I. Growth Regressions

Despite these limitations, it is worth reviewing a few recent studies in order to highlight some conclusions that are intriguing and could support further debate and research. Consider first how patent laws interact with real GDP growth. Falvey et al. (Reference Falvey, Foster and Greenaway2006) studied this question using a panel of eighty countries over discrete five-year periods between 1975 and 1994, the pre-TRIPS period. The authors noted the standard arguments that the innovation gains from stronger patent rights – in terms of both new products and technology diffusion – could be offset by higher imitation costs and reduced static competition. These impacts should vary among countries at different levels of economic development and technological capabilities. The authors estimated a standard growth equation in which average real growth in GDP per capita, for each country and within each period, was regressed on several variables: initial GDP per capita, gross domestic investment, population growth, degree of secondary education in the economy, ratio of exports to GDP, average inflation rates, a measure of IP protection, and country- and time-specific fixed effects. The IP variable was the widely used Ginarte–Park (GP) index, which essentially counts the number of patent provisions in each country’s national laws (Ginarte and Park, Reference Ginarte and Park1997).

In their basic estimation, Falvey et al. (Reference Falvey, Foster and Greenaway2006) found no impact of IP protection on economic growth, which is unsurprising in light of the problems discussed above. Instead, they argued that if there were such a relationship, it would likely depend on threshold effects in how IP protection interacts with initial GDP per capita. In fact, they found evidence of two thresholds. In countries with real per-capita incomes below $671 (in 2005 prices) and those with incomes above $10,289, a rise in patent rights significantly increased GDP per capita across the time periods. Countries in the middle-income ranges experienced no effect, positive or negative. It should be noted that the estimated effects, while significant, were economically small. The authors interpreted their findings to mean that poor countries can achieve income growth through the ability of IPRs to attract foreign investment and new products from abroad, whereas rich countries gain from increased technological innovation. In contrast, the middle economies see any inward diffusion benefits offset by lower domestic imitation and competition.Footnote ⁴

While these results are intriguing, as is the absence of any negative effect of IP on growth, the study exemplifies the econometric difficulties in aggregate growth estimation. No attempt was made to control for endogenous changes in the GP index, while simple fixed effects were insufficient to control for other factors that could drive these results. In short, the paper does not reliably demonstrate a causal effect. Moreover, the approach sheds no light on what precise economic mechanisms could drive the varying growth impacts, if in fact they exist.Footnote ⁵

Hu and Png (Reference Hu and Png2013) offered a better design by studying panels of about fifty manufacturing industries across about seventy countries, in five-year periods from 1981 to 2000, thereby bringing in a disaggregated sectoral focus and a period overlapping the early TRIPS era. Their basic specification regressed the growth in real value added at the sector–country level on several variables: initial value added, an interaction between sectoral patent intensity and national patent rights, and country and industry fixed effects. Their measure of “effective patent rights” was the product of the GP index and a national measure of contract enforcement, the Fraser Institute’s index of legal systems and property rights. The logic is that GP fails to incorporate IP enforcement and interacting it with the Fraser index – assuming it applies mutatis mutandis to patents – should better capture the effective scope of protection. Industry-level measures of patent intensity were taken from US data and assumed to be constant across countries. The variable of interest was the interaction term: it should be that manufacturing industries with higher patent intensity grow faster than other industries in countries with strong patent rights.Footnote ⁶

This expectation was born out in the study. The coefficient of the interaction variable was positive for all periods but statistically significant only for 1991–1995 and 1996–2000. Moreover, the size of this coefficient grew over time, offering some suggestion that in the TRIPS era, we may be seeing stronger manufacturing growth effects. Using 1990 figures, Hu and Png (Reference Hu and Png2013) computed that a one-standard-deviation increase in effective patent rights (roughly, the difference between the regimes in Turkey and Singapore) would raise value-added growth by 0.75 percentage points, a large effect in the context of an average growth rate of around three percentage points. This effect was strongest for the most economically advanced countries. The results withstood a battery of robustness tests.

The study is noteworthy largely for its focus on detailed industries and the finding that if patent rights matter for output growth, that is true mainly for high-patent sectors and developed economies. However, the paper can be criticized for not dealing adequately with endogeneity, and it does not permit inferences about overall economic growth effects beyond manufacturing.

A more nuanced approach was taken by Kim et al. (Reference Kim, Lee, Park and Choo2012). They studied the thorny question of whether different forms of technology protection, specifically invention patents versus utility models, have different effects on innovation and economic growth in developed and developing economies. For this purpose, they specified a “knowledge production function” in which the stock of knowledge (cumulated ideas) depends on the number of patents registered at the US Patent and Trademark Office (USPTO), which in turn depends on legal rights to protect the patents. The production function was specified as a growth equation, in which increases in per-capita income in each nation depend on lagged knowledge and IP applications, along with physical and human capital stocks, population growth, and fixed effects. This function was estimated together with an equation for patenting – itself a function of lagged patents, R&D spending, and a productivity term. The latter equation was augmented by a dummy variable indicating which countries had a utility model law in place, which enabled investigating whether the existence of such laws spurred patenting; that is, whether protecting utility models encouraged patentable invention. The authors demonstrated that the existence of a utility model regime was due primarily to each country’s colonial origins rather than current economic factors that would generate sample selection bias, so that inclusion of the binary variable would not suffer from endogeneity problems. This careful relation between theory and estimation marks the study by Kim et al. (Reference Kim, Lee, Park and Choo2012) as particularly credible.

Using their preferred estimation approach, the authors found evidence for the idea that different forms of patent rights are “appropriate” for varying development levels. First, the strength of patent rights (the GP index) had a positive and significant effect on patenting, but only for developed high-income (HI) countries. It had no evident effect on USPTO patent applications from lower-income and middle-income economies. Second, the coefficient for the existence of a utility model law increased future USPTO patent applications, but only in middle-income and lower-income economies. The effect in HI countries was negative but insignificant. In brief, protection of utility models can be an important determinant of the flow of internationally patentable inventions, a novel finding in the literature.

The next question is whether patenting activity raised the per-capita economic growth. Again, Kim et al. (Reference Kim, Lee, Park and Choo2012) found that the propensity to patent in the USPTO positively affected per-capita growth, but only for HI countries. There was no effect in low-income and middle-income nations. The authors argued that this result reflected the relatively high costs of technology inputs in these countries from increased patenting, which offsets any growth benefit from stronger protection. In contrast, the existence of utility model laws had a positive and significant relationship with economic growth rates in these locations. Thus, policies protecting incremental innovations seem to correlate positively with economic growth in lagging economies. While many observers have argued for this form of tailoring IP policies to suit development needs, this study was the first credible demonstration of the empirical effects on invention and, perhaps, on growth rates.

II. Innovation

If stronger patent rights correlate with economic growth, presumably it is because they encourage innovation and technology diffusion. It remains difficult to find such causal links empirically, for reasons discussed above. Again, however, it is useful to review selected recent studies to elicit certain conclusions that seem robust.Footnote ⁷

Branstetter et al. (2006) analyzed the responses of affiliates of US multinational enterprises (MNEs) to major reforms of patent laws in sixteen countries, most of them developing or emerging, between 1982 and 1999. Their event analysis considered changes in aggregate resident and non-resident patent filings in a six-year window surrounding the dates of reforms. In their econometric model, the patent reforms showed no impact on domestic applications. However, the reforms had a significant and positive impact on foreign patent applications, both in the short and long run, raising non-resident filings in the average nation by more than 50 percent. These findings reinforced the conventional wisdom, analyzed further in Lerner (Reference Lerner2009), that multinational firms are more responsive to increases in patent rights in developing countries than are domestic firms. This point is unsurprising, particularly when one considers that the greatest short-term beneficiaries of domestic patent strengthening are likely to be global firms seeking to deploy their technologies locally.

