Overview

Genetic engineering is revolutionising our understanding of disease prevention in humans, including the use of gene therapy to prevent or cure genetic defects.

However, in plants, the use of genetic engineering to develop new varieties with desirable traits has been long-established. Indeed, the first “genetically modified” (GM) plant, a tobacco plant engineered for antibiotic resistance, was reported in 1983. This was followed by the first commercial GM crop, the Flavr Savr tomato, which was introduced in the USA in 1994 and demonstrated slower ripening to prolong shelf-life and delay rotting. 

However, with the advent of genome editing techniques, led initially by ZFNs and TALENs, and now by CRISPR-Cas9, we now have the ability to add, remove or alter genetic material at targeted locations within the genome, with precision, relative ease, at scale and at low cost.  This is transforming plant breeding.  The traditional process of crossing and selection relies largely on unintended recombination of genes and random mutants occurring naturally, which are selected and developed further over many years, using multiplication techniques, with a new variety taking often 10+ years to get to market.  However, so-called new plant breeding techniques (NBTs), which involve development of new plant varieties with desired traits by modifying the DNA, can reduce the development time for a new variety to only 2-4 years.

Potential applications include traits for disease resistance, herbicide tolerance, drought or salt tolerance, low anti-nutritional compounds, improved nutritional value, improved yield and improved biomass conversion.  For instance, in Japan, the University of Tsukuba/Sanatech Seed has developed and had authorised in December 2020 the “Sicilian Rouge High GABA” tomato, using CRISPR/Cas9 editing, with five times the amount of Gamma-Aminobutyric Acid to help reduce elevated blood pressure and reduce stress.  In addition, Calyxt worked, using its proprietary technology TALENs, on a reduced trans-fat soybean oil which is in production and use in the US and Argentina, whilst recently announcing that it had transformed the complex hemp genome, as part of a pipeline of future traits for hemp varieties.

Yet development of all new plant varieties (traditional or using NBTs) involves access to (and use of) plant material of existing plant varieties.

The international regime for protection of plant varieties set out in the International Convention for the Protection of New Plant Varieties (latest UPOV 1991) is predicated upon an open model of innovation, which allows breeders to use plant material for the purpose of breeding a new variety, the so-called “breeder’s exception” (Art 15(1)(iii) UPOV).  For instance, this compulsory exception was adopted in section 8(c) of The Plant Varieties Act 1997 in the UK and § 10a(1) No. 3 of the German Plant Variety Protection Act (“Sortenschutzgesetz”).

What is an essentially derived variety?

However, recognising the advent of biotechnology, UPOV also introduced a further compulsory limitation upon the breeders’ exception in respect of essentially derived varieties (EDVs).  The main driver for the limitation was to prevent plagiarism of traditionally-bred varieties using new technologies, but it was also in response to erosion of the minimum distance requirement in phenotypical characteristics as part of the DUS (distinct, uniform and stability) requirements for a new variety.   From a legal perspective, there was also uncertainty as a matter of competition law over the enforceability of grant back clauses, included in breeders’ licences with customers, that essentially derived varieties would be treated as improvements in which the breeder retained any intellectual property rights.

The complex EDV concept was intended to prevent the commercialisation of a bred derived variety, without the consent of the owner of the plant breeders’ rights in the protected initial variety, where the derived variety fell within defined “scope” of the initial variety.  The idea was that, given the significant contribution that the work in breeding the initial variety had made to the derived variety, the owner of the plant breeders’ rights in the initial variety should be entitled to licence the material embodied in the derived variety and obtain a financial benefit.  It would prevent the developer from simply patenting the biotech trait and then commercialising the trait by inserting it into plant material already protected by plant breeders’ rights, to produce an improved variety. 

The EDV concept is not intended to prevent the developer of a derived variety from obtaining protection for the derived variety, if it otherwise satisfies the legislation as being distinct, uniform, stable and new.

Article 14(5) of UPOV 1991 sets out the concept of EDV.  An EDV can only be derived from a protected variety which itself is not an EDV.  Under Article 14(5)(b):

“a variety shall be deemed to be essentially derived from another variety ('the initial variety') when (i) it is predominantly derived from the initial variety, or from a variety that is itself predominantly derived from the initial variety, while retaining the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety;

(ii) it is clearly distinguishable from the initial variety; and

(iii) except for the differences which result from the act of derivation, it conforms to the initial variety in the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety.”

This complex definition throws up a number of issues, including what amounts to “predominantly derived” and whether it is relevant to the expression of which essential characteristics that the EDV has strong phenotypical similarity to, as well as genetic identity.

Why does it matter?

The concept has polarised views and also led to its implementation into national law in differing forms.  For instance, Article 13 of Council Regulation 2100/94 on the community plant variety and section 12 of the Plant Breeders’ Act 1994 in Australia both take non-literal implementations of UPOV.   China is rumoured to be considering adopting an EDV concept to update its 2014 Regulations, after it adopted UPOV 1978, but not the latest UPOV 1991 (which includes the EDV concept).

With the fast pace of change brought by genome editing as part of NBTs to developing new varieties, there is a real concern for biotech companies that the legal uncertainty of the concept is stifling innovation.  Yet, others remain concerned at the difficulty of policing use of plant material of their protected initial variety and the risk of damage to their business from competition in the marketplace from a derived variety. 

The deployment of these technologies in plant breeding may be about to accelerate in the UK as the UK Government reviews the post-Brexit regulatory landscape around the use of genome editing tools, and the commercialisation of genome edited crops and animals, after a decade of a largely EU-wide moratorium upon the approval and commercialisation of gene-edited crops.

