- BIOLOGICAL DIVERSITY ACT, 2002 (BDA)
India, a signatory to the United Nations Convention on
Biological Diversity (Biodiversity Convention), 1992,
which affirms nations’ sovereign rights to use their biological
diversity, attempted to realize the objectives expressed in the
Biodiversity Convention by legislating the Biological
Diversity Act, 2002 (BDA). The BDA was enacted in 2002
with three main goals akin to the Biodiversity Convention, which
are:
- conservation and sustainable use of biological diversity,
- addressing issues related to its access, and
- enabling fair and equitable benefit sharing
(FEBS) arising from the use and knowledge of such
resources with the local communities.
- EQUITABLE BENEFIT SHARING IN INDIA
Biological components play a significant role in the existence
of humankind. Hence it becomes pertinent for every individual to
have access to such natural resources and share the benefits. This
concept is popularly known as Access and Benefit Sharing
(ABS). The principle facilitates sharing of biological
resources, specifically genetic resources, fairly and equitably
between innovators/users and creators/conservers/providers, thereby
enabling innovation and biodiversity conservation incentives.
The benefits arising from technological advancements and
innovations using such resources must be utilized by the innovators
and shared with the creators and conservers. The Biodiversity
Convention, in its regulations, explicitly addresses ABS, and since
India is a signatory, it practices the principles and fundamentals
of ABS.
The National Biodiversity Authority (NBA)
determines the equitable benefit sharing arising from using
biological resources. In exchange for commercial exploitation of a
genetic resource, an
applicant is required to pay a fee, where 95% of its amount goes
to the indigenous and local populous. Under BDA, the local people
are referred to as ‘Benefit Claimers’, who
are engaged in conserving biological resources and those who
produce and maintain knowledge and information on the use of
biological resources. The benefits could be monetary or
non-monetary.
However, the provisions of BDA lay out certain restrictions and
exemptions based on the identity of the persons accessing and using
the biological resource (e.g., Indian or foreign; local or
commercial enterprise) and the activity being performed (e.g.,
research for Intellectual Property Rights generation or
collaborative non-commercial research under Section 5 of BDA).
Moreover, the extensive aspects of the BDA’s framework, the
longstanding history of the conservation movement, and
international obligations in the form of international treaties to
which India is a signatory must be understood to grasp the
principle of FEBS.1
- Biological resources under BDA
India is one of the world’s prominent megadiverse countries.
Having only 2.4% of the world’s land area, it already
encompasses 7-8% of the documented species. India is known for its
agricultural diversity and is home to abundant varieties of plants,
animals, fishes, and millions of microbes, insects, and other
species. As per the Botanical Survey of India and the Zoological
Survey of India, the nation acquires around 46,000 flora species
and 81,000 fauna species.2 Compared to other
countries globally, India’s ecological variety is unrivaled,
and it is home to multifarious biological resources.
Biological resources are defined in
Section 2(c) of the BDA, which refers to plants,
animals, and microbes, or parts of them, including their genetic
material and by-products that have actual or potential use or
value. However, the definition explicitly excludes value-added
products and human genetic materials. The value-added
product has been elucidated under Section 2(p) of
the BDA as the products that may contain unrecognized and
physically inseparable formed portions or extracts of plants and
animals. The reason for exempting value-added products from the BDA
is to ensure and soothe the domestic industry’s fear of
impeding value-added product exports.3
Since the definition has quite a broad scope of interpretation,
it is observed that some instances about questions like whether a
particular resource is a biological resource or whether it is a
by-product or value-added product have been coming before the
National Green Tribunal (NGT) and other judicial
authorities.
A similar issue was addressed in4?, brought before
the High Court of Uttarakhand (Court), which
clubbed numerous writ petitions filed by several paper
manufacturers for the sake of brevity. The Vishwanath Paper and
Boards Ltd. (Petitioners) sought relief on several
grounds, including whether the waste paper is included in the
category of ‘biological resources’ defined in Section 2(c)
or the category ‘value-added products’ defined in Section
2(p). The Petitioners companies were primarily using bagasse, rice
husk, waste paper, and wheat straw as raw materials, which they
claimed could not be considered biological resources under Section
2(c), and it is an industry, which does not come under the purview
of ‘commercial utilization’ as set out in Section 2(f) of
the BDA. Further, Petitioners acquire vast raw materials from
states such as Uttar Pradesh, Bihar, and others. In contrast, only
a small portion of these raw materials is obtained from
Uttarakhand.
