Biological Diversity

The New (Draft) Access and Benefit Sharing (ABS) Guidelines – Part I


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In this post, I intend to share my views on the draft “Guidelines on Access to Biological Resources and Associated Knowledge and Equitable Sharing of Benefits Regulations, 2019” (draft ABS Regulations, 2019). As many may be aware, the previous version of the same guidelines was issued in 2014, viz., ABS Regulations, 2014. The draft ABS Regulations, 2019, is intended to replace the earlier version and was put up for comments earlier this year. The topic is a little dated, but I recently had the occasion to work on these draft guidelines and felt the need to share some thoughts on the same. In any event, the draft is not final yet and so…better late than never!

The regulations are proposed, inter alia, under Section 21(4) of the Biological Diversity Act, 2002 (“BDA”), which empowers the national biodiversity authority to frame “Guidelines”, by way of regulations, for the purposes of determination of equitable benefit sharing. Section 64 of the BDA grants power to the National Biodiversity Authority to make “Regulations”. This power is to be distinguished from the power of the Central Government/State Government to make “Rules” under Section 62/63.

The short summary is that the regulations deal with how benefit sharing obligations are to be determined and imposed by the authority. For simplicity-sake, the benefit sharing methods in the draft ABS Regulations, 2019, is transcribed into the following table:

General guidelines of Benefit-sharing (Draft Regulation 9)

 

(i)      Monetary and/or non-monetary (list as Annex-II);

(ii)     Mandatory factors to consider: as commercial utilization of the biological resource, stages of research and development, potential market for the outcome of research, amount of investment already made for research and development, nature of technology applied, time-lines and milestones from initiation of research to development of the product and risks involved in commercialization of the product;

(iii)    ‘Minimal benefit sharing’: technologies/innovations/products developed for controlling epidemics/diseases, for mitigating environmental pollution affecting human/animal/plant health.

(iv)    If contributing to non-monetary benefits, the monetary quantum shall be as reduced as determined by the NBA.

 

Activity Purpose Benefit-Sharing Comments
Access

 

Commercial utilization; or bio-survey and bio-utilization for commercial utilization Option I: If purchased, 3-5% of purchase price Plus 5% of sale amount for high economic value resource

 

Option II: Rs 500 to 0.5% of Annual gross ex-factory sale price (minus taxes),

 

Depends on annual turnover
Access Research; or bio-survey and bio-utilization

 

Nothing specific
Transfer results of research Any purpose If monetary benefit received, 2-5% of the same.

 

Obtaining IPR (i)    If IP is commercialized, 0.05-1.0% of annual gross ex-factory sale price of product minus government taxes

(ii)  If assigned/licensed to third party, 2-5% of licence/assignment fee

 

Sectoral approach; case-to-case basis
Transfer of material accessed under approval

 

If monetary benefit received, 2-5% of the same Sectoral approach; case-to-case basis
Transfer by Indian researcher / institutions outside India Non-commercial research or research for emergency purposes N/A

There are many points to discuss on the draft and several points have been raised for discussion in the various comments provided to the draft (which I have on file based on an RTI request), as well. I do not intend to provide a line by line commentary and will limit myself to only a few.

Binding the State Biodiversity Board

Draft Regulation 2 suggests that the State Biodiversity Board (SBB) are bound to follow the regulations for benefit sharing when exercising powers conferred under Sections 23 (b) and 24.

The draft is being issued after the judgment of the High Court of Uttarakhand in Divya Pharmacy vs Union Of India And Others dated 21.12.2018 (covered here and here), which holds that SBBs can impose benefit sharing obligations. To the best of my knowledge, this judgment has not been stayed on appeal (if at all it was appealed). So, understandably, the draft ABS Regulations 2019 operate on this basis. (Note: My personal view is that the judgment requires reconsideration, but this requires a lengthy explanation and perhaps I will explore this in a later post).

