3.01 Conduct refers to the pattern of behaviour that enterprise follows in adapting or adjusting to an ever changing marketplace. Conduct depends on the structure of an industry, e.g. the nature and number of buyers and sellers. With respect to the biotech sector two aspects of conduct will be examined:

(a) the bilateral relationships between the five prime biotech agents described under Structure (above);

(b) the role of intellectual property rights in the conduct of these agents.

a) Bilateral Relations

3.02 Given five prime agents described under Structure (above) there are potentially 15 sets of bilateral relationships (Figure 2). This includes relations between peers, e.g., between universities or between levels of government such as federal-provincial arrangements. It excludes, however, multilateral relationships between more than three or more agents, e.g., joint projects between universities, newly established biotech firms and the public sector. At the extreme, such multilateral relations would constitute the biotech section of a national system of innovation that will be examined separately in the next paper in this series: Part III – Performance, Preferred & Probable Futures.

3.03 Five of the fifteen bilateral relations have, to one degree or another, been formally examined in the literature. Relations between innovators and newly established biotech firms have, at least in part, been examined by Zucker et al (1998) and by Audretsch and Stephan (1999). Three of the 15 have been examined by Auroa and Gambardella (1990) specifically the relations between universities and large established firms, between newly established biotech firms and large companies, and, between large firms. Relations between universities and the public sector, in the case of the agrofood sub-sector of biotechnology have been examined (in part) by Wolf and Zilberman (1998). No formal studies were found regarding the remaining 10 bilateral relations between the five prime agents of the biotech sector (Exhibit 2).

Figure 2

Biotechnology Bilateral Agent Matrix

AGENT	Innovator (I)	University (U)	New Biotech Firm (NBF)	Large Firm (LF)	Public Sector (PS)
Innovator	I/I	I/U	I/NBF *	I/LF	I/PS
University	-	U/U	U/NBF	U/LF **	U/PS ***
New Biotech Firm	-	-	NBF/NBF	NBF/LF **	NBF/PS
Large Firm	-	-	-	LF/LF **	LF/PS
Public Sector	-	-	-	-	PS/PS

* Zucker et al (1998); Audretsch and Stephan 1999

** Auroa and Gambardella 1990

*** Wolf and Zilberman 1998

3.03 Zucker et al highlight the role of innovators (or ‘stars’) in the founding of new biotech firms (Zucker et al 1998). Audretsch and Stephan also focused on the role of academic innovators in founding new biotech firms emphasizing the ‘appropriation’ and commercialization of knowledge developed during an academic career (Audretsch and Stephan 1999).

3.04 Auroa and Gambardella focused on the complementary strengths of universities, new biotech firms and large established companies. New biotech firms have ‘lab bench’ knowledge or ‘know-how’ as well as specific new biotech products that are prized by large companies. On the other hand, the large firms have the knowledge and ability to scale up innovations of the new firms as well as the experience, expertise and resources to push such discoveries through the regulatory and testing processes required by the public sector. Universities with a focus on basic research are supported by larger firms in order to interact with university scientists, gain familiarity with basic research and, potentially, to have first option on the commercialization of any discoveries. Four types of external links by the large firms were identified by Auroa and Gambardella: (i) research and/or joint development agreements with other firms (peer-to-peer); (ii) research agreements with universities; (iii) investments in new biotech firms; and, (iv) acquisition of new firms (Auroa and Gambardella 1990).

3.05 Wolf and Zilberman begin by noting that: “The most important agricultural biotechnology innovations originated in universities, were transferred to start-up companies, and were then absorbed by global corporations (Wolf and Zilberman 1999, p. 37). They go on to argue that the university and public sector have a crucial role to play in fostering a decentralized and differentiated system of innovation outside the direct control of the large firms in order to maintain the potential for “radical innovation”.

b) Intellectual Property Index

3.06 The biotech sector was founded on the creation of new knowledge of both intrinsic and instrumental value. But how can such new knowledge be converted into economic property that can be bought and sold and protected from theft and/or trespass? This is a critical question for biotechnology affecting the evolving structure of the sector and the conduct of firms as well as relations between nation states (Kerr et al 1999; Lesser 1998).

i - Economic Evolution of Intellectual Property

3.07 Knowledge is abstract. It is not like a car or a house which can be locked and secured against theft. In economic terms, knowledge is non-excludable. Furthermore, if someone gains knowledge it does not reduce that available to others. In economic terms, knowledge is non-rivalrous. Essentially there are two ways of turning knowledge into economic property. One is secrecy, i.e., hiding it and restricting its availability. The second is intellectual property law, including copyright, patent, registered industrial design and trademark legislation and international conventions. As will be seen below, with respect to biotechnology, intellectual property rights provide the legal foundation for the industrial organization of the sector.

