by Sara Hasan
TED Case Studies Number
665, 2002
I.
Identification
1. The
Issue
2.
Description
Traits
Dispute
II. Legal
Clusters
III.
Geographic Clusters
IV. Trade
Clusters
Trade
Measures
Patents
on neem
V.
Environment Clusters
VI. Other
Factors
The United States and
India are currently involved in a biopiracy dispute over the rights to a tree
indigenous to the Indian subcontinent, the neem tree. While the neem tree has
been used in India for over 2000 years for various purposes such as pesticides,
spermicides and toothbrushes, a US company has been suing Indian companies for
producing the emulsion because they have a patent on the process. The dispute
is over the rights of companies to conduct research and development by using
patents against the interest of the people who live at the source of the
resource. To what extent can multinational companies claim and patent
resources from the develping countries, like India? The movement around the
issue of the neem tree and trade-related aspects of intellectual property
rights (TRIPS) represents a challenge to the developing countries..
There are approximately 14 million neem
trees (Azadirachta indica) in India. Access to neem products was very cheap (if
not free) and easy to get. It is a tropical evergreen, related to the mahogany,
that mainly grows in arid regions of India and Burma and Southwest Asia and
West Africa. When temperatures do not drop below freezing, it may grow up to
50 feet tall. They are estimated to live up to 200 years.
The neem tree has many versatile traits
that can be traced back to the Upavanavinod, an ancient Sanskrit treatise
dealing with agriculture. This treatise cites the neem tree as a cure for
ailing soil, plants and livestock. The tree has been referred to as the 'curer
of all ailments' and the 'blessed tree' by both the Hindu and Muslim
population in India. The leaves and the bark have been used to treat illnesses
such as leprosy, ulcers, diabetes and skin disorder. It has also been used to
make spermicides and pesticides. The neem tree is known as the tree for all
seasons because of its versatility. Here is a list of its many uses::
1)Medicine - Many ancient
and traditional medical authorities Indian texts place neem as a vital
resource for pharmacy. They mention the usefulness of the leaves, bark,
flowers, seeds and fruit for treating several diseases such as diabetes,
ulcers and skin disorders. For example, some people chew neem leaves in the
morning for 24 days to protect the body from diseases like hypertension and
diabetes. The juice of the neem tree (5ml) mixed with equal amounts of honey
reduces oozing from ears and also removes inflammation. The ash of the dry
neem leaves is used to remove urinary stones. (www.healthlibrary.com/ready/neem/chap3.htm).
2)Timber - The chemical in neem makes
it resistant to termites, which is an extremely useful quality to have in
construction. It is interesting to note that there is a new EPA regulation
that bans certain chemically treated wood.
3)Toiletries - Neem twigs
have been used by millions of Indians (including my parents) as an antiseptic
tooth brush. Its oil is used for preparing soap and toothpaste.
4)Contraception - The oil
of neem is a potent spermicide.
5)Fuel - The oil can also
be used as lamp fuel.
6)Agriculture - Even
dating back to the ancient Sanskrit treatise dating about 600 BC dealing with
forestry and agricultural, the Upavanavinod, neem was seen as a cure for
ailing plants and livestock. The cake, or residue, is fed to livestock and its
leaves increase the fertility of soil. The most important, and controversial,
is its use as a potent insecticide. It is effective against approximately 200
insects.
Making pesticides emulsion
does not take highly sophisticated equipment, as native peoples have been
making it for over 2000 years. Indians have developed their own process of
cracking off the top that would then be used on plants as a pesticide. Neem
based pesticides, medicines and cosmetics have been produced by some
laboratories in India, but there has not been an attempt to make ownership of
the formula legal because Indian law does not allow agricultural and medicinal
products to be patented.
In 1971, a timber company
in the United States figured out that the neem tree's usefulness in acting as
a pesticide and began planting neem tree seeds. He received a patent on it and,
in 1988, sold the patent to the US based company W.R. Grace. In 1992, W.R.
Grace secured its rights to the formula that used the emulsion from the Neem
tree's seeds to make a powerful pesticide. It also began suing Indian
companies for making the emulsion.
The controversy over who
has the rights to the Neem tree raised many questions. India claims that what
the US Companies are calling discoveries are the actual stealing and pirating
of the indigenous practices and knowledge of its people. The Indians and
members of the Green Party in the European Union oppose big businesses owning
the rights to living organisms, otherwise known as biopiracy, because they
believe that the rights of poor farmers in developing countries will be harmed.
