In October 2014, the Nagoya Protocol entered into force. It created a new international regulatory system affecting all life science companies that conduct R&D on biological material such as animals, seeds, flowers, viruses, fragrances, flavonoids, essential oils, enzymes, yeasts, and so on. So far, compliance by companies is progressing slowly due to unawareness of the regime and uncertainty over its requirements.

By January 2017, this new international agreement will be in force in 89 countries, including China, India, Mexico, Switzerland, South Africa, and the entire EU. Between December 4 and 17, 2016, the second “COP-MOP” takes place. At that meeting, the parties to the Nagoya Protocol are working to accelerate substantive implementation and enforcement of the rules.

How the Nagoya Protocol Works

The full title of the Nagoya Protocol to the Convention on Biological Diversity reads “…on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from Their Utilization.” Under the Protocol, the Parties may adopt (i) provider-country measures on “access and benefit sharing” (ABS), but must adopt (ii) user-country rules to enforce compliance with provider-country measures.

(i) Provider-country rules are most relevant for countries rich in biodiversity such as India, Denmark (Greenland), France (mainly through the overseas territories), Brazil, and South Africa. First, as “providers” of genetic resources, countries may require a public permit to obtain them from their territory. Such a permit commonly describes what genetic resource may be acquired, and whether the results of R&D may be commercialised. Second, countries may require the negotiation of a contract with public or private entities on how benefits from R&D on the genetic resources will be shared. Monetary benefit-sharing can include payments into a public fund or making the resulting product available at a preferential price. Non-monetary benefit-sharing can include providing access to scientific results of the R&D.

(ii) User-country rules are most relevant for countries with advanced technological capabilities, where public and private entities conduct R&D to develop commercial products from genetic resources. Under the Nagoya Protocol, all parties must adopt enforcement measures to ensure that genetic resources used in their jurisdiction have been acquired in compliance with rules of the country that provided them.

The Nagoya Protocol covers “genetic resources” and “associated traditional knowledge.” Both are legal terms subject to controversy. Nevertheless, the following examples likely fall within the scope.

• Black cumin seeds and the derived compound thymoquinoe with properties that reduce food allergies;

• pineapple stem and the derivative bromelain, a proteolytic enzyme used as the active ingredient in an EU-approved medicinal product to treat burn wounds, and;

• flower buds of the Japanese Pagoda Tree and the derived flavonoid rutin with properties useful in hair and skin cosmetics. In Asian traditional medicine the Pagoda Tree is mentioned for its hemostatic effects, possibly qualifying as “associated traditional knowledge” under the Nagoya Protocol.

In the span of two years, the Nagoya Protocol has created a complex web of public rules and private contracts spanning almost one-hundred provider and user countries.

Challenge for Industry

Upon reviewing their R&D pipelines, many companies are likely to find that the vast majority of their activities do not trigger provider country obligations. However, user countries’ rules require that companies have in place processes to check whether access and benefit-sharing obligations apply. This necessarily implies reviewing all R&D activities. If the company then finds that Nagoya obligations are triggered, they must request public permits and negotiate benefit-sharing as required in the provider country.