On the contrary, the State of Uttarakhand
(Respondents) contended that waste paper is a
biological resource. Instead of deciding whether waste paper
qualifies as a ‘biological resource’, the Court dismissed
the petitions at the admitting stage and ordered that the
petitioner company not be prosecuted.
The NGT also cast a light on the dilemma through
Asim Sarode v. State of
Maharashtra5. Order on 03 November 2015
was passed by NGT where manufacturers and entities using castor
plants and other bio-resources for pharmaceutical drugs and
cosmetic products claimed that castor oil is a value-added product
and not a bio-resource. The manufacturing entities contended that
castor oil is a finished product because it is sold in that state
rather than in its raw form.
The order laid down that ABS under the BDA is applied to both
agricultural and other natural bio-resources. Following, ABS does
not apply to castor oil which is an agricultural bio-resource when
used for general commodities, but it does apply when castor oil is
used for commercial reasons in pharmaceuticals and cosmetic items,
as well as bio-resources and bio-utilization for commercial use.
Therefore, the entities were ordered to make ABS payment to
Maharashtra State Bio-Diversity Board, given the continued
commercial usage of castor oil.
Yet another critical case is Bio-Diversity
Management Committee vs. Western Coalfields Ltd. and
Ors6, which
provided legal ramifications to the coal as a ‘biological
resource’ under the BDA. The Bio-Diversity Management Committee
(Petitioner) of village Eklehara filed a petition
before NGT at Bhopal bench demanding 2% royalty from Western
Coalfields Ltd.’s (Respondent) revenue of Rs
1,470 crore, for commercial excavation of coal from their
territory, considering coal to be a ‘biological resource’.
The Ministry of Environment and Forest (Environment Ministry) and
NBA were made respondents to the petition.
The Respondents contended that the Biodiversity Convention and
BDA do not attract any provision to regulate minerals or fossil
fuels. Its key focus remains genetic materials, people’s
knowledge, and information on biological resources. Further, it was
submitted that the definition of the biological resource set forth
in Section 2(c) is extensive and only comprises plants, animals,
microorganisms, and their genetic material along with the
by-products, and because coal does not fit into any of the
foregoing categories, it cannot be classified as a biological
resource. Coal is a flammable, sedimentary, and fossil rock that
takes around 300 million years to build up. It cannot be equated to
a living thing, hence it cannot be classified as a biological
resource under the definition of BDA. The Respondents went on to
say that the Biodiversity Convention defines ‘genetic
material’ as any material of plant, animal, microbial, or other
origins that has a functional unit of heredity. Under optimal
conditions, the half-life of DNA, being the functional unit of
heredity, was estimated to be 521 years. Such optimal circumstances
for DNA survival were dried state, vacuum-packed, and frozen at
around 80ºC. Supporting the mentioned submissions, the
Respondents cited a study published in Proceedings of the Royal
Society of Biology conducted in 2012 by a New Zealand scientist.
Unlikely, coal dates back 63 to 300 million years. It is generated
at high temperatures and pressures, and as a result, it is turned
into a fossil. Given the above scenarios, the Petitioner’s
assertion that coal comprises the genetic material of plants stands
invalidated. Moreover, the fact that under Section 2(c),
value-added products had been explicitly excluded from the
definition of biological resources, coal cannot be brought under
the same.
The NGT upheld the Respondents’ above contentions,
concluding that coal is not a biological resource under the BDA.
Therefore, the Petitioner cannot rely on the BDA provisions that
allow it to charge for ABS. However, it refrained from going to the
merit of coal being treated as a value-added product or not.