Hypothetical Case
The villager supplier of
neem products ranging from pesticides to formulations for creams to cure skin
disorders, Raju, was not the first in his family to use the "blessed tree" for
as many purposes as possible. His family revered and know all of the tree's
sacred qualities. While Raju did not know the exact word for the extract of
the neem seed, Azadirachtin, he did know that it helped all the people in his
village in one way or another.
One day his life changed
drastically. An American company called W.R.Grace patented the natural
insecticide that had been used for generations by Indian farmers. The company
was allowed to patent the process of making the insecticide because the Indian
government did not patent agricultural or pharmeceutical products. This patent
caused many problems for Raju because he could no longer use the traditional
method of smashing the neem seeds, scooping the emulsion from the top, and
selling it to local farmers as pesticide. This was the method he and his
family had used for generations. He was told that he had to pay the company
royalties for using their innovation because farmers in India did not hold a
patent for the process. It just did not make any sense. The economy seemed to
be overtaking his society. The worst part about it was that the community, his
people, did not get any benefits from the patents.
Raju often asks, how is it
possible for American companies to come into our country, steal our knowledge
and make money off of it? He was also concerend why the Indian government did
not protect the neem emulsion through patents themselves. This is a question
that many intellectual property disputes have to answer.
There is an increasing
awareness in India of the commodification of neem will lead to the
expropriation by multinational corporations, like W.R. Grace (Shiva, Vandana "Piracy
by Patent: The Case of the Neem Tree," in The Case of the Global Economy: and
for a turn toward the local, edited by Jerry Mander and Edward Goldsmith,
Sierra Club: San Francisco, 1996, p. 154). On Indian Independence Day in 1995,
farmers in from Karnataka rallied outside the district office to challenge the
demands for made by multinational corporations for intellectual property
rights. As part of their protest, the farmers carried twigs and branches from
the neem tree as a symbol of their collective indigenous knowledge of the
properties of the neem (Shiva: 154).
The United States, on the
other hand, states that what they are doing will help the Indian economy.
India is not against sharing its information about the Neem tree's virtues,
but it is against countries and corporations that intend to stop India's
present use of it.
Another issue is whether
the neem tree is patenable, since it is a product of nature, which shows that
it is not a result of innovation and discovery. The problem is that W.R. Grace
does not have a patent on the tree itself, but rather on the process of making
the emulsion. They believe that this process is a discovery because it entails
manipulation yielding greater and better results. In other words, discovery
seems to have both old and new definitions. The problem is over the use of
novel scientific advances on traditional Indian techniques. According to
Vandana Shiva, the director of the Research Foundation for Science, Technology
and Natural Resource Policy in India, "corporate processes are supposedly
novel advances on Indian techniques" (Shiva: 152). She goes on to state that
the reluctance of scientists in India to patent agricultural and
pharmaceutical inventions may be a result of their recognition that the bulk
of work had already been accomplished by generations of anonymous, Indian
experimenters (Shiva: 153). For example, "Dr. R P Singh of the Indian
Agricutural Research Institute asserts: `Margosan - O is a simple ethanolic
extract of neem seed kernel. In the late sixties we discovered the potency of
not only ethanolic extract, but also other extracts of neem ...... Work on the
neem as pesticide originated from this division as early as 1962. Extraction
techniques were also developed in a couple of years. The azadirachtin - rich
dust was developed by me’" (http://www.healthlibrary.com/reading/neem/chap10.htm).
Shiva also states that the discovery of the neem's properties and the means of
processing the extract was not "obvious" but rather evolved through extended
systematic development in non-Western cultures (Shiva: 153).
The World Trade
Organization (WTO) is asking developing countries to open up to foreign direct
investment from abroad and to liberalize their trade policies. There has been
a restructuring of General Agreement on Tariffs and Trade (GATT) into the WTO.
This resulted in agreements on trade-related aspects of intellectual property
rights (TRIPS) made during the Uruguay Round. These agreements created a trend
towards a legal framework for intellectual property rights including a
consensus to follow and establish patent laws in conjunction with those of the
developed world.