3.08 Secrecy is used to protect two types of knowledge: trade secrets and “know-how”. Trade secrets such as the formula for Coca-Cola are protected by private means. In the case of electronic data this includes encryption and “password” technologies. Know-how refers to knowing how to do things, e.g. how to organize a construction project. Know-how is held by employees. Generally it is protected by contract legally binding an employee to secrecy. When a corporation or government finds its secrets have been betrayed legal recourse is available through the courts.

3.09 Formal intellectual property rights (IPRs), such as copyrights, patents, registered industrial designs and trademarks, are created by the State as a protection of, and incentive to, creativity which otherwise could be used freely by others. In economic terms, without legislation knowledge suffers from a free-rider problem. In return, the State expects creators to make their work available and that a market will be created in which such work can be bought and sold. But while the State wishes to encourage creativity, it does not want to foster harmful market power. Accordingly, the State builds in limitations to the rights granted to the creator. Such limitations embrace both time and space. Rights are granted for a fixed period of time, and protect only the fixation of creativity in material form. Eventually, therefore, intellectual property enters what is known as the public domain where it may be used by everyone without charge or limitation.

3.10 A distinction can be made between the four principal types of IPR based on the matrix on which creativity is impressed. In copyright, expression is fixed in a material matrix that has no utilitarian value, e.g., a book makes a second rate door jam. Industrial design impresses aesthetic value onto a matrix that is useful in its own right – a decorated coffee cup remains a coffee cup. A patent impresses utilitarian function on the matrix itself – an electromagnetic door jam is a new type of door jam. Trademarks embody the ‘identity’ of a company, business or government. The matrix, like copyright, has no intrinsic value but unlike copyright, a trademark impresses not artistic expression but rather the ‘good will’ earned by a business or government department or agency from citizens, clients, customers and the general public. Also unlike other forms of intellectual property rights, trademarks are, potentially, capable of being extended without time limit.

3.11 The utilitarian or commercial nature of industrial designs, patents and trademarks place them in a legal category called ‘industrial property’. The peculiar nature of such property was the subject of the first international intellectual property rights convention, the Paris Convention for the Protection of Industrial Property of March 20, 1883 (Chartrand 2001). More recent international conventions also formally recognize and protect trade secrets and ‘know-how’, e.g., the Common Industrial Property Regime of the Andean Community and the Agreement on Trade-Related Intellectual Property and TRIPS (Chartrand 2001). The non-utilitarian nature of copyright, by contrast, is recognized in a separate set of international conventions that began with the Berne Convention for the Protection of Literary and Artistic Works in 1886 (Chartrand 1999).

3.12 Such international conventions, however, cover significant differences in the intellectual property rights granted by individual nation states reflecting their distinct histories and legal systems, e.g., Anglo-American Common Law versus the European Civil Code tradition. Thus each nation state can create a distinct set of intellectual property rights quite different from other nations. This ability of nations to ‘tailor’ intellectual property regimes has significant implications for the future competitiveness of nations even under free trade (Paquet 1990). In fact, until conclusion of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and creation of the World Trade Organization in 1995, IPRs were not subject to formal international trade regulation or ‘harmonization’. Rather, they were subject to the milder constraint of ‘national treatment’ imposed by international conventions such as the Berne and Rome Copyright Conventions (Chartrand 1999). Accordingly, if a nation chooses to limit protection for its creators, then no greater protection is available to foreigners even though foreigners must be treated as if they were nationals.

3.13 From an economics perspective, intellectual property rights are State-created transaction costs for firms. In order to obtain access to new knowledge firms must negotiate and pay licensing or other ‘royalties’. The term ‘royalties’ points to the evolutionary nature of intellectual property particularly, and business law in general. As noted by John R. Commons in The Legal Foundations of Capitalism (1924) what is business law today in the Anglo-American tradition was once the internal rules and practices of guilds and monopolies created by Crown grants of industrial privilege. The process came to a head with the 1624 British Statute of Monopolies that abolished the power of the guilds. This was part of an evolutionary process whereby the Common Law courts progressively stripped the guilds, with one notable exception, of their monopoly powers and assumed responsibility for their regulation.

