TED Case Studies Number 770, 2004 Alyson Slack

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I. Identification 1. The Issue Turmeric is a tropical herb grown in East India, and the powdered product made from the rhizomes of its flowers has several popular uses worldwide. Turmeric powder, which has a distinctive deep yellow color and bitter taste, is used as a dye, a cooking ingredient, and a litmus in a chemical test, and has medicinal uses as well. In the mid-1990s, this product became the subject of a patent dispute with important ramifications for international trade law. A U.S. patent on turmeric was awareded to the University of Mississippi Medical Center in 1995, specifically for the "use of turmeric in wound healing." This patent

also granted them the exclusive right to sell and distribute turmeric.[1] Two years later, a complaint was filed by India's Council of Scientific and Industrial Research, which challenged the novelty of the University's "discovery," and the U.S. patent office investigated the validity of this patent. In India, where turmeric has been used medicinally for thousands of years, concerns grew about the economically and socially damaging impact of this legal "biopiracy." In 1997, the patent was revoked. But for two years the patent on turmeric had stood, although the process was non-novel and had in fact been traditionally practiced in India for thousands of years, as was eventually proven by ancient Sanskrit writings that documented turmerics extensive and varied use throughout Indias history. Many developing countries are concerned that the globalization of intellectual property rights under the WTO's TRIPs agreement, and the negative consequences it has for traditional indigenous knowledge and biodiversity. Short of dismantling TRIPs, however, one possible solution to the problem of biopiracy in certain cases like turmeric would be for countries to claim protection for indigenous products and processes as geographic indications. GIs are defined in the TRIPS agreement as "indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation, or other characteristic of the good is essentially attributable to its geographic origin." India and other developing countries are already constructing databases of indigenous knowledge to guard against biopiracy. Indigenous products and processes identified in these databases could be further protected if the case for geographic indication could be made. For these, not only would biopiracy be prevented, but developing countries could start profiting from the export of such knowledge and products. 2. Description This case study will investigate two interrelated issues highlighted by the turmeric dispute. First, there is the specific issue of whether the use of turmeric in wound healing should have qualified as a patentable U.S. product - whether it meets the legal criteria of "Novelty, Non-Obviousness, and Utility" and what India's rights should be with regard to trading the herb bilaterally. There are alleged weaknesses in U.S. patent law that discriminate against developing countries by failing to recognize products like turmeric as "non-novel," despite the fact that this medicinal plant and other traditional agrochemicals have been used in healing for thousands of years. Secondly, there is the problem of international intellectual property rights law. World Trade Organization rules largely mimic and support the U.S.-style patent system, and as a result, they reflect the same biases and pose a threat to the sanctity of indigenous knowledge. The WTO TRIPs agreement, specifically, has led to a cry for reform from developing

countries that consider this "biopiracy" a threat to their economies and their biodiversity. Some activists charge that the WTO should retreat entirely from intellectual property rights enforcement. Reform advocates consider it the WTO's duty to protect indigenous knowledge from foreign patents, so that the dispute process can be accessible and universal. Scientists and academics in India have been some of the most vocal critics of the WTO's brand of intellectual property rights enforcement. As an ecologically biodiverse country struggling to emerge from poverty by integrating itself in the world's trade regime, India has much to be gained from such reform, as it would likely lead to the revocation of U.S. patents on many other Indian products (like Neem, Amla, Jar Amla, Anar, Salai, Dudhi, Gulmendhi, Bagbherenda, Karela, Rangoon-ki-bel, Erand, Vilayetishisham, Chamkura).[2] Developing countries increasingly sees biopiracy as a significant issue that urgently needs to be addressed. Since many of these countries are havens of biodiversity and rely economically on their ability to export indigenous products and processes, they see the rising importance of protecting their traditional knowledge from unjustifiable foreign patenting. After all, as Suvira Srivastava quips, Knowledge is the global currency for the 21st century.[3]

3. Related Cases Biopiracy cases: Goldberg, Danielle B. JACK-AND-THE-ENOLA-BEAN. Hasan, Sara. NEEMTREE. Gindin, Jane E. MACA. Priestley, Duaine & Pearson, Steve. MERCK. Jandl, Thomas. LIFEPAT. Indian trade cases: Adewumi, Jolayemi. BASMATI. Espy, Charisse. CHIPKO. Jones, Jenny. SHRIMP. Kim, Beryl. INDIATEA. Maharajah, Usha. SHRIMP3. Pattni, Tarun. INDBEEF. Rosenberg, Sarah. RUGMARK. Ramanathan, Cindy. SANDALWD.

