the Right of Local Communities, Farmers and Breeders, and for the Regulation of Access to Biological Resources (formally endorsed by all African Union States, but at this writing, not adopted in whole or in part by any). A more controlled version of this approach is found in the BioTrade discussions and first draft guidelines, which focus very broadly on the involvement of “natural ingredients” or “biological resources.”

247 This approach is taken in a large majority of the legislative measures that are contained in the ABS database.

248 For example, the African Union Model Legislation for the Protection of the Right of Local Communities, Farmers and Breeders, and for the Regulation of Access to Biological Resources, would apply ABS to all “biological resources.” Bhutan takes the approach of defining genetic resources indirectly – by defining which biological resources are not genetic resources: “This Act shall not apply... [w]here the biological material is used as a commodity for the purpose of direct use or consumption as determined by the Competent Authority, based on the processes and end use of genetic resources, in accordance with the provisions of the Act.” Biodiversity Act of Bhutan, art 4.a. Norway's draft Act avoids the term “genetic resources” by focusing only on the issue of “genetic material.”

249 COSTA RICA: Normas Generales para el Acceso, Art. 1, et passim.

250 The entire definition reads: “information of genetic origin, contained in samples of all or part of a plant, fungal, microbial or animal species, in the form of molecules and substances originating in the metabolism of these living beings, and in extracts obtained from in-situ conditions, including domesticated, or kept in ex-situ collections, if collected from in-situ conditions, within the Brazilian territory, on the continental shelf or in the exclusive economic zone.” BRAZIL: Provisional Act N°2 (186-16, 23 August 2001) at Art. 7 (translation provided by Brazil to the CBD). The rest of the law, however, discusses “genetic resources” as physical material.

251 Article 15, 16 and 19.2, as well as an integrating reference in Article 9(b). There is a possible inferred reference to genetic resources in Article 17.2's provisions regarding repatriation of information. The only other appearances of the term are in the third objective (Article 1), and in the definitions of genetic resources and in-situ conditions.

252 See CBD Art. 1 (“benefits arising out of the utilization of genetic resources”); CBD Art. 15.7 (“the results of research and development and the benefits arising from the commercial and other utilization of genetic resources”); and see CBD Art. 16.3 (“which makes use of those resources”) and 19.2 (“arising from biotechnologies based upon genetic resources”).

253 Efforts to distinguish non-commercial research from “utilization of genetic resources” (see, e.g., Fernandez-Ugalde, 2005) would have to take into account this clause which suggests that research was originally believed to be within the scope of “utilization” for this purpose.

254 If utilization of a genetic resource refers to any activity which uses a specimen which contains or was derived from biological material that contains DNA – it might include blowing one's nose on a cotton handkerchief. Clearly, the utilization of genetic resources means something else.

255 The basic problems with the “intention” element of the “genetic resource” concept, as it is currently used, are discussed in many different sources, including Cabrera Medaglia et al., 2007; Young, 2006b. Intention is an element of every existing definition of “genetic resources,” and of every use of an alternative term (“research samples,” “genetic heritage,” etc.) except for those systems which ignore the entire issue and apply ABS to all biological resources (creating a broader problem, as set forth in 4.3.1, below). When controlled at the access level, ABS faces the problem that the difference between genetic resources and other resources is determined by the intention of the holder – something that is not knowable at the time of collection. Even in the laboratory, there may be a distinction between “biological research” and “genetic research,” yet arguably only the latter is subject to ABS provisions.

256 At this writing, the CBD has authorized, but not yet received the report on a further examination of the concept of “certification of source, origin or legal provenance of genetic resources” by a “group of experts.” CBD-COP Decision VIII-4 (UNEP/CBD/COP/8/4) at Part C, para 1. The Group was not asked to come to a conclusion regarding such certification, but to consider the options and impacts. While there remains a possibility that the COP will simply adopt a form certificate without directly linking it to any specific performance or other aspect of the new regime, there is still hope that the certificate will develop as an organic part of the regime, addressing the specific points at which the regime (as ultimately developed) will require documentation.

257 CBD Article 15.7, calls for equitable sharing of “the results of research and development and the benefits arising from the commercial and other utilization of genetic resources.” See also the more general statement in Article 1 (the third objective of the CBD) also based on the “benefits arising out of the utilization of genetic resources.”

258 CBD Article 15.2, emphasis added.

259 It appears unnecessary to try to distinguish between “research results” and “non-commercial benefits” since the two are treated the same under Article 15.7.

260 This issue is discussed in greater detail in Bhatti et al., 2007.

261 For example, most countries' laws state that a government official may not participate in official decisions that affect any company in which he holds a financial interest. Complex requirements may be imposed to ensure that he is not merely masking his interest (deeding it to his children or to a family-owned corporation) in order to take governmental decisions that promote his own private interest.

262 See, Mgbeoji, 2006. This question is based on an actual case.

263 Bonn Guidelines, adopted by CBD-COP Decision VII-24.A, Appendix II.

264 As noted in footnote 247, supra, the African Union Model Legislation for the Protection of the Right of Local Communities, Farmers and Breeders, and for the Regulation of Access to Biological Resources (formally endorsed by all African Union States) avoids the genetic resource definition problem by applying its benefit-sharing provisions to all “biological resources.” Art. 3, et seq. According to some sources, if this approach were applied to the international ABS regime, it would enable northern countries to bring actions against southern developing countries that allow their citizens to engage in commercial trade in roses, for example. Personal communication, Leonard Hirsch.