The next hundred years, until the Act of Settlement in 1700, was substantially the struggle of farmers and business men to become members of the Commonwealth, whereby they might have courts of law willing and able to convert their customary bargains into a common law of property and liberty. The court which abolished the power of the gilds began to take over the work of the gilds. Their private jurisdiction became a public jurisdiction. And the very customs which the gilds endeavored to enforce within their ranks became the customs which the courts enforced for the nation. The monopoly, the closed shop, and the private jurisdiction were gone, but the economics and ethics remained. Much later, in the modern commonwealth, other functions of the gilds, such as protection of the quality of the product and the qualifications of practitioners, have also been taken over by courts or legislatures (Commons 1924: 230).

3.14 The notable exception to the Statute of Monopolies of 1624 was the copyright monopoly maintained by the Stationners’ Company of London. It took another hundred years for this copyright monopoly to be revoked by the Statute of Queen Anne (the first modern copyright act) in 1710 (Chartrand 2000). This Act, as well as the patent provisions of the 1624 British Statute of Monopolies, (Scherer 1971, p. 381) served as the basis for Article I, Section 8 of the U.S. Constitution, the so-called ‘Intellectual Property Clause’:

The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

3.15 It was, however, in 18^th century British courts cases involving copyright that the legal concept of intangible property including business ‘goodwill’ became firmly established in the Anglo-American tradition. These decisions also affected evolution of patents and trademarks:

The similar principle has been worked out in the law of patents and trade secrets. A secret process or invention, not yet given to the public nor patented, remains by operation of common law, the exclusive property of the inventor, and his secret cannot be wrested from him by fraud or communicated to or used by others through breach of confidence. Yet “whenever the inventor permits the invention to pass beyond the legally defined limits of his exclusive possession, his right to it ceases and the right of all mankind to it begins.”

In other words, the old distinction between the possession of physical property and liberty of contract becomes the distinction between the behavior of those persons who are subject to command and obedience and the behavior of those persons who are subject only to persuasion or coercion. “Economy” is the exclusive holding for one's own use, according to one's own will, but the thing now held for one's own use is not a physical thing, the manuscript, nor even the printed book, nor the physical objects embodying an invention, but is the behavior of persons over whom the owner retains the power of command and obedience, since they are his employees, agents, friends, who are bound to obey his commands in their use of the manuscript, book, or secret process. (Commons 1924, pp. 281-2

3.16 Beyond the idiosyncratic legal evolution of intellectual property rights in the Anglo-American tradition, biotechnology presents distinct problems in obtaining intellectual property right protection. Biotechnological inventions fall into three categories. They are the processes for creation or modification of a living organism and biological material, the results of such processes, and the use of such results. Until the last generation, the concept of invention was generally limited to physics and chemistry because living organisms were thought outside the scope of technology, i.e., of direct human manipulation. However, with the ability to directly manipulate the hereditary characteristic of living things, the concept has been enlarged to cover biotechnological inventions. It is thus argued that if it is possible to control a biotechnological process and to describe it so that experts in the field can replicate it, then an invention has been made.

3.17 Nonetheless, inventors in the field of biotechnology initially faced specific problems when seeking protection. These problems did not exist, at least to the same degree, in other areas of technology. The first is the problem of whether there really is an invention rather than a discovery. If, for example, a microorganism is isolated by a sophisticated process, it may be argued that it is not an invention but a scientific discovery. The counter argument is that the isolation requires an important intervention using a highly sophisticated process that results in a solution of a technical problem (WIPO 2001). In the United States, the issue was resolved with a microorganism created by Chakrabarty that is able to absorb oil pollution from oceans and rivers. It was the subject of a landmark decision of the Supreme Court of the United States of America that accepted a microorganism was patentable. (Diamond v. Chakrabarty, 447 U.S. 303, [1980])

3.18 The second obstacle, which is more important, is that fact that many countries have express legislative provisions excluding certain categories of biotechnological inventions from patent protection or have yet to legislated rights required to protect them. Such restrictions and limitations vary significantly between countries thereby complicating the global development of biotechnology and the conduct of biotech firms. In addition, there appears to be significant confusion and uncertainty about the status of such rights which, in turn complicates the conduct of biotech firms. To demonstrate the problems, examples will be drawn from Canada, the European Union and the United States followed by a review of international intellectual property conventions of relevance to the biotech sector.