- Measures for implementing FEBS
While granting clearance for an Intellectual Property
Rights (IPR) application or a transfer of biological
resources or knowledge, the NBA can evaluate equitable benefit
sharing by implementing any of the following measures:
- granting the NBA or the benefit claimers joint ownership of
IPR, - technology transfer,
- locating production or research & development facilities to
improve living conditions for the benefit claimers, - associating Indian scientists, benefit claimers, and local
residents for biodiversity research & development, - establishing a venture capital fund to assist and compensate
the benefit claimers, and - awarding monetary compensation and other non-monetary benefits
to the benefit claimers as the NBA may deem appropriate.
- Determination and Mode of FEBS
The NBA prepares benefit-sharing standards, which are published
in the Official Gazette. However, the benefit-sharing approach is
subjective and varies from case to case. The benefit amount is
mutually agreed upon by those seeking approval from the NBA and
local entities and benefit claimants. In addition, the NBA allows
5% of the benefits as administrative and service charges.
The applicant can pay for benefit sharing in ranges of 0.1 to
0.5 percent of the yearly gross ex-factory sale of the product,
which is calculated using the annual gross ex-factory sale minus
government taxes as shown below:
|
Annual Gross Ex-Factory Sale of
|
Benefit Sharing Component
|
|
Up to Rupees 1,00,00,000
|
0.1 percent
|
|
Rupees 1,00,00,001 up to 3,00,00,000
|
0.2 percent
|
|
Above Rupees 3,00,00,000
|
0.5 percent
|
- When the applicant commercializes the process, product, or
innovation himself, the monetary share ranges from 0.2 to 1.0
percent, depending upon the sectoral approach, and is calculated
based on annual gross ex-factory sales minus government taxes. - Based on the sectoral approach, the monetary sharing ranges
from 3.0 to 5.0 percent of the fee received (in any form, including
the license/assignee fee) and 2.0 to 5.0 percent of the royalty
amount received annually from the assignee/licensee where the
applicant assigns/licenses the process/product/innovation to a
third party for commercialization.
- Liabilities imposed in violation of the
BDA
To date, all offenses under the BDA are cognizable and
non-bailable. However, the Biological Diversity (Amendment) Bill
2021, which is under consideration, has proposed decriminalizing
such offenses and recognizing them as civil offenses. The penalties
for violating the provisions of the BDA are listed below:
|
Section
|
Cause
|
|
Penalty
|
|
55(1)
|
Contravention of Sections 3 or 4, or 6 of the BDA. Sections 3,
|
|
Imprisonment up to 5 years or fine up to Rs. 10 lakhs or both.
|
|
55(2)
|
Contravention of Section 7 of the BDA, related to prior
|
|
Imprisonment up to 3 years or fine up to Rs. 5 lakhs or
|
|
56
|
Contravention of directions/ orders of the Central Government,
|
|
If no penalty is prescribed in any other provision of the Act,
|
|
57
|
For offenses committed by companies in contravention of the
|
|
Every person who was in charge or had the responsibility of the
|
- PATENTS AND FEBS
To proceed to grant patents, applications based on
biodiversity components found in India must overcome specific
additional compliances.
Before applying for any IPR in or outside India, linked to an
invention based on biological material produced in India,
compliance to acquire the prior approval of the NBA is mandated as
per Section 6(1) of the BDA. However, approval of the NBA can be
acquired after its filing or acceptance, but before the sealing of
the patent by the Patent Office. Furthermore, the NBA is required
to act on any application for approval it receives within ninety
days of receipt.
Additionally, Section 10 of the Patents Act, 1970 necessitates
disclosure of the source and geographical origin of the biological
material when used in an invention, in the specification. The
provision requires a declaration and detailed information from the
Applicant regarding any biological or biogenetic matter obtained
from India.
One such case is NBA v. Sunev Pharma
Solutions7, a classic example of
inappropriate information and wrongful mention of the geographical
source and origin of the biological resource. Section 25(2) of the
Patents Act explicitly allows filing post-grant opposition on the
grounds of wrongful disclosure of geographical source and origin of
biological resource utilized in the invention. By virtue of the
provision, NBA filed post-grant opposition before Indian Patent
Office against Sunev Pharma Solutions (Applicant),
who was granted patents on inventions using bio components viz.