The present situation is akin to the legal challenges often encountered with the adoption of new technologies (whether 5G, Wi-Fi or new electric vehicle charging) covered by standard essential patents (SEPs), as part of ensuring products meet agreed industry standards and how businesses meet their obligations to license such patents upon FRAND terms.  There are no FRAND obligations here however, so if a business develops a new variety which amounts to EDV, it faces the risk of being unable to commercialise the new variety, whether blocked outright (hold up) or royalties cannot be agreed upon appropriate terms.  For example, it is unclear in such instances if a licensee can invoke compulsory licensing regimes. 

The legal presumption may be upon the owner of the rights in the protected initial variety to prove essential derivation and then claim dependency, based upon the fact that the breeder of the initial variety will have access to development records and sequencing data for the initial variety. However, that breeder may not have access to the technical data for the derived variety.  It may be that the burden of proof should be reversed in that the developer of the derived variety may have better data about the gene edit.

There is a role for the use of biochemical and molecular markers, though they need to be used cautiously, if used to determine whether a variety is an EDV.  For instance, The Supreme People’s Court in the PRC has issued several “guiding” cases on plant breeders’ rights aimed to guide lower courts, including two on the use of molecular markers in cases of infringement (not EDV cases) where it balanced the results of genetic testing, with traits observed in field tests, to temper over-reliance upon molecular markers to reach a decision.

Litigation has already occurred in this area, notably in the Dutch Courts, for example in the case of Danziger 'Dan' Flower Farm v. Astée Flowers B.V. where the Court of Appeal, The Hague, held in 2009 that the Gypsophila variety, Blancanieves, was not an EDV of Million Stars ‘Dangypmini’.  Further cases have also been heard in the US, Australia and South Africa. 

In particular, the history of the mandarin variety “Nadorcott” is fascinating.  Nadorcott is thought to be a by-chance cross-pollination between the Murcott mandarin and a clementine in Morocco, resulting in a seedless variety which was then protected.  Scientists at The University of California Riverside subsequently irradiated budwood from Nadorcott mandarins to create a new seedless variety called Tango (Tangold),  which took the U.S. market by storm. A Spanish seed company, Eurosemillas, aimed to build upon that success in Europe, Africa, the Middle East and South America, but faced legal challenges from France's Nador Cott Protection in Spain, Australia and South Africa about whether Tango was an EDV of Nadorcott.  The Community Plant Variety Office granted Tango community plant variety rights, as a distinct variety, despite arguments to the contrary.  Intriguingly, these disputes apparently did not have a chilling effect upon demand for the Tango fruit.

We can expect more disputes in this area as the cost of developing a new variety using NBTs reduces, as compared to traditional varieties which may have been bred up to 20 years ago and still be in plant variety protection (25 years for most plants and 30 years for trees, tomatoes and vines in the UK and EU), and as companies look to recoup the high costs of that classical R&D breeding program.

What is currently happening?

A Working Group on EDVs was set up in December 2020 by UPOV for the revision of the Guidance on EDVs (EXN/EDV/2) following a seminar in October 2019 held in Geneva by the Administrative and Legal Committee to UPOV.  A draft text has been produced and is due to be discussed next on 19 October 2021, with a view eventually to being adopted by the UPOV Council.

Potential solutions

There needs to be more certainty for all breeders, without the risk (and expense) of litigation before the courts. 

Some experts (see Kock¹) are keen that the Guidance provides a more practical framework, including a flow diagram, to distinguish between the cases which are clearer instances of EDV (black zone) or non-EDV (white zone) and how the grey zones cases may be determined by reviewing the inventive contribution of both the initial variety and the derived variety expressed in their respective essential characteristics.

There may be a role for the plant breeders’ rights offices or patent offices to be able to provide an early declaratory decision (as in Australia), based upon receiving technical evidence.  There may also be a greater role for alternative dispute resolution processes, such as expert determination or mediation, facilitated by an industry mediator.

There may also be value in developing industry-standard approaches to licensing and model form contractual clauses, perhaps drawing upon the expertise and learnings from other licensing regimes (such as SEPs) or perhaps even the fair and equitable access and benefit sharing arrangements under the Nagoya Protocol for plant genetic resources.

Comment

Genome editing brings huge benefits for plant breeding and meeting the challenges of food security and the climate crisis.  However, the balance between this form of IP protection and the freedom to use another’s protected plant material is a delicate one, which requires improved guidance, model form approaches to licensing and improved dispute resolution procedures.

It is likely that we will see further disputes in this complex area at the interface of biotechnology and plant breeding.

Joel Smith is a leading authority in the UK and EU on plant breeders’ rights and the regulation of gene edited crops.  He has acted widely for the plant breeding industry on a range of disputes, including around infringing production, farm saved seed, compulsory licence challenges, approval of new varieties,  adventitious presence of GM material in seed and crop trials.  He also has unrivalled experience in advising upon and negotiating licensing arrangements for the production and commercialisation of protected crops.

Burkhart Goebel is a highly experienced IP litigator with exceptional expertise in multi-jurisdiction litigation and preliminary rulings procedure before the Court of Justice of the European Union. In the field of plant breeders' rights he has litigated extensively over licensing agreements and has negotiated licensing agreements in the field. His interest in plant breeders' rights goes back to his doctorate in law on the TRIPS Agreement and UPOV Convention.

Hogan Lovells has a market leading IPMT Group with expertise in agribusiness at the intersection between intellectual property rights and government regulation.

Authored by Joel Smith, Burkhart Goebel and Will Buswell.

¹Kock, Essentially Derived Varieties in View in New Breeding Technologies – Plant Breeders’ Rights at a Crossroads.  GRUR Int. 2021, 11.