(ii) Canada Index

3.19 It is commonly believed that genes are not patentable in Canada. Thus in December 2001 the House of Commons Health Committee recommended against such patents. However,

“We have been patenting genes for years," said Peter Davies, chairman of the Patent Appeal Board, which is part of Industry Canada. “It's only a chemical compound.”… He noted that insulin, which is contained in the body of every person, was patented at the time of its discovery by Canadian scientists in 1922 (Bueckert 2002, A5).

3.20 Patenting of single-celled organisms, mainly bacteria or yeast cells, is permitted in Canada. However, the Government of Canada does not allow patents on higher and more complex life forms, for example, transgenic mice. In 1985 Harvard University applied for a Canadian patent on such a mouse but the application was turned down by the Commissioner of Patents. Recently, however, the Federal Court of Appeal in President and Fellows of Harvard College v. Commissioner of Patents (commonly known as “the Harvard mouse case.”) decided in favour of Harvard University. The Canadian government has appealed the decision to the Supreme Court of Canada. If this decision is upheld by the Supreme Court of Canada, there will be much broader protection of transgenic organisms in Canada. In particular, it appears that novel, non-obvious plant and animal varieties created by genetic engineering will be patentable. Although some protection is currently available for plant varieties under the Plant Breeders’ Rights Act, such a legal development will provide further and better protection for organisms which qualify. It should be noted, however, that the Plant Breeders' Rights Act c. 20, itself was not passed by Parliament until 1990 and Canada did not ratify the International Convention for the Protection of New Varieties of Plants until 1991 (more below).

3.21 In the Pioneer Hi-Bred case (1 S.C.R. 1623, affirming [1987] 3 F.C. 8) the Supreme Court of Canada affirmed a Federal Court of Appeal’s decision that a novel soy-bean variety created by cross-breeding was not adequately disclosed by the inventor so as to enable a person skilled in the art to reproduce it based on the knowledge of the art and the information contained within the patent application. The problem of ‘disclosing’ a biotech patent on plants and microorganisms was resolved with an amendment to the Canadian Patent Act in 1996 permitting the deposit of microorganisms. In September 1996 Canada also acceded to the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (more below).

3.22 The status of ‘human stem cell’ research remains unclear in Canada compared to the United States where it is severely restricted and in Britain where it is legally allowed (BBC March 1, 2002). Guidelines proposed by Canadian Institutes of Health Research (CIHR) on March 4, 2002 appear to place Canada somewhere between the two. It should be noted, however, that such guidelines do not have the effect of law.

3.23 A lack of case law as well as formal legislation, e.g., concerning stem cells, leaves biotech business in Canada unclear about their property rights and even the legality of their activities.

iii - The European Union Index

3.24 Article 53(b) of the European Patent Convention stipulates that European patents shall not be granted in respect of plant or animal varieties or essentially biological processes for the production of plants or animals (with the exception of microbiological processes and their products).

3.25 There are two reasons for this approach. Firstly, it was considered that granting such patents would create legal and administrative difficulties. Secondly, a special system of protection had been created in various countries with respect to plant varieties, and it was thought that this system should remain the only applicable one with respect to that category of inventions.

3.26 The special system of protection for plant varieties is different from patent protection in that it only concerns the marketing of propagating material (seed, etc.) but not the growing and marketing of plants themselves. The system of plant varieties rights is also different in respect of the conditions for protection and the protected acts. The special nature of this system is demonstrated by the fact that an international convention was concluded for the protection of new varieties of plants which is administered by a special organization, namely the International Union for the Protection of New Varieties of Plants (more below).

3.27 The exclusion of plant and animal varieties and essentially biological processes for the production of plants or animals is a feature existing in a number of national laws. EU countries with important biotechnology industries, however, do not expressly exclude certain types of biotechnological inventions from patenting (WIPO 2001).

3.28 Beyond formal legislation, regulations play an important role in the conduct of biotech firms. It is, for example, well known that European Union regulatory attitude differs dramatically from those in the U.S.

When it comes to agricultural biotechnology, public policies in the United States (US) and the European Union (EU) have been radically different. In the US, products of agricultural biotechnology have been extensively tested and marketed. In the EU, few biotechnology products have received regulatory approval while most have faced a de-facto moratorium. The tough regulatory stance of the EU towards agricultural biotechnology has typically been justified on the basis of public skepticism towards the technology and heightened concerns about food safety in the wake of the mad cow disease outbreak and other recent food scares. (Kalaitzandonakes 2000)

iv - The United States Index

3.29 The legal breakthrough facilitating the emergence of the modern American biotech industry was Diamond v. Chakrabarty in 1980 (see paragraph 3.18 above). Among other things this led to the U.S. Patent Office approving the patentability of Harvard mouse and higher life forms. However, the first explicit American biotech intellectual property rights were recognized in 1930 with passage of the Patents for Plants Act (35 U.S.C. § 161) which allowed “whoever invents or discovers and asexually reproduces any distinct and new variety of plant, including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state, may obtain a patent therefore, subject to the conditions and requirements of this title.”