Azadirachta indica, Berberis aristata or Berberis vulgaris,
Glycyrrhiza glabra, Jasminum officinale, Picrorhiza kurroa,
Pongamia pinnata, Rubia cordiflia, Saussurea lappa, Terminalia
chebula, Capsicum abbreviata, Nymphea lotus, Curcuma longa;
Tricosanthes diocia, Symplocos racemose, Ichnocarpus frutescens,
Sesamum indicum oil, Ricinus communis oil, Cocos nucifera oil,
Brassica juncea oil.
NBA submitted that after it examined the said patent
application, it was discovered that patents had already been
awarded in countries namely Europe, South Africa, the United States
of America, South Korea, and Mexico without prior permission, which
is a breach of Section 6 of the BDA. NBA supported its argument
stating that despite its rejection order passed because of the
Applicant’s wrongful disclosure of the source of biological
components used in the invention, a patent was still awarded to the
Applicant.
A search on the IPO database revealed that the patent was
granted on 10 October 2018 with the patent number 302105. The IPO
initially directed the Applicant to submit NBA approval in First
Examination Report to which the Applicant responded on 10 October
2015, submitting that Applicant had applied for NBA’s approval.
Following that, on 04 January 2018, the Applicant amended their
First Examination Report response to state that all biological
resources were imported from China, except for Sesamum indicum
oil, Ricinus communis oil, Cocos nucifera
oil, and Brassica juncea oil, which were sourced from
India and are exempted from NBA permission because they are
notified as ‘Normally Traded Commodities’ in the NBA
notification dated 07 April 2016.
To present, the abovementioned post-grant opposition/order is
still pending considering the documents regarding the post-grant
opposition proceeding/order are not available on the online
records of the IPO. However, it would be interesting to watch how
the IPO responds to the post-grant opposition in this matter. Not
to mention, as per Section 64(1)(j) and or 64(1)(p) of the Patents
Act, any false declaration made on behalf of the applicant will
result in the revocation of a patent.
- Persons who are mandated to
acquire the NBA’s Prior Approval before engaging in
biodiversity-related activities
As per Section 3 of the BDA, without first obtaining NBA
approval, certain persons are not permitted to engage in
biodiversity-related activities or obtain any biological resource
occurring in India or knowledge associated therewith for research,
commercial exploitation, or bio-survey and bio-utilization, which
include:
- a non-citizen of Indian citizen,
- a non-resident Indian citizen,
- a body corporate, association, or organization not incorporated
or registered in India, and - a body corporate, association, or organization incorporated or
registered in India under any law in force that has any non-Indian
participation in its share capital or management.
Therefore, it is evident from the legislation that prior NBA
permission is only required for those persons or entities that have
any foreign ownership or management attached to them.
To access biological resources for doing research in India,
Indian researchers do not require prior authorization from any
agency, nor do they need to notify the State Biodiversity Board.
Under Section 7 of the BDA, prior notification to the State
Biodiversity Board is necessary if the study results are further
used for commercialization.
One such case related to NBA approval and FEB is
Divya Pharmacy v. Union of India &
others[8]. It was the case of the
Divya Pharmacy (Petitioner) that the Uttarakhand
State Biodiversity Board (Respondents) cannot
issue a demand under the Head of FEBS because the Board lacks the
authority and jurisdiction to do so. Secondly, since the Petitioner
was an Indian company with no foreign ownership or management,
cannot be forced to pay any amount in accordance with FEBS. The
Petitioner’s whole argument was based on a textual and
legalistic interpretation, particularly on the FEBS definition
clause.
The High Court of Uttarakhand (Court) decided
that the Respondents had jurisdiction to demand the benefit-sharing
amount from the Petitioner, clarifying that domestic companies
procuring biological resources are on par with foreign entities
under Section 3(2) of the Access and Benefit Sharing Guidelines,
2014 when it comes to benefit-sharing obligations. The Court
adopted a more expansive interpretation of the Nagoya Protocol,
ruling that foreign and domestic enterprises must comply with FEBS
and share their benefits with local and indigenous groups. Further,
it opined that the FEBS should be interpreted with a broader
canvass view, as it cannot be looked through the narrow contours of
the definition clause alone. The FEBS concept is centered on
benefits for local and indigenous communities. The Nagoya Protocol
sees no difference between a foreign entity and a national entity
in terms of their commitments to local and indigenous inhabitants.