In an important contribution, Qian (Reference Qian2007) analyzed twenty-six countries that, between 1978 and 2002, implemented laws establishing patent protection for pharmaceutical products; the study examined how that move influenced innovation in the industry. Her primary innovation measure was citation-weighted drug patent applications registered in the USPTO, and the analysis compared matched country pairs that differed in whether they adopted reforms. Various national and industry control variables were included in the regressions. Qian found no significant direct impacts of legal changes on US drug patent applications, even up to ten years later. However, there were important interaction effects: countries with higher educational attainment and per-capita income as well as greater measured market freedom significantly increased such applications post-IP reforms. Qian’s results suggest that the innovation impact of IPRs depends heavily on complementary socioeconomic factors. Low-income economies with limited educational attainment and technical skills as well as restricted markets are less likely to motivate more internationally protectable inventions simply by improving their IP regimes. This result is likely relevant to other patent-sensitive sectors as well, but to my knowledge, this question has not yet been studied.

Kyle and McGahan (Reference Kyle and McGahan2012) studied global pharmaceutical innovation in the periods just before and after TRIPS was negotiated. That this new regime would expand innovation incentives, especially in treatments for diseases endemic to poor countries, was a key promise by TRIPS advocates. The authors exploited the fact that TRIPS compliance occurred at different times and across countries with different relative disease burdens. This diversity enabled them to study how global disease-specific R&D investments (measured as Phase I clinical trials) were changed after TRIPS, controlling for the global market in each medicine. They distinguished global diseases (experienced in most countries) from neglected diseases (also experienced in most countries, but of greatest interest in poor regions). In this difference-in-difference (DID) setup, the authors found increases in clinical trials for drugs aimed at both types of disease after TRIPS compliance, but significantly more for drugs aimed at global diseases. They next broke down these impacts into country groups classified by income levels. Here they found no indications of an increase in clinical trials for drugs aimed at neglected diseases after TRIPS compliance was achieved within developing countries. Rather, there were significant increases in R&D spending on illnesses with a large presence in HI countries. Such findings reinforce the fact that pharmaceutical companies are profit-seeking entities and that stronger global patent regimes are unlikely to induce more private spending on drugs that offer limited market potential.Footnote ⁸

Two final papers are of interest, in that they demonstrate the reliance of innovation effects of IPRs on other factors. Aghion et al. (Reference Aghion, Howitt and Susanne Prantl2015) investigated whether the innovation responses of firms to competition-raising product market reforms in the European Union varied according to the strength of national patent rights. They presented a model in which competition enhancements are complementary to patent strength in driving innovation, particularly in industries that are patent-intensive. The product market reform they analyzed was the formulation in 1992 of the Single Market Program, which worked over several years to remove regulatory barriers to trade across the European Union. This initiative resulted in considerable increases in product market integration and competition in the years before national patent laws became harmonized. The authors studied innovation responses in two groups of countries, those with stronger patent rights and those with weaker rights, in the period 1987 to 2003.

At first blush, the idea of complementarity in patents and product competition seems odd. Patents limit static competition in order to generate temporary monopoly rents, leading – in theory – to faster and deeper dynamic competition. Product competition, in contrast, should reduce market rents statically, potentially diminishing innovation incentives. However, the model of similar firms showed that a company could escape the competition through successful innovation, an incentive enhanced by patent protection. Aghion et al. (Reference Aghion, Howitt and Susanne Prantl2015) were the first researchers to identify that complementarity empirically. They regressed measures of innovation (such as R&D over value added, and patents granted at the USPTO) on a product–reform variable, which was zero before 1992 and between zero and one post-1992, with the value depending on how much each industry was expected to be affected by reforms. This variable was interacted with a dummy variable over the two country groups, indicating strong and weak patents. Also included were control variables and country-year and industry-year fixed effects.

Their data included a panel of two-digit manufacturing industries, characterized as more or less patent-reliant on the basis of US data. In this DID setup, the findings showed that product market reforms did not directly raise R&D intensities, but the interaction of such reforms with patent rights was significant and positive in industries with high or medium patent relevance and located in countries with strong patent rights. However, in countries with weaker patent rights, there were no R&D impacts in either patent-relevant or other industries. These results also held true when the dependent variable was USPTO patent grants.

The paper has empirical weaknesses, particularly concerning its measures of patent strength and its limited disaggregation of industries. But it does suggest that incentives to invest in innovation are spurred by product market competition in countries with strong patent regimes. One lesson is that as developing nations strengthen their IP regimes in the hope of encouraging technological activity, they should also consider relaxing their barriers to domestic competition.

A final point to recognize is that the scope of patent rights may have differential impacts on R&D, depending on the availability and structure of financial resources to fund R&D. Maskus et al. (Reference Maskus, Depoorter and Menell2019) set out a straightforward theoretical model in which costly R&D must be financed through external channels. Further, the outcome of R&D is uncertain, and investments are therefore vulnerable to shirking in a principal–agent relationship. Hence, firms could – for example – borrow in the domestic bond market, which is an arm’s-length relationship and involves little or no monitoring by creditors (the principals) of research managers at the inventor firms (the agents). Such investments are liable to carry a risk premium and to be relatively costly. Alternatively, R&D investments could be financed through bank loans and issuing equity, both of which offer greater scope for the lenders or investors to oversee the innovator’s efforts. A third possibility is that domestic innovators could arrange financing through inward foreign direct investment (FDI), becoming affiliated with international firms as a source of funding. The authors argued that patent protection can offset some of the R&D disincentives arising from limited financial development, for several reasons. Primarily, poorly developed financial systems are inefficient at allocating resources to promising investment projects with uncertain returns, particularly where intangible assets (e.g., the potential for future profits garnered through patents) cannot be collateralized. Put briefly, patents permit potential innovators to reveal more details about the nature of their R&D programs to lenders. All this suggests that the responsiveness of R&D to IP protection should be stronger in countries with limited financial development in general and with deficient equity and bank-lending markets in particular.

These questions were studied using panel data on R&D intensity in twenty-two industries across twenty OECD countries from 1990 to 2009. To implement their DID approach, Maskus et al. (Reference Maskus, Milani and Neumann2019) noted that two industry characteristics could be used to identify the interrelationships between financial development and IPRs. First, industries differ considerably in the intensity with which they register patents. Second, they vary in their dependence on external sources of finance as opposed to internal sources (retained earnings). Controlling for these two elements, the authors hypothesized that industries with higher patent intensity should be more responsive to patent protection, as in the conventional wisdom. In addition, this sensitivity should be higher in countries with limited lending and ownership markets (bank financing and equity). In contrast, the elasticity of R&D to patent strength should be higher in countries with highly developed bond markets, where enforceable patents effectively reduce the monitoring costs.

These hypotheses were clearly born out in the econometric model, in which private business enterprise R&D intensity, by industry, was regressed on multiple variables: country-level measures of financial development; patent enforcement (the product of GP and the Fraser Index); interaction terms between the variables of interest; industry patent intensity; external financial dependence; asset tangibility; and country, industry, and year fixed effects. The results showed that the patent index itself had little effect on R&D shares. However, there was a significant and positive coefficient for the interaction between patent intensity and IP protection in countries with below-median private credit and below-median stock market capitalization (both relative to GDP). In contrast, this interaction was significant and positive for countries with above-median private bond market size. Interestingly, the same interaction was highly significant and positive for all countries when financial development was measured as the stock of inward FDI.

The authors interpreted these results to mean that patent protection effectively substitutes for inadequate direct monitoring possibilities (that is, where bank lending and stock markets are weak) and expands the access of inventors to bond financing in relatively developed economies. Most powerfully, increased availability of foreign finance through FDI works together with patents to increase local R&D incentives, at least within these OECD economies. This last result is important for it sheds light on the common finding that FDI reacts positively to patent reforms among middle-income and emerging economies.Footnote ⁹

III. Summary

Before proceeding, it is worth taking stock of the messages the recent research seems to be offering. In my view these conclusions remain tentative and in need of further validation but do offer food for thought.