While this can be seen as
a good sign for India, it still causes a problem because of the Indian
government's reluctancy to issue patents on agricultural and pharmaceutical
product. Also, there is a lack of knowledge of the legal process that
surrounds intellectual property rights. Indian business owners argue that the
lack of patents leads their technology to move to the developed world. India
feels that by letting foreign companies control resources, they become more
vulnerable to them. As a result, there has been a backlash on foreign
investment and less joint ventures between India and the United States.
The World Trade
Organization (WTO) is encouraging developing countries to expand their legal
protection of intellectual property rights in order to be on a similar "playing
field" with the developed countries. In an effort to standardize trade rule,
the WTO is also asking developing countries to open up to foreign direct
investment from abroad and to liberalize their trade policies. The WTO
believes that the restructuring will lead to a development of more modern
economies.
There has been a
restructuring of the General Agreement on Tariffs and Trade (GATT) into the
WTO. This resulted in agreements on trade-related aspects of intellectual
property rights (TRIPS) made during the Uruguay Round. TRIPS, the forum for
dispute, created a trend towards a legal framework for intellectual property
rights. It also forced countries to honor the northern/Western interpretation
of patent rights (Shiva: 147). According to Shiva, "the northern countries
argued that when southern farmer's attempted to retain free use of their own
seeds, developed by them over thousands of years, it was a form of piracy, but
the pirate's hat clearly belongs on the other head" (Shiva: 147).
One of the major parties
involved is obviously the Indian government who has signed onto the TRIPS
agreement. India's laws still do not allow patents on agricultural and
pharmaceutical products. Another party involved is the business community (like
W.R. Grace) that needs intellectual property rights to encourage development
in foreign countries because it gives more incentive to the business owners
that their property or "inventions" will be protected. They believe that the
result of researching and development in foreign countries can lead to a
greater public good because of the new discoveries of medicines and other
innovations that will result.
Another forum for dispute
surrounding the neem tree is the Convention on Biological Diversity (CBD) that
took place in 1992 at the United Nations Conference on Environment and
Development. Article 15 of the convention states bio-assets are the property
of the sovereign states in which they are from. In other words, they are not
the property of the world at large. India's claim is that what the Western
world is calling discoveries is actually an indigenous method that they have
been suing for years. They say that it is a bio-asset that is protected under
Article 15 of the convention. While CBD emphasizes the rights of sovereign
nations over biological resources, such as the neem tree, it still calls for
the acceptance of intellectual property rights. What this means is the CBD
calls for governments, such as India, to provide the proper patents or other
forms of protection on the life forms and include pharmaceutical products.
Another WTO dispute that
relates to the TRIPS agreement is a case that involves India, as well. This
case is regarding Basmati rice. India feels that because the United States has
granted a patent for Basmati rice, that it is violating the TRIPS agreement.
They say that Basmati rice is exclusively associated with India and Pakistan.
They want the United States to take away their patent on the rice because they
felt it is an indigenous product of their country. India's problem with the
neem tree is similar to the Basmati case because they have realized the
importance for creating laws that conserve bio-assets and control piracy. They
feel that protecting their assets through patents may protect them from other
companies like Rice Tec that took advantage of the nonexistent Indian laws.
Indian farmers want to
protect their cultural heritage. It seems the best way to do it is to change
their philosophical attitude that natural resources should not be patented in
order to protect and preserve India's biodiversity and also to conform to
international laws and agreements like the TRIPS agreement. According to Shiva,
there has been a new alliance of farmers and scientists to formulate an
alternative form of intellectual property rights - what they term collective
intellectual property rights (CIPR's) (Shiva: 157). It allows people to have
the right to benefit commercially from traditional knowledge. In other words,
the farmers want to solve their disputes at the local level or village
organizations rather than through GATT panels.
5. Discourse and Status:
Disagreement and In progress
6. Forum and Scope: WTO,
GATT, TRIPS and Bilateral
7. Decision Breadth: The
United States and India
8. Legal Standing: Treaty
9. Geographic Locations
a. Geographic Domain: Asia
b. Geographic Site: South
Asia
c. Geographic Impact:
India
10. Sub-National Factors:
No
11. Type of Habitat:
Temperate
12. Type of Measure:
Intellectual Property
The trade measures that
are most relevant to the neem tree case are intellectual property and patents.