3.30 This initial act was followed by the Plant Variety Protection Act of 1970 (7 U. S. C. §2321 et seq.) which extended patent-like protection to novel varieties of sexually reproduced plants (plants grown from seed). In effect, the PVPA extended patent-like protection to novel varieties of sexually reproduced plants (that is, plants grown from seed) which parallels the protection afforded asexually reproduced plant varieties (that is, varieties reproduced by propagation or grafting) under the Patents for Plants Act ( Chapter 15 of the Patent Act. See 35 U. S. C. §§161-164).

3.31 While the U.S., through legislation and case law, has extended biotechnology intellectual property rights further than any national jurisdiction, it too has restrictions and limitations that constrain biotech firms and development of the industry. Such restrictions tend to centre on the application of biotechnology to human beings, or more precisely to human cells. Thus for religious and moral reasons rather than scientific ones, the National Science Foundation will not fund any research involving human fetal tissue including stems cells derived from cloning of human cells.

3.32 Above national intellectual property rights and the refusal to recognize certain rights there is the umbrella of international trade agreements and intellectual property conventions. Essentially two international institutions are involved: the World Trade Organization and the World Intellectual Property Organization (WIPO). I will briefly review the origins and mandate of both organization and relevant biotechnology international instruments that they manage.

v – The World Trade Organization (WTO) Index

3.33 With creation of the World Trade Organization (WTO) in 1995 minimum international standards of intellectual property right protection were established. All applicant countries for membership in the WTO must sign all WTO agreements as a single package with a single signature - making it, in diplomatic terms, a “single undertaking”. The “TRIPS Agreement” (Agreement on Trade-Related Aspects of Intellectual Property Rights including Trade in Counterfeit Goods) is part of that single undertaking. Therefore it applies to all WTO members (as of January 2002, 144 countries were members of the WTO) http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm.

3.34 In summary:

In respect of each of the main areas of intellectual property covered by the TRIPS Agreement, the Agreement sets out the minimum standards of protection to be provided by each Member. Each of the main elements of protection is defined, namely the subject-matter to be protected, the rights to be conferred and permissible exceptions to those rights, and the minimum duration of protection. The Agreement sets these standards by requiring, first, that the substantive obligations of the main conventions of the WIPO, the Paris Convention for the Protection of Industrial Property (Paris Convention) and the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention) in their most recent versions, must be complied with. With the exception of the provisions of the Berne Convention on moral rights, all the main substantive provisions of these conventions are incorporated by reference and thus become obligations under the TRIPS Agreement between TRIPS Member countries. The relevant provisions are to be found in Articles 2.1 and 9.1 of the TRIPS Agreement, which relate, respectively, to the Paris Convention and to the Berne Convention. Secondly, the TRIPS Agreement adds a substantial number of additional obligations on matters where the pre-existing conventions are silent or were seen as being inadequate. The TRIPS Agreement is thus sometimes referred to as a Berne and Paris-plus agreement. http://www.wto.org/english/tratop_e/trips_e/intel2_e.htm

3.35 There are three permissible exceptions to the basic TRIP’s rule on patentability with implications for the biotech sector.

… One is for inventions contrary to ordre public or morality; this explicitly includes inventions dangerous to human, animal or plant life or health or seriously prejudicial to the environment. The use of this exception is subject to the condition that the commercial exploitation of the invention must also be prevented and this prevention must be necessary for the protection of ordre public or morality (Article 27.2).

The second exception is that Members may exclude from patentability diagnostic, therapeutic and surgical methods for the treatment of humans or animals (Article 27.3(a)).