First, economic growth may be positively influenced by a strong patent scope, but this conclusion must be heavily qualified. Aggregate national-level growth regressions remain highly suspect for their inability to establish causality. In particular, the mechanisms for such a relationship remain understudied. Moreover, such growth impacts seem conditional in that they may exist for upper-income emerging countries and developed countries with threshold levels of education, market competition, adequate governance, and other factors. To date, there is virtually no evidence of a growth effect – positive or negative – from IP protection in poor developing economies.

Second, studies done with industry- or enterprise-level data are considerably more informative than those aggregate data. It remains technically challenging to find such data, especially for the enterprise level, and to devise appropriate hypotheses and testing techniques. However, the findings of various DID approaches support the view that R&D and patenting within high-technology goods are sensitive to domestic patent rights at the microeconomic level – again when attention is limited to HI and emerging countries.

Third, types of knowledge protection, such as patents versus utility models, may matter differentially for innovation as economic development proceeds, at least beyond certain thresholds. There is empirical merit in thinking of such devices as “appropriate” or “inappropriate” IP protection.

Fourth, the ability of strong patent rights to encourage innovative activity depends on other economic factors, such as product market competition and financial development. There is a long list of such factors, including simple trade liberalization, that could alter this elasticity, which itself would vary across industries and countries. This possibility calls for more research that combines micro data with measurable policy and economic variables through models that identify such interactions. This remains a large research agenda.

Fifth, readers who pay attention to the details of this review will have seen that little of the extant research, even in recent papers, directly asks whether innovation incentives have changed in the post-TRIPS era. There are hints that they might have, again heavily conditioned by additional factors. But additional research aimed at this question is sorely needed.

Finally, there are other important research questions that have yet to be asked. I will mention just two of many. We have yet to introduce meaningfully other elements of IP protection – such as copyrights, trademarks, and trade secrets – into consistent innovation analysis. This task will necessarily be more difficult, both for reasons of limited data and conceptual ambiguities, but it should be undertaken. And economists have not yet studied systematically what has happened to competition processes in emerging and developing countries after the implementation of patent reforms. Do domestic firms leave the market, and to what extent? Are they more likely to become acquired by foreign enterprises, particularly in high-technology sectors? On what other factors do such decisions depend?

I. TRIPS, PTAs, and IP Reforms Increase High-Technology Exports in High-Income and Middle-Income Countries

It is intuitive that the strong IP standards imposed by TRIPS would increase high-technology exports from advanced economies to emerging and developing countries. Less expected is the robust finding in recent papers that the standards also are pro-export in emerging nations with at least moderate technological capacity. This was first noted by Delgado et al. (Reference Delgado, Kyle and McGahan2013), who estimated the determinants of both imports and exports across countries in a DID framework. Specifically, they regressed sectoral imports or exports across countries on a dummy variable for the years following TRIPS compliance, along with interactions of that variable with indicators for high-IP goods and three-way interactions (also involving dummies) for HI countries and for developing countries. Traded goods in manufacturing were allocated to either IP-sensitive sectors (the treatment group) or sectors that are not sensitive to IP use (the control group) for 158 countries over the period 1993–2009. The definition of high-IP goods varied across specifications, including high-IP clusters such as biopharmaceutical products, medical devices, and information-communication technologies.

The initial regressions showed that in the years after TRIPS implementation, there were large increases in high-IP exports, and this finding held true for both HI countries and developing countries (DCs). Moreover, the coefficients grew in magnitude as the years elapsed, suggesting both a significant and a time-distributed effect. Total imports of high-IP goods were also sensitive to TRIPS, but with lower coefficients. Interestingly, exports of nearly all the high-IP clusters were highly elastic to TRIPS in both the HI and DC groups. The DC imports remained relatively insensitive to this breakdown, although there were significant effects on imports from innovative countries in chemicals and information technologies. In brief, the findings suggest that TRIPS is strongly expanding the export of high-technology goods (relative to low-technology goods) from both HI and DC markets.

Maskus and Ridley (Reference Maskus and Saggi2020) extended this analysis to the trade impacts of PTAs that embody elevated TRIPS-Plus standards at the request of either the United States or the EU – the major demandeurs of highly protective IP standards. The researchers labeled such accords “IP-related trade agreements” (IPAs), and these have proliferated greatly in the last twenty years. Their econometric specification departed from that in Delgado et al. (Reference Delgado, Kyle and McGahan2013) by, first, including both IPAs and TRIPS in the interactions; and second, setting up the control group as low-IP goods in countries that do not join an IPA, and the treatment group as high-IP goods in countries that do. Moreover, they estimated a version of the gravity trade model using highly detailed bilateral trade statistics, accounting for IPA membership of both exporters and importers. Trade flows to the major partner country were excluded in order to avoid that source of endogeneity in agreement formation. Country groups were broken down into low-income (LI), lower-middle income, upper-middle income, and HI. There were 187 countries included over the period 1995–2014, covering much of the post-TRIPS era.

Among many results in the paper, two are most novel. First, both TRIPS and IPAs have significant impacts on bilateral trade, but often these effects are more pronounced for IPAs. Both policy interventions significantly raise exports of most high-IP clusters from all country groups except LI. The effects on bilateral imports are generally insignificant, except in biopharmaceuticals and medical devices, where imports are stimulated by IPAs that involve developing and emerging countries. Second, there is a marked “comparative advantage” effect, in that IPAs tend to reduce exports of low-IP goods and raise exports of high-IP goods – at least relative to the control group of other countries.

These studies are interesting in shedding light on how trade patterns may evolve in the wake of major international IP agreements. However, they leave unanswered some fundamental questions that require considerably more research. For example, what are the channels through which trade agreements may (relatively) expand exports of high-IP products? The results in Maskus and Ridley (Reference Maskus and Saggi2020) suggest that IPAs may encourage multinational firms to increase production and exports from local affiliates, but that is only a surmise. How do local firms become competent exporters within such agreements? Does this happen because they acquire and adapt new technologies and products of higher quality? Is the export expansion the result of greater entry into exports by firms that had not been exporting?

Such questions occupy the authors of two other studies that I highlight here. Maskus and Yang (Reference Maskus and Yang2018) estimated models, based on trade theory, of how exports of patent-intensive goods respond to national effective patent rights rather than membership in TRIPS or IPAs. The authors used trade data concorded to the standard industrial classification across 102 countries in five-year increments over the period 1995–2010, along with several industry characteristics interacted with country factor endowments and policy measures. The results showed that exports of patent-intensive goods were significantly higher in countries with stronger domestic patent rights, with some evidence of higher coefficients over time. Interestingly, the export effects in developing and emerging countries were also positive, although significantly lower than those for developed nations. In their final specification, they included additional interactions with three variables commonly thought to embody technology transfer: the inward stock of non-resident applications by technology class, within-firm imports of intermediate inputs from the United States (aggregated to industries), and industry employment in affiliates of US MNEs. All three variables increased the elasticity of exports with respect to patent rights in patent-intensive sectors. This finding suggests that all the examined variables were sources of technology transfer and quality upgrading.

The second study was by Lai et al. (Reference Lai, Maskus and Yang2020). Their question was whether stronger IP enforcement would encourage innovation and export growth among Chinese firms during the period just after China joined the WTO. They developed a theoretical model of heterogeneous firms, in which the dividing lines separating firms that are productive enough to export, import new capital goods, and invest in new products depended both on tariff cuts and IPRs. IP protection was measured as the ratio of judicial cases in each province in which the IP owner, as plaintiff, prevailed. These figures for the early 2000s and 2006 were compiled from legal reporting sources and combined with firm-level data on exports, capital and intermediate-goods imports, and new product development. The findings supported the theory: more productive firms export and invest in capital and new products.

