Biological Diversity

Patanjali’s Tryst with the Biological Diversity Act – Is It Liable to Pay for Using Biological Resources?

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The Business Standard recently reported that Baba Ramdev’s firm Patanjali has run into trouble under the Biological Diversity Act, 2002 and is challenging demands from state biodiversity authorities that it share its revenues with farmers whose biological resources it uses. The report is behind a paywall and Business Standard’s subscription policy requires an automatic renewal being charged to credit cards because of which I refuse to subscribe to the service. Nevertheless, the headline gives enough information to discuss the mounting issues with the enforcement of the Biological Diversity Act in India.

Let me begin with why exactly an IP blog is discussing the Biological Diversity Act. As conceived originally the Convention on Biological Diversity, 1993 which was adopted in 1993 by several countries (with the notable exception of the United States) was supposed to be an environmental treaty meant to preserve the biodiversity of the world. Simply put, the earth, especially regions like India have a tremendous variety in terms of biological resources which is gradually being eroded. For example, take rice – India was estimated to have 1,10,000 varieties of rice in 1970, which has reportedly fallen to 6,000 varieties in recent years. The fall is due to a number of reasons. The shrinking of biodiversity over generations is worrying from an environmental concern. It also has implications for food security and maintaining the ecological balance. While talks for the CBD were progressing, the WTO talks and negotiations over TRIPS led to a backlash of sorts from developing countries who seized the opportunity to set the agenda for the CBD, which was still within the purview of the United Nations unlike the WTO agreement which was driven primarily by the American government. The new agenda for the CBD now included the protection of intellectual property and traditional knowledge associated with biological resources. The idea was that if the US and EU were going to force countries like India to protect IP like pharmaceutical invention, then these countries would have to protect IP associated with biological resources – the developing world has always been much “richer” in terms of biological resources and quite often these biological resources are the starting point of successful inventions. Take for example, Placitaxel which is obtained from the Pacific Yew tree or a whole range of neem-based pesticides which are derived from azadirachtin, which is the active ingredient in neem. The ‘Kani’ example from Kerala is another good example of a model that the CBD was trying to institutionalize across the world.

The CBD then transformed from an environmental treaty into an international treaty on regulating bioprospecting i.e. the practice of collecting biological resources for scientific study. One of the key achievements of the CBD was to assert national sovereignty over biological resources. This meant that countries could control access to biological resources and impose conditions on how those biological resources were used. The earlier position was to consider natural resources, including biological resources, as the common heritage of mankind.

So, for example if there was a ‘Kani’ type situation where a tribe shared it knowledge about certain properties of a plant with scientists who were then able to develop a product that sold in the market, the scientists would be required to share royalties with the tribe. The royalties would also be used to preserve biological diversity.

The Biological Diversity Act, 2002 was enacted in pursuance of India’s treaty obligations under the CBD. Its implementation has been less than stellar. There are also major questions regarding interpretation of the legislation, which are currently pending before court. Several of these cases were covered in a guest post that we published by Alphonsa Jojan.

But let me come to the issues that are most likely the subject of Patanjali’s recent lawsuit

The first, threshold issue, is the requirement for Indian companies to seek permission prior to accessing biological resources and the subsequent need to share royalties with the biodiversity boards. This is a pertinent question because the Biological Diversity Act clearly makes a distinction between foreign companies and Indian companies. Section 3 requires only foreign companies or Indian companies with foreign shareholding or management to approach the National Biodiversity Authority (NBA) for permission to access biological resources. Indian companies on the other hand are only required, as per Section 7, to give “prior intimation” to the state biological diversity authorities before accessing biological resources in India. There is a dispute even on this aspect, with several states contending that “prior intimation” means prior permission. Such an interpretation would vest significant power in the hands of state biodiversity boards and there are several Indian companies, not just Patanjali, which are contesting this interpretation of the law. Speaking from an academic perspective, I don’t think “prior intimation” can be interpreted to mean prior permission – if that was the legislature’s intent they would have modelled Section 7 on the lines of Section 19 or 20, both of which provisions are crystal that permission is required from the NBA before accessing these biological resources.

Second, there is a debate on whether the benefit sharing provisions apply to the simple use of biological resources for their conventional purposes. For example, using barley to make beer or selling mangos as fruits are conventional purposes. Or is it the case that the Biological Diversity Act applies only to cases where there has been research conducted on a biological resource leading to a new invention or a value-added commodity. For example, if a company were to identify and extract a particular compound from a plant which then formed the basis of a new drug, then it would be required to share royalties with the biodiversity fund. Or if certain compounds were extracted from a plant which formed the basis of a cosmetic. A reading of the law, especially Section 3, 4, 19 & 20 suggests that benefit sharing provisions can be invoked only in the latter scenario. The most important definition is of “commercial utilization” in Section 2(f). I reproduce it below:

“”commercial utilization” means end uses of biological resources for commercial utilization such as drugs, industrial enzymes, food flavours, fragrance, cosmetics, emulsifiers, oleoresins, colours, extracts and genes used for improving crops and livestock through genetic intervention, but does not include conventional breeding or traditional practices in use in any agriculture, horticulture, poultry, dairy farming, animal husbandry or bee keeping;”

The definition above suggests that commercial utilization covers only cases where biological resources are used as a source for drugs, industrial enzymes etc. or where genes are used for improving crops etc. Would this definition then cover even alcohol manufacturers or companies that are involved in mere food processing?

If Patanjali and other Indian companies involved in this litigation can establish that they are Indian companies, it will very likely that they will not be required to pay up to the state biodiversity authorities. There are several more very interesting issues pertaining to the implementation of the Biological Diversity Act but I will leave them for another day.

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP). He has recently been appointed as an Assistant Professor at NALSAR, Hyderabad, starting September 1, 2017.

One comment.

  1. arjun sugunan

    Section 3 applies irrespective of the nationality of the applicant so I don’t think the companies can play the nationality card with NBA. The real issue is on what ground the NBA is demanding royalty, as in, when a company owns its own firm, produce it won raw material and make a value-added product and then give royalty to NBA, where does the money go?
    Getting the permission for Patent prior to filling does not make sense, not all inventions that are patented go to production. at least let the inventor get his invention patented.
    Another issue is NBA sends notice even for biological material that does not belong to India but the applicant is Indian, I don’t understand the rationale behind that?


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