Keywords: Biopiracy India Biodiversity

4. Author and Date: Alyson Slack, December 2004

II. Legal Clusters 5. Discourse and Status: DISAGREE; COMPLETE The general discourse of the bilateral turmeric dispute is of non-agreement, and involved a legal proceeding. The case, however, was resolved, with the court ruling that the U.S. patent be revoked for the "use of turmeric in wound healing." 6. Forum and Scope: Forum: U.S. Government Scope: UNILATERAL 7. Decision Breadth: Number of Parties Affected: 1 The only sovereign state affected in the case was the United States, whose courts presided over the legal proceedings and whose Patent Office was forced to revoke the turmeric patent. India as a state was not involved, though its Council of Scientific and Industrial Research, which is partly governmentfunded, was responsible for challenging the U.S. patent. In another sense, citizens of all WTO member countries were legally affected by the decision in that they regained respect to their rights to use turmeric in wound healing without paying royalties in some form to the University of Mississipi Medical Center, as they would have been required to do under the TRIPs agreement. 8. Legal Standing: Standing: LAW

III. Geographic Clusters

9. Geographic Locations a. Geographic Domain: Asia b. Geographic Site: South Asia c. Geographic Impact: USA Note: The Geographic Impact location is listed as USA because the court ruling (law) took place there. However, to the extent that WTO member nations are bound by the TRIPs agreement, those countries too are legally affected by the ruling against the U.S. Patent Office. As such, Indian citizens represent the group of people most impacted by the outcome of the dispute, because of their frequent traditional use of turmeric in wound healing. 10. Sub-National Factors: No 11. Type of Habitat: Habitat Type: (1) TROPICAL This habitat type refers to southern India, a hotspot of biodiversity where turmeric is a large cash-crop.

IV. Trade Clusters 12. Type of Measure: Type of Measure: INTELLECTUALL PROPERTY; LICENSE U.S. Patent #5,401,504 had the potential to disrupt the flow of a key good in this spices trade: turmeric. The patent was labeled "Use of Turmeric in Wound Healing." Patents are not commonly considered barriers to trade, a term usually reserved for tariffs, quotas, and the like. But intellectual property rights, in all their forms, have the same effect of restricting the free flow of goods, services, and ideas. The TRIPs agreement negotiated in the WTO's Uruguay Round solidified the world trade regime's commitment to implementing U.S.-style intellectual property rights worldwide. The proliferation of bilateral and regional trade agreements, in addition to the expansion of the WTO, means that more and more countries are agreeing to enforce intellectual property laws within their borders. Pharmaceutical patents are a hot issue because while drug companies insist that their products need to be protected in order for them to recover R&D costs, there is a huge negative impact on human health worldwide from these patents. While that debate rages, it should be clear that arbitrarily patenting a centuries-old herbal medicinal practice is unjustifiable. An internationally enforced patent on the "use of

turmeric in wound healing" would mean that suddenly hundreds of millions of Indians (and anybody else) would have to pay in order to apply turmeric to their wounds. Given drug prices today, it might become prohibitively expensive for most of those people. The patent on turmeric, had it not been overturned, would have caused an outflow of money from India to the U.S. in the form of licensing fees. Intellectual property rights, in short, have costs. The outrageous nature of the turmeric case aside, it is worth considering the losses that developing countries incur by agreeing to enforce U.S.-style patent laws. In 2002 the World Bank estimated what it would cost developing countries to adhere to TRIPs. The figures for India are shown below:

Net patent rents refer to the transfer of money out of India in the form of licensing fees and royalties. Deadweight losses refer to the cost of allowing a good to be priced much higher than its production cost. Both types of losses could have been incurred because of the turmeric patent, and this doesn't begin to calculate the social cost to Indians then forced to pay for the medicinal use of turmeric. While it is impossible to determine what the particular total social cost to India would be of enforcing the U.S. turmeric patent, the total estimated cost of TRIPs adherence, at nearly $3 billion, is startling. It is evident that international legal protections against biopiracy are in developing countries' best interests, so that the costs of joining the world' liberal trade order do not become even more inflated. Activist Vandana Shiva takes this view a step further, accusing the West of using patent laws as a system to 'rob' the Third World and TRIPs and the WTO as the enforcing authority.[2] During the Uruguay Round the US accused developing countries piracy in pharmaceuticals amounting to $2.5 billion. But the Rural Advancement Foundation International (RAFI) has shown that "if the contribution of Third World peasants and tribals is taken into account, the roles are dramatically reversed: the US owes [over $5 billion in royalties] for pharmaceuticals to Third World countries."[4] 13. Direct v. Indirect Impacts: Impact: DIRECT Patents have a direct impact on the trade of knowledge and ideas. 14. Relation of Trade Measure to Environmental Impact a. Directly Related to Product: Yes, turmeric. b. Indirectly Related to Product: No c. Not Related to Product: No d. Related to Process: Yes, intellectual property

15. Trade Product Identification: Turmeric 16. Economic Data The most pertinent economic data to this case is an estimate of the cost to developing countries of TRIPs enactment, and this chart was presented in a previous section (12: Type of Measure). Data on the volume of India's spice trade and its turmeric exports to the United States, are presented under the next section (17: Impact of Trade Restriction). 17. Impact of Trade Restriction: High Although this study is part of the Trade and Environment Database, raw import and export data are not integral statistics for the case, because trade in turmeric itself would not have been affected by the patent. At issue is the trade of knowledge, and the threat that biopiracy poses to the free flow and use of non-novel ideas. Therefore, the trade data listed below is only intended to give an idea of the importance of spice and agricultural production in India's economy.

Over the span of the years for which data is provided (1991-2000), agricultural exports accounted for an annual average of nearly 18% of India's total exports. Spice exports, in turn, averaged an annual 4.6% of agricultural exports over the same period. India is a leading exporter of spices because of its culture and its climate. Specific trade data is available for sales of turmeric from India to the United States. In 2003, the customs value of this trade was USD$2,973,704.

As of 2004, India is a dominant player in the world's spice trade, accounting for 46% of trade volume and 27% of trade value. From these numbers, it is clear that a developing country like India needs to be able

to rely upon the income it can generate from its biodiversity. This especially includes stopping the theft of indigenous plant-based knowledge. 18. Industry Sector: Pharmaceutical Turmeric has medical uses, as indicated in this case study, but the product is best classified in the agricultural sector. It is used in cooking as well, and therefore could easily be classified under the Standard Industrial Code FOOD, but PHARMACEUTICAL has been indicated because this study concerns a medical use of turmeric. 19. Exporters and Importers: The leading countries in turmeric trade are listed below. Due to the specificity of this agricultural product, following lists were not compiled based on any hard numbers from statistical trade databases. The countries listed were repeatedly referred to in a wide range of readings as chief producers or major importers of turmeric. Top exporters:

India (largest exporter of spices) Thailand and other Southeast Asian countries Various Pacific islands Central and Latin American countries Taiwan

Top importers:

Japan Sri Lanka Iran North African countries Middle Eastern countries Ethiopia United States United Kingdom

The first five importers listed - Japan, Sri Lanka, Iran, and the regions of the Middle East and North Africa, represent 75% of all turmeric imports.