The model predicted that stronger IPRs would encourage more of all three activities – exports, capital importation, and new goods – among highly productive firms, while forcing less productive Chinese firms out of the market. Moreover, most of the positive impacts should occur at the “extensive margin,” meaning new entry into those activities by firms that were not previously active in those areas. Careful estimation found results supporting these hypotheses, although there were also positive effects along the intensive margins. In brief, the combined effect of trade liberalization and patent enforcement tended to push surviving Chinese firms into higher-productivity activities and to both export and innovate more. These findings point to induced innovation as a primary channel for export growth at the micro level.Footnote ¹¹

II. IP Protection Correlates with Export Quality and Sophistication

I noted earlier the evidence that exports of high-technology and high-IP goods to emerging economies rise significantly after IP reforms. This broad insight has been refined with more detailed trade figures and firm-level data to understand the sources of these increases. Is there a simple intensive margin effect, where existing exporters simply sell more to the same markets? Is it an extensive margin effect, where firms enter exporting and may export to new markets? Or is it the result of higher export quality, which finds more international markets and permits higher export-price markups? All of these scenarios are possible, and all contribute, as noted by Lai et al. (Reference Lai, Maskus and Yang2020) in their paper on China.

Three recent papers have studied the characteristics of high-IP exports that increase in the wake of IP reforms. Ivus (Reference Ivus2015) studied detailed product-level US exports to foreign destinations from 1990 to 2000. She estimated how such exports reacted to changes in patent laws abroad, measured by the GP index, which was instrumented to control for policy endogeneity. Her identifying factor was that countries that were not former colonies of European powers were required by TRIPS to strengthen their patent rights significantly more than those that were. Her statistical analysis found a significantly higher entry of new varieties of products into emerging markets with relatively stronger expansion of patent rights in the 1990s. Nearly all of this relative increase in trade came through the introduction of new products, implying that extensive margin effects dominated export growth. Put in simpler terms, developing economies with relatively greater expansion of patent rights in this period gained access to significantly more new product varieties, implying a gain from trade through enhanced choice.

Lin and Lincoln (Reference Lin and Lincoln2017) took this analysis further by analyzing confidential export data of US firms to different locations, matching those figures to firm-level data on US patents owned and industry characteristics from the Census of Manufactures. Using 1997 data, they found that just 9 percent of US manufacturing firms owned at least one patent at the USPTO. However, these firms were quite large and accounted for 89 percent of US manufacturing exports, demonstrating the joint concentration of size, innovation, and exporting. They estimated a simple DID model to see if firms owning patents were more likely to export to countries with stronger patent rights, measured by the GP index, than to other countries. They included several other interactions between firm characteristics and the GP index, plus additional controls and fixed effects, in the 1997 cross-section. The authors discovered that a substantial rise in a foreign country’s GP index would raise the probability by 2.9 percent that a firm owning a US patent would begin exporting to that country; this increase was statistically significant. Similar results were found for patent-owning firms with relatively high average wages and skills in their employment mix. The authors extended this analysis by tracking how US enterprises chose to serve six emerging markets that engaged in substantial IP reforms, as identified in Branstetter et al. (Reference Branstetter, Fisman, Fritz Foley and Saggi2011). Using matched pairs analysis, with the treatment firms being those that owned a US patent, Lin and Lincoln (Reference Lin and Lincoln2017) found significantly larger increases in exports by the treatment firms, compared to other firms, to five of six reforming economies. These findings suggest that at least part of the reason for the positive export response of high-technology goods to patent reforms is that patent-owning firms choose to enter new markets. In turn, the reforming economies benefit from access to newer technologies and new products.

A third paper, by Sweet and Maggio (Reference Sweet and Maggio2015), studied the characteristics of manufactured exports from developing economies with differing levels of IPRs. The authors equated innovation with the sophistication of exports, measured by an index of product complexity at the national level. This index (ECI) measured the diversity of exports across industry classes, in comparison with a global or development-consistent standard across countries. It was computed from detailed trade data. The authors regressed ECI on the GP index, a vector of national controls, and country and year fixed effects every five years between 1965 and 2005. They found robust evidence that patent protection was positively correlated with export sophistication. In this context, emerging economies may benefit from higher export earnings after patent reforms. Again, however, this result pertained only to countries above a threshold level of initial GDP per capita. This finding supports a common theme: simply adopting stronger patent in poor countries is unlikely to generate many innovation or export benefits – as reviewed in this chapter.

III. High-Technology Exports from Developing Countries May Be Impeded by IP Rights in Rich Countries

Shin et al. (Reference Shin, Lee and Park2016) studied an important question: is the composition of exports from developing countries (the Global South) affected by IP protection in developed economies (the Global North)? They noted that developed economies – such as the United States and the EU – have laws in place protecting their IP-owning firms from infringing imports through bans or anti-dumping actions. Thus, the possibility exists that higher IP protection in the North could diminish imports from the South through such actions.

The authors constructed a measure of each country’s level of technology (LT), defined as either the total number of foreign patents or US patents its residents own. They estimated a basic gravity model of the determinants of bilateral exports, augmented by the importer’s IP protection, the exporter’s LT, an interaction between those variables, and various fixed effects. IP protection was measured by the annual survey of global technology managers by the World Economic Forum.

The primary results reported by Shin et al. (Reference Shin, Lee and Park2016) were intriguing. First, the importer’s IP level positively affected bilateral exports, consistent with prior findings. However, the interaction term was significant and negative, suggesting that in countries with high levels of IP protection, an increase in the exporter’s LT level would be met with marginal reductions in trade. When the estimation was broken into income groups, this result existed for South to North exports, but not the reverse flows. In summary, as the exports of emerging countries expanded in technological intensity, those countries found it increasingly difficult to penetrate Northern markets.

This analysis can be criticized for its use of qualitative survey data and inadequate attempts to deal with endogeneity and measurement. However, it does point to the possibility that importer patent rights and exporter technology trade may not go hand in hand. Rather, there may be other impediments to trade that assert themselves to diminish this form of competition at the margin.

IV. IP Protection Shrinks Effective Distance within Production Networks

In an insightful analysis, Keller and Yeaple (Reference Keller and Yeaple2013) studied the behavior of MNEs to illuminate the spatial barriers to transferring knowledge from headquarters to affiliates. Firms can transfer technical information either via exports of intermediate inputs (embodied knowledge) or through direct communication (disembodied). Physical distance raises costs and reduces the amount of both forms of trade. It may seem counterintuitive that costs of communication rise with distance, but there are mistakes in transmitting knowledge directly, and the severity increases with remoteness. This is one explanation for the continued prominence of within-firm business travel by engineers and skilled managers. The authors modeled these processes and, under reasonable assumptions, showed that the costs of shipping inputs fell relative to communication costs the farther away was the affiliate. As a result, the technological content of intra-firm exports among US multinationals increased significantly as the distance increased, because firms chose to ship their high-technology inputs rather than relying on disembodied means of diffusion. The prediction was born out in this empirical work with confidential US data on the operations of such enterprises.

One interesting finding that the authors did not discuss is that this substitution proposition was considerably attenuated by the strength of patent rights. Other things being equal, countries with stronger IP protection received a smaller share of embodied technology and a larger share of information transmission, raising relative affiliate sales. From this result it seems that stronger IPRs reduce the severity of the consequences of miscommunication, making firms more willing to share their technological information in disembodied form. At this point, the inference remains speculative but intriguing and further research is needed to understand why this might be.

In a complementary analysis, Piermartini and Rubinova (Reference Piermartini and Rubinova2018) found evidence of an important technology spillover within production networks or global value chains (GVCs). They hypothesized that new ideas flow to a country as a function of how closely that country is linked to other countries in which knowledge is generated. Their econometric model regressed patents registered through the Patent Cooperation Treaty (PCT), disaggregated into industries, among residents of one country, on several variables: domestic R&D spending, the weighted average of foreign R&D spending, national control variables, and country and industry fixed effects. The novelty is that the bilateral weights depend on various measures of networked trade linkages through vertical supply chains. These weights were computed from the World Input–Output Database, which links countries through these flows of intermediate inputs and outputs.

The authors found significant and positive spillover coefficients from weighted foreign R&D to domestic patent applications. In their main specification, they computed that a one-standard-deviation increase in GVC linkages raised PCT patenting by 5 percent, which held for both developed and emerging countries. Thus, countries that have firms linked closely to GVCs have higher innovation profiles. It is also noteworthy that the regressions showed a significant and positive effect of domestic patent protection on patenting.