As a result, to bring out the actual meaning of FEBS, the
“ambiguities” in the national statute must be viewed in
light of the international treaties, namely Rio and Nagoya, and a
purposive rather than a restricted or restricted or literal
interpretation must be made.
- BDA exempted activities and biological resources from
approval
Besides the above compliances regarding bio-resources, certain
exempted activities and resources do not need prior intimation
approval from the NBA as stated under BDA. The exemptions are as
follows:
- use of biological resources from India that are normally traded
as commodities, such as Pulses, Oilseeds, Fiber Crops, and Forage
Crops (for some species), and for no other reason, - utilization of value-added products (implied from Section 2(c)
of the BDA), - traditional usage of Indian biological resources or usage in
collaborative search initiatives between India and international
universities, publication of research papers, and knowledge sharing
in any seminar or workshop with compliance and necessary approval
from the Central Government (Section 4 and 5 of the BDA), - utilization and consumption of bio-resources including
conventional breeding, traditional practices by the cultivators,
framers, breeders, animal husbandry, poultry farming, live-stock
keepers, beekeepers, and traditional healers such as
vaids, hakims (implied from Section 2(f) of the
BDA), and - Using entirely exhausted biological resources, i.e., bio-waste
products.
There is a matter related to one such exemption raised in patent
application 4228/KOLNP/2008, before the Controller
of patents. The use of plant-based oils and animal-derived
eggshells was declared in the application by Romano Development
Inc. As a result, the Controller instructed the Applicant to
specify the source and its geographical origin and acquire
approval from the NBA if biological components were obtained from
India. The Applicant clarified in its response that the oil was
from the United States, whereas regarding eggshells the Applicant
submitted specific arguments.
The Applicant submitted that eggshell is a waste product with no
practical application. Generating anything useful such as the
compound of the present invention by utilizing waste is anyway a
sincere contribution to the government’s waste management
efforts and can be considered a biological source that is otherwise
depleted, hence its sustainable use is necessary, as stated in the
objectives of the BDA. Eggshell waste is generated in enormous
quantities every day; it will not result in any long-term reduction
in biological diversity. Moreover, eggshell waste is not a
biological resource whose depletion could be concerning. Because
eggshell waste is animal waste, using it to isolate the compound of
this invention will not degrade the nation’s natural biological
resources.
The Applicant further submitted that such eggshell waste could
be compared to the use of domestic and livestock waste, all of
which are entirely exhausted biological resources and exempted from
BDA. In addition, the current inventors devised a method for
isolating aminoglycan from garbage in a cost-effective
manner and producing something valuable, such as cosmetics. Hence,
the Applicant stated that the claims do not and cannot invoke the
provisions of the BDA.
The Controller eventually approved the application in light of
the above submissions, given that NBA approval was not
required.
- Provisions under the Patents Act, 1970 through which a
third party can initiate proceedings against the grant of
patent/granted patent using biological resources
Under the PA, the following actions can be taken:
- refuse to grant the patent: as per Section 15 of the
PA, violations of provisions imbibed in BDA result in
refusal to grant the patent. - initiation of opposition proceedings: pre-grant opposition or
post-grant opposition procedures can be filed under
Sections 25(1) and 25(2) of the PA respectively,
if the entire specification fails to disclose or wrongly mentions
the source and geographical origin of biological material employed
for the invention. - revocation of patent: one of the grounds to procure patent
revocation under the PA is non-disclosure or wrong mentioning of
the source and geographical origin of biological material employed
for the invention.
- THE BIOLOGICAL DIVERSITY (AMENDMENT) BILL,
2021
In December 2021, the Ministry of Environment, Forest, and
Climate Change introduced the Biological Diversity (Amendment) Bill
2021 (Amendment Bill) in Parliament amending the
Biological Diversity Act 2002 (BDA). The Amendment Bill cites
issues voiced by the medical, seed, and research sectors along with
their appeal to the ministry to “simplify, streamline, and
reduce compliance burden”. Hence, in order to address the said
issues and provide a conducive environment for resource exchange
and research study, reduce the compliance burden along with
simplified access to use bio-resources the Amendment Bill was
proposed.