United States patents on neem tree products are seen as forms of "biopiracy"
by the country of India, the Green Party and the European Patent Office. There
are three main issues surrounding the patenting of local products used for
medicinal or agricultural purposes by the United States. First, the farmers
will no longer be able to use these products without paying royalties to the
company that has a patent on it. Secondly, consumers will be deprived of cheap
medicines and agricultural products. Last, local communities should receive a
share of the profits because the companies learned the value of the species
from local knowledge. (Source: Trade and Development Center: A joint Venture
of the World Bank and the World Trade Organization www.itd.org/isues/india6.htm)
Since 1985, over a dozen
of the U.S. patents by the United States and Japanese firms are for the neem-based
solutions and emulsions. There are a total of four patents are owned by W.R.
Grace. Three patents are owned by another U.S. company, the Native Plant
Institute. Two others are owned by the Japanese company, Terumo Corporation (source:
Vanadan Shiva's article "Piracy by Patent: The Case of the Neem Tree" in The
Case Against the Global Economy ). Remember that these patents are used for
the process of making the emulsion from the neem tree, not on the neem tree
itself. The US Company had in fact created a new invention from the neem
extraction process. The local population, however, has been extracting the
substances from the seeds for years, too, using a more traditional method of "smashing
the seeds" and "scooping the emulsion."
The neem is not the only
living organism that has become a subject of "patent" debate. There are
scientists and farmers around the world that are trying to gain rights to
protect their organisms. For example the Africa Soapberry has properties for
insecticidal soap, fish intoxicant and a spermicidal contraceptive that
African have used for a very long time. In 1964, though, things changed due to
Dr. Akililu Lemma's report to the Tropical Products Institute in Britain that
it killed water snails (which are used to fight the disease, bilharzia).. At
the time of his report, he was stunned to find out that the Institute placed a
patent on the extraction process without consulting or crediting him (Shiva:157).
13. Direct v. Indirect
Impacts: Direct and indirect
14. Relation of Trade
Measure to Environmental Impact
a. Directly Related to
Product: Yes - Wood
b. Indirectly Related to
Product: Yes - Manufacturing
c. Not Related to Product:
No
d. Related to Process: Yes
- Deforestation
15. Trade Product
Identification: Neem tree extract and seeds
Examples of Neem Tree
Products (from Neemsa website www.neemsa.co.za)
|
Neem Facial Moisturiser |
Neem Hand & Body Lotion |
Neem Moisturizing Cream |
|
Neem Organic Shampoo |
Neem Organic Conditioner |
Neem Eye Gel |
|
Neem Toothpaste |
Neem Lip Balm |
Neem Soaps |
|
Dragon Repellent Candle |
Leaf Extract |
Tree Extract |
|
Seed Oil |
Plant Spray |
Horse Wash |
|
Pet Flea Powder |
Head Lice Attack Packs |
Neem Incense Sticks |
|
Bath Fizz Bombs |
Powdered Neem Leaf |
Pure Powdered Neem Tree |
|
Neem Tea |
Nail Nourisher |
Neem Leaf Capsules |
16. Economic Data
17. Impact of Trade
Restriction: High
18. Industry Sector:
Agricultural and Chemical (use in pesticides)
19. Exporters and
Importers: United States and India
U.S. Companies patents:
The patents granted to W.R. Grace for extraction and storage processes are the
most controversial.
US patent No 4946681 -
granted in 1990 for improving the storage stability of neem seed extracts
containing azadirachtin (a naturally occurring substance that belongs to an
organic molecule class called tetraortritenoids. Azadirachtin occurs in all
parts of the neem tree but the majority of it is concentrated in the neem
kernal. It is one of more than 70 limanoids produced by neem). The inventor is
named as James F Walter of Ashton, Maryland.
US patent No 5124349 -
granted in 1994 for storage of stable insecticidal composition comprising neem
seed extract. The major contribution was increasing the shelf-life stability
of azadirachtin solution. (Four people are named as the inventors).
Recent Indian patents:
70/Bom/91 - 13.3.91
(171888) - A process for treating (Upgrading) Neem Oil -Hindustan Lever Ltd.
Bombay, India
668/Mas/93 -23.9.93 - A
combination of hydroponicum and a spray to improve the survival of tissue
cultured plants with specific references to Neem - Dalmia Cantre for
Biotechnology
757/Del/93 - 20.7.93
Preparation of edible Neem oil - Rohm and Haas Co.
758/Del/93 - 20.7.93
Stable extract from neem oil - Rohm and Hass Co.
759/Del/93 - 20.7.93
Preparation of neem seed extract - Rohm and Haas Co.