V. The Specifics of Patent Protection Matter for Trade Flows

A final novel and important paper is Palangkarya et al. (Reference Palangkarya, Jensen and Webster2017). These economists, reviewing the literature on patent rights and trade, wondered what specific features of patent regimes affect microeconomic trade flows. Rather than using a national patent-law index such as the GP measure, they studied patent examination records in many countries and developed two measures of the difficulty of achieving patent protection in various destination jurisdictions. These measures included (i) bias at examination offices against foreign applicants who propose to export if they receive protection and (ii) the existence of patents owned by others that might block imports even if new patents are granted. These measures were included as “trade costs” in a gravity trade model of bilateral imports at the detailed industry level, estimated from 1976 to 1999 across 189 exporters to several locations where examination records and extant patents could be accessed. The authors distinguished industries as being high-tech, medium-technology, or low-technology, and they hypothesized higher impacts in the first two groups.

Their regressions found significant and negative coefficients for both examiner bias and the likelihood of patent blockage on bilateral trade. This was true for all types of goods, but the coefficients were considerably larger for high-technology and medium-technology goods than for low-technology. From this evidence, it appears that specific elements of patent policy have strong effects on bilateral trade. Exporters of high-technology and medium-technology goods are particularly concerned about encountering lawsuits from blocking-patent owners if they export to countries where that action is a threat. Examination bias against foreign inventors similarly deters exports, suggesting that firms are aware of this problem. Their study was, to my knowledge, the first to combine trade data with patenting processes to achieve a microeconomic explanation for the correlation between exports and patent standards. It should stimulate an extended literature going forward.

VI. Patent Rights and Global Innovation Networks

One of the most significant, yet so far understudied, global trends in information diffusion is the growth of international networks across which R&D investments are made, whether to achieve local innovation or to collaborate on global technology solutions by specializing R&D resources. These global innovation networks (GINs) arose in good part within multinational enterprises seeking to maximize their innovation profits, but today they may involve collaboration across private firms, universities, public research laboratories, and charitable foundations (Maskus and Saggi, Reference Maskus and Ridley2013). In these contexts, GINs may be uniquely poised to address critical public-goods issues requiring extensive international cooperation and skill specialization, ranging from vaccines to environmentally sensitive technologies.

Of greatest interest for this chapter are the roles played by MNEs in this globalization of research efforts. The traditional conception is that such firms have engaged in so-called headquarter services, most prominently R&D and marketing, the fruits of which could be spread at low cost among producing facilities in different countries. This insight cast MNEs as the core of the knowledge-capital model of FDI (Markusen, Reference Markusen2002). In brief, such firms concentrated R&D in their home location but transferred their knowledge-based advantages to reduce costs or introduce new products in foreign markets. The resulting FDI could either be horizontal, designed to sell similar products in local markets, or vertical, seeking lower factor costs, such as low-wage labor. Over time, as the costs of transferring technologies fell due to better information and communication technologies and the gains to producing abroad rose due to tariff cuts, this process evolved into extensive offshoring through complex production networks (Baldwin, Reference Baldwin2016).

The emergence of R&D networks within MNEs was perhaps natural in this context (Branstetter et al., Reference Branstetter, Glennon and Jensen2018). Early investments in R&D-based affiliates focused on developing capacity for local adaptations of international technologies, complementing horizontal FDI. While this process transferred considerable knowledge abroad, it was not aimed at building deep local research capacities, although to some degree such capabilities emerged endogenously.

More recently, however, many MNEs have built major R&D centers in large emerging markets, primarily China and India, for more complex reasons, four of which stand out. First, these countries are producing large volumes of skilled workers with sufficient research and engineering proficiency to sustain large facilities with global inventive potential. Moreover, the governments have invested in complementary research infrastructures, including technologically advanced universities and public research facilities. Second, increasingly restrictive limitations on bringing technical workers to the United States and other technology hubs have encouraged firms to seek and employ talented inventors and scientists in the home locations of those employees.

Third, the process of invention itself is now so complex, with knowledge combined across multiple scientific and engineering disciplines, that the specialization of tasks within international R&D networks is considerably more efficient for firms than is using generalists situated within concentrated innovation centers in a headquarter location. Finally, the increasing application of modular software to technical problems has made it easier to split research tasks among specialized locations, raising the productivity of R&D (Branstetter et al., Reference Branstetter, Glennon, Jensen, Lerner and Stern2019). Indeed, the abundance of software engineers in China, India, and Israel explains why these countries have become major sources of global innovation mediated through MNEs, as indicated by the rapid growth of co-invention measured by international patent statistics listing multiple inventors across facilities within such firms.

I am unaware of formal econometric studies that establish a clear role for IP protection in encouraging R&D networks, a question that deserves careful analysis. After all, China is the source of considerable irritation among Western policymakers regarding its selective enforcement of the IPRs of foreign investors. In contrast, Israel has strong IP protection, and India is noted for its copyright strength. Making firm conclusions about these linkages is, again, problematic. However, given the evidence reviewed earlier regarding a positive association between patent laws and the FDI of high-technology MNEs, it seems likely that IP is a contributing factor in decisions about where to locate R&D facilities and how MNEs try to safeguard the outcomes of local R&D programs.

I. Research Questions

This contribution was guided by the following research questions:

1. 1. What scientific presumptions underlie the UPOV treaty and the PBR regime it establishes?

2. 2. What scientific presumptions underlie the Convention on Biological Diversity (CBD) and the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA)?

3. 3. What is the scientific and historical basis of the regulatory focus on uniformity or homogeneity and stability? Does this focus correspond with current and emerging scientific understanding of how sustainability can be ensured in agricultural production and innovation?

4. 4. In what way, if at all, does agricultural biodiversity support food security and seed-related innovations?

These questions are explored in this paper with a relatively long-term perspective. The aim is to determine whether a fundamental rethinking of international IP regulations is called for to promote and incentivize what has been previously referred to as “sustainable innovations” in plant varieties.Footnote ¹⁵

II. Arrangement of the Paper

The paper is arranged as follows. Following this introduction, Section B briefly explores the assumptions that underlie the UPOV agreement and the PBR regime it establishes. Specifically, Section B discusses the meaning and scope of the key terms under PBR regimes, giving special attention to the historical scope of the term “variety” and the scientific and commercial basis of the focus on “uniformity” (or homogeneity) and “stability.” Section C explores the assumptions underlying the CBD and the International Treaty on Plant Genetic Resources for Food and Agriculture (the ITPGRFA, also known as the Seed Treaty). Section C specifically discusses the scientific basis of the importance given to “diversity” (contained in landraces and farmers’ varieties) and “traditional knowledge” in the CBD and the Seed Treaty. Section C also looks into current scientific research that highlights the importance of and the inter-relationship between seed and soil (microbial) diversity for the performance of indigenous or heterogenous seeds in marginal environments. A related point is the limited utility of “uniform” seeds in such environments and in the face of climate change.

In Section D, the value of traditional (ecological) knowledge vis-à-vis protection and enhancement of agrobiodiversity (i.e., seed and soil microbial diversity) is explored in the context of the natural farming (NF) movement in India. Section E concludes with exploring recent legislation in Europe that indicates a sort of “return to innocence,” focusing, once again, on the importance of local seed and food diversity in the face of climate change and the ongoing global pandemic. Section E also makes recommendations for further research and highlights the need to urgently redirect international effort toward more diversity, supporting “minimum standards” in IP and associated regulations.