- Main intent behind the Amendment Bill
The main reason behind introducing the Amendment Bill is to
attain certain goals, all without imperiling the Nagoya
Protocol’s objectives. The goals are as follows:
- expand the scope of AYUSH (India’s traditional medicine
systems) researchers and practitioners by exempting the traditional
healers from intimating biodiversity boards for gaining access to
bio-resources/knowledge (vaids and hakims), - attract more foreign investments in research and development of
biodiversity, - minimize the pressure on wild medicinal plants by fostering
cultivation & framing of medicinal plants, - fast-track and streamline the research patent application
process including commercial utilization, expanding access, and
sharing benefits with local communities. - decriminalize and reclassify the violations of benefit-sharing
law as civil offenses, because such laws are still recognized as
criminal and non-bailable offenses.
The Amendment Bill authorizes State governments to establish
district-level intermediate biodiversity management committees.
- Reason behind the condemnation of the Amendment
Bill
Aside from the concerns with the proposed legislation itself,
the way Amendment Bill was introduced in Parliament gave scant
regard to the legislative process. The Amendment Bill was proposed
without soliciting public input or referring it to the appropriate
Parliamentary Standing Committee (i.e., Parliamentary Standing
Committee on Science and Technology, Environment and Climate
Change). The Amendment Bill was being rushed through without much
parliamentary scrutiny and public debate.
Secondly, the Amendment Bill contains vague provisions to
safeguard, conserve, or increase local communities’ stake in
biodiversity conservation and sustainable use. The phrase
‘bio-utilization’ which is a key part of the Act, is not
included in the Amendment Bill. Such a removal creates ambiguity
over its regulation and would leave out a dozen commercially
oriented operations like characterization, incentivization, and
bioassay. Likewise, cultivated medicinal plants are exempted by the
Amendment Bill from the purview of the Act. However, it is nearly
impossible to tell which plants are cultivated and which are
wild.
Additionally, the proposed exemption to AYUSH practitioners and
manufacturing companies and ‘codified traditional knowledge
only for Indians’ including local communities from prior
intimation clause could pave the way for bio-piracy allowing
illegal commercial use of naturally existing genetic/biochemical
material. To guarantee that no aberrations from international
responsibilities occur, the extent of the terms ‘codified
traditional knowledge’ and ‘only for Indians’ should be
specified. Moreover, the meaning of Section 3 (2) has been expanded
to encompass a ‘foreign-controlled corporation’ that is
incorporated or registered in India. When compared to Section 2(42)
of the Companies Act 2013, the proposed definition of
‘foreign-controlled company’ in the Bill causes dubiety.
Because corporations that are not foreign-controlled are excused
from prior intimation clause before utilizing biological resources.
Therefore, the exemption could allow huge multinational and foreign
corporations to escape from FEBS and avoid the need for prior
approval.
Conclusively, the proposed Amendment Bill sabotages the primary
goal of the BDA and the Nagoya Protocol of conserving biological
resources. Certain loopholes in the proposed amendment could enable
corporate or foreign organizations to exploit traditional
biodiversity resources for economic gain without sharing the
benefits with biodiversity conservationists. The environmental
experts are of the opinion that the Amendment Bill will shatter the
fundamental tenets of conservation and sustainable use if
approved.
As of now, the Amendment Bill has been referred to a Joint
Parliamentary Committee which is anticipated to submit a report by
the 2022 budget session. According to reports, the submitted report
will almost certainly be put up for public comment.
CONCLUSION
Consequently, for every innovator, researcher, and other
business or non-business entity, it is paramount to realize
and cognizantly comply with the requirements of BDA.
Footnotes
1. http://ifs.nic.in/Dynamic/book/page8.pdf
2. https://www.cbd.int/doc/world/in/in-nr-02-en.doc
3.
http://nbaindia.org/content/19/16/1/faq.html#:~:text=Value%20added%20product%20implies%
20products,unrecognizable%20and%20physically%20inseparable%20form.
4. 2016 SCC OnLine Utt 1094
5. Application no.25 of 2015
6. MANU/GT/0169/2015
7. 2648/DEL/2006
8. Divya Pharmacy v. Union of India, 2018 SCC OnLine Utt
1035
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