The third is that Members may exclude plants and animals other than micro-organisms and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, any country excluding plant varieties from patent protection must provide an effective sui generis system of protection. Moreover, the whole provision is subject to review four years after entry into force of the Agreement (Article 27.3(b)). http://www.wto.org/english/tratop_e/trips_e/intel2_e.htm#generalprovisions

3.36 Unlike its predecessor (the General Agreement on Tariffs & Trade), , the WTO has the power through formal ‘dispute settlement mechanisms’ to enforce its rules and findings of unfair trade practices. This means that interpretation of treaty provisions is now subject to adjudication and revision unless the WTO chooses to explicitly exempt any given sector. The WTO, for the first time, regulates international trade in intellectual property through TRIPS. Previously IPRs were subject only to international IP conventions such as the 1886 Berne Copyright Convention administered by the World Intellectual Property Organization (WIPO).

vi - World Intellectual Property Organization (WIPO) Index

3.37 The World Intellectual Property Organization (WIPO) is an international organization responsible for promoting the use and protection of intellectual property. With headquarters in Geneva, Switzerland, WIPO is one of the 16 specialized agencies of the United Nations system of organizations. It administers 23 international treaties dealing with different aspects of intellectual property protection. It has 178 member nation states.

3.38 WIPO emerged out of the Paris and Berne Conventions each of which set up an International Bureau to carry out administrative tasks. In 1893, these two small bureaux united to form the United International Bureaux for the Protection of Intellectual Property (better known by its French acronym BIRPI) headquartered in Berne. In 1960, BIRPI moved from Berne to Geneva to be closer to the United Nations and other international organizations in that city. Then with the entry into force of the Convention Establishing the World Intellectual Property Organization (1967), BIRPI became WIPO.

3.39 Of the 23 treaties administered by WIPO two have specific relevance for biotechnology: the International Convention for the Protection of New Varieties of Plant (1961, 1978, 1991) and the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1977, 1980).

International Convention for the Protection of New Varieties of Plants, 1961, 1978, 1991

http://www.upov.int/eng/convntns/index.htm

3.40 The purpose of the Convention is to ensure that member States acknowledge the achievements of breeders of new plant varieties, by making available to them an exclusive property right, on the basis of a set of uniform and clearly defined principles. To be eligible for protection, varieties have to be

· distinct from existing, commonly known varieties;

· sufficiently uniform;

· stable; and,

· new in the sense that they must not have been commercialized prior to the date of the application for protection.

3.41 Both the 1978 and 1991 Acts set out minimum protection allowing member States extend protection through national legislation. The 1978 Act requires that the holder's prior authorization is necessary for commercial production, sale and marketing. The 1991 Act contains more detailed provisions and, exceptionally, where the holder has had no reasonable opportunity to exercise his right in relation to the propagating material, his authorization may be required in relation to any specified acts done with harvested material.

3.42 Like all intellectual property rights, plant breeders’ rights are granted for a limited period of time, at the end of which protected varieties pass into the public domain. The rights are also subject to controls, in the public interest, against abuse. In addition, authorization of the holder of a plant breeder's right is not required for research purposes, including its use in the breeding of further new varieties.

Budapest Treaty on the International Recognition of the

Deposit of Microorganisms for the Purposes of Patent Procedure 1977, 1980

http://www.wipo.int/treaties/registration/budapest/treaty.html

3.43 The Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (the Budapest Treaty) is a special agreement under the Paris Convention and came into force on August 19, 1980. Disclosure of an invention is a usual requirement for granting a patent. Normally, this is done by means of a written description. With respect to a patent involving a microorganism, or the use of a microorganism, such a description is not sufficient for disclosure. Accordingly, many countries (including Canada, the European Union and the United States) require not only a written description but also the deposit of a sample with a specialized institution. Patent offices are not usually equipped to handle microorganisms, whose preservation requires special expertise and equipment to keep them viable, to protect them from contamination and to protect both human health and the environment from contamination.

3.44 When protection is sought in several countries, the complex and costly procedures of the deposit may need to be done in each country. The Budapest Treaty is intended to eliminate or reduce such duplication by allowing one deposit with any “international depositary authority” to serve the purpose of all member States.

3.45 An “international depositary authority” is a scientific institution capable of storing microorganisms. Such an institution acquires status as an “international depositary authority” by the recommendation of a member State and its assurances to the Director General of WIPO that the institution complies, and will continue to comply, with specific requirements established in Article 6(1) of the treaty. In particular, the authority will: (i) be available to any “depositor” (person, firm, etc.) under the same conditions; (ii) accepts ands store deposited microorganisms; and, (iii) furnishes samples to anyone entitled to such samples but to no one else.

3.46 The final segment of this paper: Part III – Performance, Preferred & Probable Futures, the current performance of the biotech sector will be assessed and its future forecast.

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