I. (Botanical) Varieties versus (Legal) Varieties

The International Union for the Protection of New Varieties of Plants (UPOV) was established by the International Convention for the Protection of New Varieties of Plants (UPOV Convention). The Convention itself was adopted in Paris in 1961 and was revised in 1972, 1978 and 1991. According to the UPOV website, “UPOV’s mission is to provide and promote an effective system of plant variety protection, with the aim of encouraging the development of new varieties of plants, for the benefit of society.”Footnote ¹⁶

The UPOV focuses on promoting and protecting new “plant varieties.” The term “plant variety” is considered to have neither a scientific nor a botanical origin.Footnote ¹⁷ Its origin as well as rise to popular usage are usually traced to the UPOV Convention of 1962. However, the term “variety” has a legal as well as a botanical origin. In the legal context, the term “variety” was indeed defined, perhaps for the first time, by UPOV,Footnote ¹⁸ under Article 2.2 of its 1962 Act, which states:Footnote ¹⁹ “For the purposes of this Convention, the word ‘variety’ applies to any cultivar, clone, line, stock or hybrid which is capable of cultivation and which satisfies the provisions of subparagraphs (1)(c) and (d) of Article 6.” Article 6(1)(c) and (d) go on to describe the “homogeneity” and “stability” requirement that every “cultivar, clone, line, stock or hybrid” must fulfill to be deemed a “new variety” and to qualify for protection:

In the European Union, the Biotechnology DirectiveFootnote ²⁰ clarifies the meaning of (plant) varieties by stating that “a variety is defined by its whole genome and therefore possesses individuality and is clearly distinguishable from other varieties.”Footnote ²¹ Recital 31 adds that “a plant grouping which is characterized by a particular gene (and not its whole genome) is not a plant variety.”Footnote ²² The 1991 Act of UPOV substantially modified the definition of “variety” and replaced the “homogeneity” requirement with the “uniformity” requirement. UPOV 1991 states:

Thus, under the legal definition, in order to be deemed a “variety,” (i) the plant grouping must exhibit specific characteristics that result from a given genotype, that is, from the “internal environment” of the seed as a whole, or in other words, from its entire genome and not due to the expression of a particular gene; (ii) these characteristics (or at least one of them) should help distinguish it from any other plant grouping; and (iii) the plant grouping must be capable of propagating itself unchanged.

It is in the context of botanical taxons and ranks mentioned in the above legal definition of “variety,” that one can also find the botanical meaning of the term. The International Code of Nomenclature for Algae, Fungi and PlantsFootnote ²³ places the term “variety (varietas)” as the category in the botanical nomenclatural hierarchy that comes between species and form (forma).Footnote ²⁴

This botanical usage of the term “variety” pre-dates the adoption of UPOV and has been defined differently by various notable botanists. The emergence of the term was highly influenced by Darwin’s work on the evolution of species.Footnote ²⁵ One of the earliest definitions of “variety” was by Linnaeus, who in 1753, in the Species Plantarum, defined “variety” as “a plant changed by accidental cause due to the climate, soil, heat, wind, etc. It is consequently reduced to its original form by a change of soil. Further, the kinds of varieties are size, abundance, crispation, colour, taste, smell. Species and genera are regarded as always the work of nature, but varieties are more usually owing to culture.”Footnote ²⁶

The reference to “culture” in the botanical definition of “variety” is significant as it indicates the very localized nature of a “variety” and that various cultural contexts can lead to the evolution, in various geographies, of diverse varieties belonging to the same species (or sub-species). The interpretation of Linnaeus’ work by Fernald (1940) confirms this understanding. Fernald opined that Linnaeus “generally designated as varieties indigenous plants which he considered to be natural (often geographic) variations within the broad limits of his specific concept.” Footnote ²⁷ In later works, botanists have distinguished between “sub-species” and “varieties,” with the former term used to indicate “major morphological variations” or “variations of greater value,” while the latter indicates “minor ones [variations].”Footnote ²⁸

Asa Gray, a leading botanist in nineteenth-century America, however, said in 1836 that “any considerable change in the ordinary state or appearance of a species is termed a variety. These arise for the most part from two causes, viz.: the influence of external circumstances,Footnote ²⁹ and the crossing of races.”Footnote ³⁰ Here we see, therefore, that before the era of genetic engineering rose to prominence, varieties were known to result not just from “crossing” (i.e. breeding activities that seek to change the “internal environment” of the seed) but also by natural environmental factors (i.e. the “external environment” to which a seed is subjected). In other words, it is not just the “internal atmosphere” of a seed, but also its external environment that determines its characteristics.

Indeed, today geneticists confirm that the seed’s external environment – which contributes specific nourishment, inter alia, through soil and manure quality as well as biotic and abiotic stressors – determines which genes will express themselves and which will remain dormant.Footnote ³¹ This principle is particularly relevant when the seed’s internal genetic environment has not been artificially narrowed with the aim of ensuring “uniformity” and “stability” in specific external conditions.

Undoubtedly, the term “variety” is now less frequently used in the field of botany,Footnote ³² with preference given to the more important differences reflected under the taxonomic ranks of “species” and “sub-species”. However, it is important to note that the botanical term “variety,” which reflects “minor” differences, does not presuppose “uniformity” or “stability” either within the same farmland (due to shifting environmental circumstances) or across various geographic, environmental, soil type and other factors. In fact, within specific species and sub-species, a variety (in the botanical sense) can be expected to naturally display different characteristics depending on various external factors and influences. Further, the changes seen in any such botanical “variety” can originate from the work not just of plant breeders but also of farmers, inter alia, based on cultural preferences and environmental expediencies.

It is, therefore, quite interesting that some countries, while following a definition of variety that is very close to the above UPOV definition,Footnote ³³ also recognize a different category – called “farmers’ varieties.” In India, for example, “farmers’ varieties” are defined to include landraces and wild relatives of a variety. To this extent, the Indian law seems to include both the legal and botanical understanding of “variety” within its scope. Section 2(l) of the Indian law states:

Wild relatives and landracesFootnote ³⁴ differ significantly from UPOV’s “varieties” because they can and do change during the course of repeated cycles of propagation. This change occurs as a result of the genetic variability inherent in heterogenous (as opposed to homogenous) propagation materials (such as seeds), and is triggered, inter alia, by external circumstances such as climate change, pest attacks, drought or flood conditions. While genetic variability makes landraces and farmers’ varieties more robust in the face of biotic and abiotic stresses, it is antithetical to “uniformity” and “stability” requirements, which are pre-conditions for the grant of PBR certificates under UPOV.

II. The Scientific (Ir)rationale of the DUS Requirement

The test of distinctness, uniformity, and stability (DUS) is referred to as the “DUS requirement.” The legal concept of uniformity can be traced back to the “homogeneity” requirement under the 1962 UPOV Act, which became “uniformity” in the later Acts. Hence, UPOV 1991 (Article 8) defines a “uniform” variety rather generally: ‘A variety shall be deemed to be uniform if, subject to the variation that may be expected from the particular features of its propagation, it is sufficiently uniform in its relevant characteristics.’

The regulatory focus on uniformity can be traced back to the (re)discovery of Mendelian genetics in the early 1900sFootnote ³⁵ Gregor Johann Mendel published his understanding of the laws of heredity in 1865. However, the dissemination of the findings in the scientific and political community followed only in 1900, rediscovered by K. E. Correns, E. von Tschermak and H. de Vries.Footnote ³⁶ They rejected “breeding methods inspired by Darwin’s evolutionary theory” as “scientifically unsound” and not feasible for practical breedingFootnote ³⁷ and focused instead on Mendel’s theory of heredity based on the stability of genes.Footnote ³⁸

Johannsen emphasized the purity of genetic material;Footnote ³⁹ he considered “the genotype as a whole as the elementary species and the pure line, as the key permanent biological type.”Footnote ⁴⁰ In the early 1900s, with the expanding practice of plant breeding, the understanding that genetic purity is rare and actually leads to instability was increasingly overtaken by the understanding that genetic purity and stability are indicative of quality and replicability.Footnote ⁴¹ Early geneticists considered genetic identity to be independent of environmental influence; that is, gene expression is not influenced by the plant’s environment but is primarily or exclusively influenced by the internal genetic makeup of the plant (i.e. the plant genome).Footnote ⁴² This idea led to a sort of obsession with genetic purity and stability that continues in the plant breeding community to date.Footnote ⁴³ According to Provine (1971), “the climate of biological opinion was favorable to the pure line theory.”Footnote ⁴⁴ Opposing ideas tying genetics closely to its context (e.g. environment) were led by Raphael Weldon but ended prematurely with his death in 1906.Footnote ⁴⁵ When Johannsen presented his pure line theory at a symposium in 1910, most geneticists accepted the theories without adequate proofFootnote ⁴⁶ and Mendelism’s legacy “boomed its way into biology.”Footnote ⁴⁷