1270,1271,1272 &
1273/Del/93 -12.11.93 A process for preparation of a spermicidal agent from
neem oil or extractives - National Research Development Corporation.
7/Mas/94 - 7-1-94 - A
method for preparing ayurvedic antivirus compound comprising three oils mainly
neem seed oil - Girivas Vishwanath Seth.
9/Mas/94 - 10-1-94 -
Nimbecidine - Vegetable oil including neem oil, enriched with azadirachtin and
the same extracted from neem seed and other parts of neem. T. Stanes and
Company Ltd.
1397/Del/93 - 9.12.93 - A
method for producing azadirachtin - Rohm and Haas Co.
*Information from Neem
Tree Foundation Website: www.neemfoundation.org
20. Environmental Problem
Type: Habitat Loss and Deforestation
21. Name, Type, and
Diversity of Species
Name: Neem tree (Azadirachta
indica) Type: Tropical Evergreen related to the mahogany
22.
Resource Impact and Effect: Low and Production
23. Urgency and Lifetime:
Low and 200 years
24. Substitutes: Like
products
VI. Other Factors
25. Culture: Yes
The controversy over the
patents on the neem tree relates to environment and culture most importantly
because the properties and utilities of the tree have been known to Indians
for millennia in both the Muslim and Hindu traditions. In Sanskrit it is known
as the "curer of all ailments" and in the Muslim tradition it is known as the
'blessed tree.' Neem trees are everywhere in India. The extraction of the seed
oil and emulsions is not difficult, the process has been used for ages in
India (Third World Network: http://www.twnside.org.sg/title/pir-ch.htm). The
village neem tree is a symbol of Indian indigenous knowledge. It has also
become a symbol of resistance against corporations that are trying to take the
Indian's knowledge for their own profit.
The WTO's goal is to
promote market competition throughout the world. It is not the just the neem
tree, as a product, that is being affected by the patents. Culture,
biodiversity, livelihoods, needs and rights are all reduced to the market The
destruction of their livelihoods becomes reduced to the level of competition.
Many Indians view fundamental life processes as sacred,not as commodities that
should be bought and sold in the market. The idea of a disembedded economy,
that Karl Polanyi discusses, is not applicable to the average poor Indian
farmer. In other words, Indian farmers are not comfortable with having the
economy be above society. They seek to protect themselves from the rise of the
global economy and agreements, such as the TRIPS agreement, that will affect
their lives for days to come. The problem with the farmers view is that due to
the logic of patenting, they cannot keep resisting, instead they are going to
have to join in. (http://www.thirdworldtraveler.com/Globalization/War_Against_Nature_VFTS.html.).
The issue of nationalism,
in the wake of colonialism plays a vital role in the case of the neem tree.
Indians do not want to lose their rights to their own indigenous resources to
a Western power. They will do everything to protect their rights. They are now
an independent nation, or are they? In the new global village, it is hard to
say. They see American companies and the WTO dictating what they can and
cannot do with the neem tree. The TRIPS agreement is essentially the
globalization of western patent laws as instruments to conquest. It can be
seen as a different form of colonialism. An interesting story is that the word
"patents" is derived from "letter patents." According to Vandana Shiva, one of
India's leading activists and founder of the Research Foundation for Science,
Technology and Ecology, letter patents were the open letter granted by the
European sovereigns to conquer lands or to obtain monopolies on imports. For
example, Christopher Columbus used a letter patent issued by Queen Isabel and
King Ferdinand, for his right to conquest the America's (Vandana Shiva: War
Against Nature and the People of the South).
26. Trans-Boundary Issues:
No
27. Rights: Yes
28. Relevant Literature
Mander, Jerry, and Edward
Goldsmith eds., The Case Against the Global Economy: a turn towards the local,
San Francisco: Sierra Club Books, 1996.
National Research Council,
Neem: A tree for solving global problems: report of an ad hoc panel of the
Board of Science and Technology for International Devlopment, Washington D.C.:
National Academy Press, 1992.
Shiva, Vandana,
Biodiversity: Social and Ecological Perspectives, London: Zed Books, 1991.
----------------,
Biopiracy: The Plunder of Nature and Knolwedge, Massacusetts: South End Press,
1997.
----------------, Ecology
and the Politics of Survival: Conflicts over Natural Resources in India, in
association with J. Bandyopadhyay, Japan: United Nations University Press,
1991.
GRAPHICS: from
www.neemfoundation.org
