Uncertainty remains over scope of value added products and biological resources

Rich and varied biodiversity, accompanied by an extensive traditional and contemporary knowledge system makes India one of the most diverse nations in the world in this regard. In recognition of this the Biological Diversity Act 2002, which implements the objectives of the UN Convention on Biological Diversity 1992, came into force on February 5 2003 with the purpose of conserving India’s biological diversity and promoting the sustainable use of its components, as well as fair and equitable sharing of the benefits arising from the use of biological resources and knowledge. The act facilitates the sharing of benefits arising from the commercialisation of an IP right with local communities where this is based on a biological resource obtained from India.

Bio-resource or value added product?
To achieve these objectives, Section 6(1) of the act provides that:

“No person shall apply for any intellectual property right, by whatever name called, in or outside India for any invention based on any research or information on a biological resource obtained from India without obtaining the previous approval of the National Biodiversity Authority before making such application.

Provided that if a person applies for a patent, permission of the National Biodiversity Authority may be obtained after the acceptance of the patent but before the sealing of the patent by the patent authority concerned.”

To decide whether a patent applicant needs to obtain approval from the National Biodiversity Authority (NBA), it must assess whether a biological resource is used in its applied invention. Section 2(c) of the act defines ‘biological resources’ as “plants, animals and micro-organisms or parts thereof, their genetic material and by-products (excluding value added products) with actual or potential use or value, but does not include human genetic material”. This definition does not include ‘value added products’ within its purview. These are defined in Section 2(p) as “products which may contain portions or extracts of plants and animals in unrecognizable and physically inseparable form”.

From these definitions it can be understood that while a plant itself is a biological resource, an extract of it is a value added product. For example if an invention is based on the Ocimum tenuiflorum (Tulsi) plant itself, the patent applicant would require approval from the NBA; no approval is required if the invention is based on an extract of Tulsi. However, further clarification is necessary with respect to certain plant-derived products (eg, oils, oleoresins and purified phyto-compounds) as to whether they qualify as a biological resource or a value added product.

Case law
These issues have come before the National Green Tribunal in Asim Sarode v The State of Maharashtra (application 25/2015) and before the Uttarakhand High Court in M/s Vishwanath v State of Uttarakhand (AIR 2016 UTR 87).

In Asim Sarode, the manufacturers claimed that castor oil is a value added product and not a biological resource. In their view, it is a final product, as it comes into market in that form and not in its raw form. However, the tribunal found that access and benefit-sharing (ABS) applies to bio-resources which result from agriculture, as well as those found in nature. No ABS applies to castor oil itself – which is an agriculture bio-resource when used for general commodities – but it does apply when castor oil is used for commercial purposes in drugs and cosmetic products, as well as to bio-resources, bio surveys and bio-utilisation for commercial utilisation.

In M/s Vishwanath v State of Uttarakhand, the Uttarakhand High Court bundled together several writ petitions filed by paper manufacturers for the sake of convenience. The petitioners sought relief on various issues, among others that waste paper is not covered under the definition of ‘biological resources’ set out in Section 2(c) of the Biological Diversity Act but is covered under the definition of ‘value added products’ set out in Section 2(p). The petitioners submitted that they primarily used bagasse, rice husk, waste paper and wheat straw as raw materials, which cannot be considered as biological resources in terms of Section 2(c), as this is an industry which is not covered by the definition of ‘commercial utilisation’ set out in Section 2(f). The respondent argued that waste paper is considered a biological resource. The court directed the petitioners to submit the required information to the respondents in respect of the materials obtained from within the territorial boundary of Uttarakhand, but refrained from deciding whether waste paper falls under the definition of a ‘biological resource’.

This case also raised another issue – that is, whether a biological waste material such as bagasse or rich husk should be considered a bio-resource under the act. Although this issue was not covered in M/s Vishwanath, a similar issue came before the controller of patents under the Patents Act 1970 in patent application 4228/KOLNP/2008. The application disclosed the use of oils from plant sources and egg shells of animal origin. The controller accordingly asked the applicant to specify clearly the country of source and its geographical origin and, if biological materials had been obtained from India, to obtain permission for the application from the NBA. In reply, the applicant clarified that the oil came from the United States. With respect to the source of egg-shell waste and obtaining permission from NBA, the applicant argued as follows:

“egg shell is nothing but waste material and has no use whatsoever. Producing something useful as in the compound of the present invention by utilising a waste is in a way contribution to such waste management which the government is working on and can be regarded as a biological source which is being depleted and hence its sustainable use is required which is the moto of Biodiversity Act.

The first line of the National Biodiversity Act states that it is – ‘An Act to provide for conservation of biological diversity, sustainable use of its components and fair and equitable sharing of the benefits arising out of the use of biological resources, knowledge and for matters connected therewith or incidental thereto.’

And ‘sustainable use’ is defined in Section 2 (o) as ‘sustainable use’ meaning the use of components of biological diversity in such manner and at such rate that does not lead to the long-term decline of the biological diversity thereby maintaining its potential to meet the needs and aspirations of present and future generations;

That the egg shell waste will not lead to any such long-term decline of the biological diversity since this is generated as waste in large amounts every day. Further the egg shell waste is not any biological resource whose depletion may be a cause of worry. That egg shell waste is an animal waste and using the same in isolating the compound of the present invention will not deplete the natural biological resource of the country. Such egg shell waste may be equated with using domestic waste and livestock waste which in no way can attract the provisions of NBA. The present inventors have found a process that makes use of such a waste to isolate aminoglycan in an inexpensive method and making something useful for example cosmetics. Hence, the claims do not and cannot attract the provision of the national Biodiversity Act.”

The controller of patents eventually granted the application, considering that NBA approval was not required.

Given that the Biological Diversity Act is designed to provide for the conservation of biological diversity, sustainable use of its components, and fair and equitable sharing of the benefits arising from the use of biological resources and knowledge, the requirement of obtaining permission from the NBA for inventions using Indian bio-resources should be decided while bearing in mind the act’s purposes.