There are, indeed, also more economically driven reasons for the continuing importance given to pure and stable genetic materials: pure and stable genetic material leads to uniform and stable plant varieties that can be easily protected by PBR and patents. The existence of property rights permits the charging of monopoly rents and recoupment of the (allegedly) high costs involved in the creation, certification and marketing of new uniform varieties.Footnote ⁴⁸ Further, industrial standardization and quality control regulations have allowed and supported the emergence of the breeding industryFootnote ⁴⁹ and effectively limited competition from the informal seed sector (in Europe). Industrial breeders, therefore, can be said to have considerably contributed to the success of Mendel’s and Johannsen’s theories.Footnote ⁵⁰

Pure (parental) lines, purified for specific traits, are also a prerequisite for the creation of F1 hybrids.Footnote ⁵¹ These F1 hybrids, in turn, help industrial breeders maintain their market monopolies in two ways: (i) once two (or more) parental lines are crossed to create an F1 hybrid, it is difficult to identify (or recreate) the parents. This is because the resulting hybrid out-performs both parents due to a phenomenon known as hybrid vigor or heterosis;Footnote ⁵² (ii) F1 hybrids do not reproduce true to type. This means that farmers who attempt to save seeds from the harvest of their F1 seeds for sowing the next season’s crop are likely to experience lowering of yields due to the segregation of genetic materials in the second generation.Footnote ⁵³

Experts argue that it was perhaps no coincidence that the dissemination of Mendelian theory in the early 1900s coincided with the industry push for property rights for new inventions and discoveries in agriculture.Footnote ⁵⁴ To ensure “quality control,” the purity and stability criteria of plant material became the norm not only for industrial seed production but also in experimental biology, and as a means of ensuring “fairness in social and economic relations.”Footnote ⁵⁵

The standardization of plant breeding and its focus on uniformity and purity caused a divide between landraces, which are preserved and improved over time by farmers in situ, versus cultivars, which result from plant breeders’ labs or from highly regulated and carefully managed agricultural testing lands.Footnote ⁵⁶ Landraces were considered “not suitable for anything,” obsolete, unproductive and were reduced to a mere gene storeFootnote ⁵⁷ – as indicated in the popular term “plant genetic resources”. A resolution in 1907 on conserving landracesFootnote ⁵⁸ by a locally oriented public initiator “soon came under private breeders’ fire” leading to its decline.Footnote ⁵⁹ However, as a paradox of modern breeding, the breeder Baur (1914) warned of their disappearance and the urgent need to preserve landraces.Footnote ⁶⁰

What has resulted since the widespread acceptance of Mendelian genetics and the “pure line” theory is a systematic exclusion of farmers (as seed sellers) from the agricultural seed market, especially in Europe.Footnote ⁶¹ This resulted in a whole array of undesirable consequences, including the erosion of agricultural biodiversity and the rapid conversion to conventional farming, heavily reliant on expensive chemical inputs.Footnote ⁶²

Arguably, therefore, the requirements of “uniformity” and “stability” have been introduced into the legal definition of “plant variety” through a legal fiction because genetic purity, uniformity and stability are important primarily from a legal (and industrial) standpoint, and not from scientific or (marginal) farm-environment perspectives. An expert has stated that “the scientific notion does not necessarily coincide with the legal concept. The law may require certain characteristics for a protected variety that may not be essential for a scientific definition.”Footnote ⁶³

In fact, as stated previously, pure, uniform and stable lines are able to perform well only in carefully managed environments because, contrary to the claims of early geneticists, a plant’s genetic identity is not independent of its environment but is highly influenced by it.Footnote ⁶⁴ More recently, historians of science have attempted to emphasize again the importance of taking environmental influences into account, together with the inherent genetic makeup of seeds, to avoid the “determinism” that results from a focus exclusively on a seed’s “internal” environment.Footnote ⁶⁵ In this context, the following explanation is helpful:Footnote ⁶⁶

This is where we can start to understand the relevance of agrobiodiversity contained in farmers’ varieties and landraces. We discuss this in further detail in the following section.

I. The Scope and Importance of ‘Diversity’ and ‘Traditional Knowledge’

We saw above that UPOV assumes and emphasizes the central importance of “uniformity”, “stability” and related “genetic homogeniety” or “purity”. The CBD and the Seed Treaty, on the other hand, assume and emphasize the importance of (agro)biodiversity. Since its inception, the CBD has underscored the importance of biodiversity within the soil (i.e. the soil microbiome) and on the soil (i.e. seed or plant biodiversity). Equally relevant is the recognition and high status given within the CBD to the valuable role played by traditional knowledge and associated systems, practices, and innovations in maintaining this biodiversity and using it in a sustainable manner (CBD, Articles 8(j), 17). The CBD also mandates the sharing of social and economic benefits (“benefit sharing”) with the people preserving and using this knowledge in situ.Footnote ⁷¹

Equitable benefit sharing is presumed necessary not only to ensure fair compensation for sharing biodiversity and associated know-how, but also to ensure that communities engaged in its protection and in-situ conservation have monetary incentives to continue their important work.Footnote ⁷² Similar to the CBD’s focus on biodiversity generally, the Seed Treaty focuses on agrobiodiversity, especially agricultural seed diversity and mechanisms to conserve, preserve and protect this diversity, while facilitating its equitable use through benefit sharing.

“Conservation” and “preservation,” however, are unfortunate terms in the context of agrobiodiversity.Footnote ⁷³ This is not least because farmers and farmer communities not only conserve this diversity but constantly improve it and innovate with it, with the help of traditional and indigenous know-how and technologies. Indeed, the CBD encourages international “cooperation for the development and use of technologies, including indigenous and traditional technologies, in pursuance of the objectives of the Convention.”Footnote ⁷⁴ The relevance of traditional technologies and associated traditional ecological knowledge (TEK), is, however, context-dependent. To understand the context, it is useful to revisit the development of “high yielding varieties” (HYVs) during the “Green Revolution.” Prior to the development of HYVs by Norman Borlaug, “lodging” was witnessed when traditional (indigenous) wheat seeds were treated with mineral fertilizers: they would grow rapidly and prematurely fill up with grain, the weight of which made them “lodge” and die before they were ready for harvest.Footnote ⁷⁵

The breeding of semi-dwarf “high yielding” wheat and rice seed varieties (HYVs) under the Green Revolution resolved a twofold problem: the problem of traditional varieties being non-responsive to fertilizer-treated soilsFootnote ⁷⁶ and the problem of lodging.Footnote ⁷⁷ The new development paved the way for bumper crops and the promise of economic and social prosperity for all farmers. Indeed, the notion that scientific intervention for the creation of “new varieties” is necessary for high yield and food security was also propelled in the Global South, at least in part, by the demonstrated success of Norman Borlaug’s HYVs.Footnote ⁷⁸

What is not discussed in the success story of the Green Revolution is its impact on indigenous seeds and landraces that were not engineered to withstand the application of mineral fertilizers. The claim that the cultivation of indigenous seeds that incorporate agrobiodiversity and genetic variability is not adequate for food security needs to be considered in this context. Studies that compare the productivity of landraces with that of improved varieties on fertilizer-treated soils can, therefore, be expected to show lower yields for landraces and farmers’ varieties than for seeds whose genetic environment is engineered to perform in such soils.Footnote ⁷⁹ Therefore, the rapid expansion of conventional agriculture involving the regular use of mineral fertilizers and chemical pesticides with “improved” seeds (and the corresponding disappearance of TEK-based farming systems) is also one of the main threats to landraces and in-situ agrobiodiversity conservation.Footnote ⁸⁰

Yet, landraces and indigenous or farmers’ varieties, when cultivated in TEK-based farming systems, have been found to outcompete hybrid varieties in highly variable environments,Footnote ⁸¹ offering a robust local strategy for food security, including coping with climate change.Footnote ⁸² They may also economically benefit (marginal) smallholder farmers by granting them independence from cost-intensive inputs such as breeders’ seeds, mineral fertilizers and pesticides while helping to revive and conserve local traditional knowledge.