V. Environment Clusters 20. Environmental Problem Type: Intellectual property and biodiversity

Developing countries increasingly sees biopiracy as a significant issue that urgently needs to be addressed. Since many of these countries are havens of biodiversity and rely economically on their ability to export indigenous products and processes, they see the rising importance of protecting their traditional knowledge from unjustifiable foreign patenting. After all, as Suvira Srivastava quips, "Knowledge is the global currency for the 21st century." India, as a biodiversity hotspot, is taking a leading role it committing to the protection of its knowledge base. This is evidenced by the government's creation of the Traditional Knowledge Digital Library (TKDL), which documents all practices of traditional treatment. The goal of this ambitious project is to preclude these treatments from being patented as novel ideas. 21. Name, Type, and Diversity of Species

Name: Turmeric (Latin: Curcuma longa, part of the Zingiberaceae family) Type: Herb/Spice 22. Resource Impact and Effect: High and regulatory 23. Urgency and Lifetime: Low, and thousands of years. 24. Substitutes: Like spices (for some purposes, excluding turmeric's medical uses).

VI. Other Factors 25. Culture: YES. The patenting of indigenous knowledge by foreign corporations is a cultural threat to countries like India as well as an economic one. The case of turmeric is a perfect example, since it plays such an extensive role in India's culinary and health practices, among its other uses (see the picture above of a woman being annointed with turmeric in a ritual). Spices are also an integral part of India's culture more generally. The spice trade has shaped India's history since antiquity, and led to its subjugation by Portugese, Dutch, and English colonists. The patenting of turmeric almost seems like a modern version of this theft. 26. Trans-Boundary Issues: No 27. Rights: YES 28. Relevant Literature Cleveland, David A. & Murray, Stephen C. The World's Crop Genetic Resources and the Rights of Indigenous Farmers. Current Anthropology, Vol. 38, No. 4. (Aug. - Oct., 1997), pp. 477-515. Goonatilake, Susantha. Toward a Global Science: Mining Civilizational Knowledge. Bloomingdale/Indianapolis: Indiana University Press, 1998. Grajal, Alejandro. "Biodiversity and the Nation State: Regulating Access to Genetic Resources Limits Biodiversity Research in Developing Countries". Conservation Biology, Vol. 13, No. 1. Feb 1999, pp. 6-10. "India-Trade/ Patent Denial Boosts Foes of Bio-Piracy." Inter Press Service, 5 Sept 1997. < http://www.iahf.com/piracy.html>, accessed 13 Sept 2004. Shiva, Vandana. "The turmeric patent is just the first step in stopping biopiracy." Third World Network, No. 86, October 1997. <http://www.twnside.org.sg/title/tur-cn.htm>, accessed 13 Sept 2004. Silva, Marina. "Bioresources and 'Biopiracy' in Brazil." Science, New Series, Vol. 280, No. 5364. 1 May 1998, p.657.

Endnotes 1. Anuradha, R.V. Biopiracy and Traditional Knowledge. The Hindu. 20 May 2001. http://www.hinduonnet.com/folio/fo0105/01050380.htm accessed 28 Sept 2004.

2. Shiva, Vandana. The turmeric patent is just the first step in stopping biopiracy. Third World Network, No. 86, October 1997. 3. Srivastava, Suvira. Biopirates Beware! TerraGreen. 15 March 2002. http://www.teri.res.in/teriin/terragreen/issue8/news.htm accessed 27 Sept 2004. 4. http://www.etcgroup.org/ (formerly RAFI). 5. Weisbrot, Mark, and Baker, Dean. "The Relative Impact of Trade Liberalization on Developing Countries." Center for Economic and Policy Research. 12 June 2002. (Original data source: 'World Bank 2002, Table 5.1, and authors' calculations.') 6. Trade Highlights. Spices Board. Ministry of Commerce, Government of India. http://www.indianspices.com/html/s0410trd.htm , accessed 10 Oct 2004. 7. Compiled from United States International Trade Commission Dataweb, http://dataweb.usitc.gov Picture credits: Turmeric annointment courtesy of Turmeric photo from www.cdfa.ca.gov/ phpps/pe/page65.htm

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