I think this is a welcome move. It removes arbitrariness in the functioning of the SBBs as far as benefit sharing imposition is concerned. The NBA had also issued guidelines to SBBs for processing of applications filed with the SBB (here). There is, of course, the question whether the NBA can frame the guidelines for the SBB. Section 21(4) makes it clear that guidelines thereunder are for the purposes of Section 21 only, which is limited to benefit sharing determination by the NBA. Section 18(1), which also repeats Section 21(4) in substance, makes it clear that the guidelines for benefit sharing are only with respect to Sections 3, 4 and 6; it does not mention Section 7, which provision concerns the SBBs. On the other hand, Section 64 and Section 18(3)(c), however suggest that the NBA may frame regulations or perform other functions for the “purposes of the Act”. This is a sweeping power and could be argued to cover directions to SBBs on how to determine benefit sharing.

This is certainly a debatable question, and, in my view, I do not think the legislature intended the NBA to be directing the SBBs in anyway, let alone direct the SBBs to follow certain guidelines to determine benefit sharing. Section 48 states the NBA is bound by directions of the Central Government and Section 49 states that the SBB is bound by the directions of the State Government; nothing in the BDA deals with the NBA’s power to issue directions to SBBs. Section 63 empowers the respective State Government to notify rules relating to how the SBBs to perform the functions under Section 24 and 23. In fact, Section 50(1) deals with the procedure for settlement of disputes between the NBA and SBBs, which only shows to me that the legislature expected situations where the NBA and the SBBs may have different, if not conflicting views, on issues/subjects. For the NBA to have the power to direct SBBs on benefit sharing arrangements, does not fit in this scheme.

Granted that this is a tricky problem to have – a common guidance across NBA and the SBBs is practically a welcome move (given past instances that practitioners have seen from SBBs), and yet, the BDA itself does not bend to this practical need. As I wrote this post, I realized that the fundamental problem arises from the assumption that SBBs are indeed empowered to independently impose benefit sharing obligations under Section 24 and 7. If this assumption goes, so does this tricky problem. Anyway, I hope to write on this assumption at a later point in time.

Creation of a New Obligation

Under draft Regulation 8, any Indian researcher/scientist (presumably, this is a reference to residential status) is obligated to provide prior intimation to the NBA in a new Form B if such person intends to deposit a novel microbial strain discovered in India, with a repository outside India.  It is difficult to source the statutory provision corresponding to this obligation. Since we are limited to an Indian here, Section 3 does not apply and since one is dealing with ‘research’, despite being an Indian, Section 7 does not apply.  Under Section 4, if the microbial strain is established to be “result of research” falling within the scope of Section 4, a prior approval from NBA is anyway mandatory since that would be a transfer to a person (repository) outside India; if not, there is no statutory obligation at all.  In the former case, there is anyway mechanism setup for approval and the draft Regulation 8 is an unnecessary additional obligation without statutory backing.  In the latter case, there is anyway no statutory backing for the draft Regulation 8 and prima facie, appears ultra vires.

More of my comments in Part-II. Stay tuned!

Please click here to view Part II of this two-part post.

Adarsh Ramanujan

Adarsh Ramanujan

Adarsh is an independent counsel with offices in Delhi and Chennai. Before starting his own practice he spent considerable time with Lakshmikumaran & Sridharan at their New Delhi and Geneva offices. He obtained his B.Sc. LL.B. (Hons.) degree (Gold Medalist) from National Law University, Jodhpur and LL.M. degree from University of California, Berkeley. He is a qualified Patent Agent in India. A major portion of his time is spent practicing in the areas of IP & Technology Laws as well as in International Trade Law. He has however branched out into doing commercial litigation and arbitration work. His expertise also extends to regulatory laws such as environmental laws, biodiversity laws and cyber laws. Adarsh has taught patent law in NLU, Delhi, NLU, Jodhpur and at the CEIPI Institute (University of Strasbourg). He has authored or co-authored close to 30 publications on diverse topics, including on IP, WTO, constitutional law and international tax.

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