265 Nearly all food and a large amount of furniture, clothing, ornamental items, and industrial commodities are based on components of biological origin. Consequently, in addition to the delays and impediments of an added set of bureaucratic requirements, this definition might also create delays through the enormous number of such requirements to be processed.

266 A standard for recognizing specific kinds of prepared samples could be developed, as under CITES, for example, which provides certain exclusions in the case of “preserved, dried or embedded museum specimens, and live plant material which carry a label issued or approved by” the appropriate government authority. CITES, Article VII. 6.

267 See, e.g., Mgbeoji, 2006, “Analysis of Four Claims...”

268 Pythoud (2005) raises a question if “... there [is] a specific type of use of genetic resources that might require additional international instruments to support implementation of CBD Art. 15?”

269 The “inventory” is a primary requirement of the CBD (Article 7). Although this requirement has been incompletely addressed in many countries, it could ultimately form a potential basis of utilization-based benefit-sharing methodologies under the international regime, as well as risk assessments for introduction of LMOs (under the Cartagena Protocol) and controls on the introduction of alien species that might threaten ecosystems (Article 8h).

270 ITPGRFA Article 3 Scope; and see Article 10.2 Objective of the MS.

271 The ITPGRFA, at Article 12.3(a) provides that “Access shall be provided solely for the purpose of utilization and conservation for research, breeding and training for food and agriculture, provided that such purpose does not include chemical, pharmaceutical and/or other non-food/feed industrial uses.”

272 See CBD-COP Decision VI/6.

273 See Hiemstra et al., 2006; and Tvedt et al., 2007.

274 The right to determine the breeding use of individual animals that one owns is a basic right of the owner of the animal in all or nearly all countries. The commercial system for animal breeding at this level has been documented for over 1000 years. (See, e.g., Bennet, D., 2004, “The Origin and Relationships of the Mustang, Barb, and Arabian Horse” in The Spanish Mustang, introduction; and Lewis, B. “Egyptian Arabians, The Mystique Unfolded” in Arabian Horses of the Pyramids (http://www.pyramidarabians.com/news/articles/arabianmystique.html), both of which document evidence of controlled animal pedigrees dating back more than 2 millennia, and formal written records as early as 1300 AD.

275 The Hiemstra et al. study discloses a number of differences between use of plant genetic resources and use of farm animal genetic resources suggesting that the ITPGRFA approach would not be productive in the animal sector.

276 The 11th, 12th, and 13th CITES COPs all noted concerns that veterinary specimens (blood samples) would be used for commercial development. For this reason the CITES COP has so far refused to adopt special expedited or non-document-required transport of these specimens.

277 One example of this in the environmental area is CITES, where a one page amendment, adopted in 1983, is still not in force (having as of this writing 46 of the 54 ratifications necessary). If it ever does enter into force, the amendment would only be binding on those countries that have ratified it, and any countries that become Parties after the amendment enters into force. This fact will create a bifurcated Convention until all Parties have ratified.

278 As noted in the case of the Tricolor Frog, however, publication of such data, even where the publication is not compensated and completely unconnected to any commercial objective, can have the impact of eliminating the value of the data, from the perspective of the source country. See, Mgbeoji, 2006.

279 Described in Cabrera and López 2007. See also, Rosenthal et al., at 7. “Drug discovery is a high-risk science. That is a very small proportion of research endeavors result in a major drug that will yield financial benefits to the research organizations and their partners.... By integrating research and development toward [the] objectives [of (i) pharmaceutical and agricultural discovery, (ii) scientific and economic development and (iii) conservation] from the outset, the ICBG aims to make substantial and incremental contributions ... without pinning all hopes for success on the relatively low probability of producing a major pharmaceutical or agricultural product.”

280 CBD Art. 15.7.

281 CBD Arts. 15.4 and 15.7. While the two MAT processes may be negotiated together in some cases, this may not be possible in all situations, and given that many benefits arise “beyond access” it is possible that the user country might be responsible to ensure that this second negotiation has occurred.

282 See, e.g., the Tricolor frog case, described in Mgbeoji, 2006. The researcher who published research results about the frog's unique poisons did not seek or receive any compensation or commercial benefit from that research. On the basis of the published data, however, multinational corporations filed 17 different patents for new synthetic compounds based on the researcher's results. One has since developed and patented a product or pre-product. That company had no contact with the source country or any part of any Tricolor frog.

283 Discussions of the possibility of a “research exception” normally are inconclusive, owing to the possibility that research will result in commercially usable results. However, a few countries have adopted generic “research exceptions.” See, e.g., BULGARIA: Biological Diversity Act: Art. 66.4 “Gratuitous provision of genetic resources may be agreed where the said resources are intended for non-commercial purposes: scientific research, education, conservation of biological diversity, or public health benefits.”

284 National law often requires that contact be made through highest level officials rather than directly between ABS focal points.

285 Henkel, Thomas, “A Perspective from Pharmaceutical Industry,” Presentation to High-level Experts Meeting – Addressing the Access and Benefit-Sharing (ABS) Challenges in the Context of the Convention on Biological Diversity (Tokyo, 8–9 February 2007) and other remarks in that meeting.

286 See for example Fowler et al., 2004; and Chambers, 2003, 318–320.

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