Max Planck Institute for Innovation and Competition, Munich, Germany


The book shows the relevance of exceptions to patent rights with breeding purposes from both an academic and policy perspective. From an academic perspective, this study categorizes the breeding exception as a type of permissible exception within the broader category of exceptions to patent rights. In  policy terms, the analysis clarifies the vagueness of language in art. 30 in order to reconcile the conflictual views surrounding the introduction of a breeding exception to patent rights. Attention is drawn to the fact that the debate on the breeding exception involves stakeholders with different interests. From one hand side, the pharmaceutical, biofuel, chemical, and cosmetics sector endorse strong patent rights in order to be more innovative in the biotechnological market. On the other hand side, plant breeders in the seed sector ask for a flexible patent system that allows the free flow of genetic material among breeding programs. In specific, they ask for a limited exception that allows for breeding and developing new varieties of plants with patented subject matter. The Dutch association of plant breeders, Plantum, demands to broaden this exception by permitting breeding, development, and commercialization of plant varieties containing patented traits (the so-called comprehensive exception).

Elaborating an exhaustive response to this issue is not an easy task as the analysis involves an understanding of complex matters in relation to the science of plant breeding, the legal and economic aspects of intellectual protection, and TRIPS interpretation. Moreover, there is a lack of a specific legal and economic literature on this subject. The general literature on patent exceptions is inconclusive with respect to the type of activities that can be exempted from patent infringement. Although national case law offers insight on the type of activities that might be exempted from patent rights, there is significant variation in the scope of research exceptions across countries. The WTO panel in the EC-Canada case provides some indications, but it does not comprehensively clarify the issue of permissible patent exceptions. Therefore, there is legal uncertainty on the type of activities that can be exempted from patent rights. In terms of the issue at hand, this means that it is not clear if breeding, developing, and commercializing a plant variety containing and/or building upon patented elements is admissible in patent law. This book seeks to offer a solution by analyzing different modalities of a breeding exception in light of panel’s findings in the EC-Canada case. The analysis is, however, broadened in order to take account of other relevant TRIPS provisions and international legal instruments. This assures a effective interpretation of art. 30 in line with the principles of treaty interpretation. Furthermore, a thorough examination of the terminology of art. 30 is based on the results of interviews with stakeholders in plant breeding. These results, combined with an understanding of economic theory and empirical studies on patents as incentives for innovation enrich the understanding of art. 30. The following sections explain how legal and economic considerations assist the analysis of both a limited and comprehensive breeding exception. On this basis, recommendations for adopting different modalities of a breeding exception to patent rights will be put forward.

7.1 A Limited Breeding Exception

This section explains the compliance of the breeding exception with each of the conditions set in art. 30: 1) the exception must be ‘limited’; (2) the exception must not ‘unreasonably conflict with normal exploitation of the patent’; (3) the exception must not ‘unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties’. Firstly, the breeding exception is found to be a limited exception. This conclusion is based on the understanding of limited as proffered by the panel, the dictionary, and scholars’ analyses. The analysis relies on the extent of curtailment of patentee’s rights from a legal viewpoint. Thus, it is found that the breeding exception impairs the right of patent holders to authorize the use of patented products as provided for by article 28 of TRIPS. The breeding exception, however, does not impair the right of the patentee to commercialize or license its products for commercial goals. The breeding exception is limited only to breeding purposes. Further commercialization of varieties bred with patented elements necessarily requires the consent of the patent holder. This means that the extent of curtailment of patentee’s rights is narrow and confined to breeding purposes. It is also shown that this type of exception has definite boundaries and corresponds to scholars’ view on patent exceptions.

Secondly, the breeding exception does not conflict with the normal exploitation of the patent. In the EC-Canada case, the panel understood ‘normal exploitation’ as a combination of an empirical understanding about ‘what is common within a relevant community’ with a normative view of what is accepted by community’s values. The analysis in this book concretizes these abstract terms in the legislations of those countries that have already adopted a breeding exception, France, Germany, the Netherlands, and Switzerland. Based on legal literature, it is argued that the empirical element is related to the use of patents to extract value through selling patented products or rights, or licensing patent rights, whereas the normative element considers whether patent exploitation is essential to the achievement of goals of patent policy. With regard to the empirical element, a careful examination finds that the breeding exception does not significantly diminish patent holder’s profit. Considering that the breeding exception allows the patentee to maintain his rights for commercial licensing, the patentee might increase licensing fees if he deems that this is necessary to recoup his R&D investments. The normative aspect requires an investigation of national patent policies. In this respect it is found that the abovementioned countries establish maintenance fees for patents. Despite national characteristics, the establishment of patent fees is deemed to be an indicator of legislators’ willingness to promote follow-on innovations. This conclusion is based on the fact that the existence of patent fees recognizes that patents impose costs on society. This reasoning finds additional support in German law, where fees are halved if the patentee declares his willingness to grant licenses. The goal of promoting subsequent innovations becomes apparent in the first part of Chap. 5 as well. This part shows that France, Germany, and Switzerland have adopted research exceptions to patent rights and national courts seem to pay attention to public policy issues. In specific, the German cases of Clinical Trial I and II emphasize the need for an exception to patent rights in the general public interest. It appears, thus, that the goals of national patent systems are not centered on the right to exclude of the patentee, but on the goal of making inventions accessible for the benefit of the society. The analysis further explaines the consistency of the breeding exception in view of the normative approach by taking into consideration the length of breeding processes and patent rights. It is argued that in absence of a breeding exception, long breeding periods might significantly increase the de facto market exclusivity of patent holders. Consequently, the breeding exception is deemed necessary to bring a balance into patent law.

Thirdly, this study finds that the breeding exception does not prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. Prior to assessing the compliance of the breeding exception with this last step of article 30, the meaning of ‘legitimate interest’ is clarified. In accordance with panel’s reasoning, it is argued that a ‘legitimate interest’ does not stem from a legal claim, but from the interest of the society as a whole to benefit from patented innovations. In these terms, the legitimate interest of the patent holder is identified in recouping the R&D investments. The argumentation in Chap. 4 on the economic function of the patent system puts the basis for the understanding of the relationship between R&D expenditures and incentives to innovate. It is shown that empirical investigations do not favor a linear correlation between R&D expenditures and innovation. However, a significant body of work has proven the importance of patents for the biotechnological sector. But this does not allow drawing conclusions in terms of the issue at hand. Therefore, this study seeks to find an answer in economic theory and in a qualitative infield research. Based on economic theory, it is argued that the breeding exception does not prejudice the patentee’s interest since it deprives him only from obtaining a profit from ex ante

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