In the following sub-sections, we look closer into the current scientific understanding of the importance of diversity and variability contained in landraces and the impact of plant genetic diversity on soil health and the nutrition contained in food.

II. The Relevance of Landraces and Genetic Variability

We saw in the previous section that modern genetics and the science of plant breeding developed under the aegis of Mendel’s theory of heredity, supported by pure line theories proposed by scientists such as Johanssen.Footnote ⁸³ However, as early as 1972, the US report “Genetic Vulnerability of Major Crops” attracted attention in science:Footnote ⁸⁴ it found genetic uniformity to be the source of vulnerability to plant diseases and abiotic or biotic stresses. The report challenged dominant scientific thought and the national policies that relied on it.

However, although scientists take the blame for the focus on uniformity, notably, the markets (and consumers) also demand uniformity (e.g. in the form size, shape, color, texture of vegetables and grains).Footnote ⁸⁵

Not surprisingly, therefore, today the legal fictions and assumptions underlying UPOV continue to unchangeably favor Mendel’s theory of heredity and the pure line theory. Empirical and scientific evidence opposing these theories is, however, accumulating. Various studies find higher variety and variability of plant genetic resources to be more efficient than pure lines. For example, increased within-crop genetic diversity has been found to enhance yield stability and yield reliability while permitting rapid and dynamic response to change (e.g. changes in climatic or biotic stresses).Footnote ⁸⁶

Unlike pure lines and hybrids created in artificial or carefully managed environments, landraces are, by definition, unique to the region where they evolve.Footnote ⁸⁷ Undoubtedly, farming – including farming with landraces or farmers’ varieties – reduces the overall plant or natural biodiversity. However, cultivation with indigenous landraces, rather than with uniform and stable seeds, helps to increase, or at least maintain, agrobiodiversity. In this context, it is useful to revisit the distinction between genetic variation and genetic variability, as discussed in significant detail elsewhere:Footnote ⁸⁸

In other words, the genes of landraces are highly variable due to continuous evolution in the face of unpredictable phenological events. This variability helps landraces adapt to varying biotic and abiotic stresses, such as weather extremes or pest attacks, making them more climate-resilient than improved and uniform varieties.Footnote ⁹² For example, lucerne landraces from five countries learned to cope differently with environmental stress situations, such as drought (Italian landraces) or salt-stress environments (Moroccan landraces).Footnote ⁹³ Lima bean landraces showed high adaptability to drought, temperature stress and competitiveness under such conditions, compared to commercial cultivars.Footnote ⁹⁴ In unfavorable areas of MoroccoFootnote ⁹⁵ and China,Footnote ⁹⁶ landraces are preferably cultivated due to their better adaptability and better yields. Farmers planting a higher diversity of corn in Mexico are better able to mitigate the weather extremes caused by climate change.Footnote ⁹⁷ In Turkey, farmers prefer a local wheat landrace that can be sown twice per year, minimizing the risk of harvest losses.Footnote ⁹⁸ As observed by Kochupillai,Footnote ⁹⁹

However, it is also this genetic variability inherent in landraces and farmers’ varieties that make them heterogenous (rather than homogenous or “uniform”). Landraces and farmers’ varieties are, therefore, unsuitable for protection by PBR, even when a landrace is significantly distinctive from other landraces or farmers’ varieties.

III. Seed–Soil Interactions, Nutrition and Environmental Sustainability

Plant genetic materials co-evolve with their surrounding microorganisms, forming a holobiont.Footnote ¹⁰¹ Plant root secretions and associated soil microorganisms together constitute the root microbiome. The soil surrounding the plant root, which is particularly rich in beneficial microbiological activity, is called the rhizosphere.Footnote ¹⁰² The more diverse the microbial population in the rhizosphere, the better the symbiotic exchange between plants and microorganisms, supporting nutrient exchangeFootnote ¹⁰³ and resulting in higher nutrient content in the plant, vegetable, or crop.Footnote ¹⁰⁴ Intimate associations between the plant root and soil microbes are also critical for the establishment and maintenance of stable relations between plant hosts and rhizobial microorganisms (host-microbial homeostasis),Footnote ¹⁰⁵ which is crucial for plant disease suppression.Footnote ¹⁰⁶

Interestingly, it is not just the quality of the soil that impacts seeds and crops, but the plant genotype, in turn, influences the root microbiomeFootnote ¹⁰⁷ and, consequently, plant–microbe interactions. Evolutionary changes in host genotypes influence the bacterial selection process, determining the richness, diversity, and relative abundances of taxa.Footnote ¹⁰⁸ For example, for barley, the community composition at the root–soil interface significantly declined from wild genetic resources to landraces to uniform plant varieties.Footnote ¹⁰⁹

Plants also co-evolve with microorganisms that are hosted in their cell walls (endophytes).Footnote ¹¹⁰ These microorganisms offer various advantages to host plants, such as the production of phytohormonesFootnote ¹¹¹ or the solubilization of nutrients such as phosphorus.Footnote ¹¹² These microorganisms are also crucial for the germination of seedsFootnote ¹¹³ and for fighting seed-borne diseases.Footnote ¹¹⁴ While a part of these microorganisms (bacteria) are vertically transmitted from parent to progeny seedlings,Footnote ¹¹⁵ at around 45 percent,Footnote ¹¹⁶ other parts are horizontally transmitted and are impacted by environmental characteristics such as the soil microbiome,Footnote ¹¹⁷ climatic conditions, and human practices.Footnote ¹¹⁸

Further, research comparing older landraces of wheat,Footnote ¹¹⁹ breadfruit,Footnote ¹²⁰ soybeans,Footnote ¹²¹ and cornFootnote ¹²² with more modern varieties found the older ancestors benefited more from symbiotic associations with mycorrhizal fungi (mycorrhiza root colonization).Footnote ¹²³ The mycorrhiza root colonization of landraces exceeded that of modern hybrid cultivars by 149 percent, doubling sorghum yields – and also correlating with higher mineral nutrients in sorghum.Footnote ¹²⁴ Heirloom bean landraces have similarly been found to contain higher nutrient contents than modern varieties.Footnote ¹²⁵

Symbiotic associations also result in more resistant plants, particularly in low-fertility soils. For example, heirloom bean landraces from Spain were found to adapt well to dry conditions,Footnote ¹²⁶ and native corn outcompeted hybrid variants in taking up symbiotic and direct phosphorus.Footnote ¹²⁷ However, plant varieties react very individually.Footnote ¹²⁸ Due to mycorrhiza symbiosis, the productivity and sensual quality of in-situ cultivated landraces can be addressed more efficiently and inclusively by agricultural practices that are beneficial for arbuscular mycorrhiza fungi, such as omitting pesticide usage, avoiding soil mechanization, and inoculating the plants with arbuscular mycorrhiza fungi. Interestingly, landraces have been found to react more positively to the inoculation of arbuscular mycorrhizal fungi than genetically modified hybrid corn, which responded negatively.Footnote ¹²⁹

Higher nutrient availability in soils results in less plant–microbial symbiosis.Footnote ¹³⁰ For example, in nutrient-rich environments under the usage of mineral fertilizers, plants downregulate their symbiosisFootnote ¹³¹ and stop interacting with arbuscular mycorrhiza fungi.Footnote ¹³² Over the last centuries, this phenomenon has been found to result in plants losing their ability to form symbioses with beneficial fungi.Footnote ¹³³

To maintain and promote plants forming symbiotic ties with beneficial microorganisms and to enhance plants’ resistance, yields and nutritive values, it is essential to revive TEK-based farming systems and the indigenous heterogenous seeds applied in such systems. In the next section, we look at one such TEK-based farming system, namely, “natural farming” (NF), which conserves both seed and soil (microbial) diversity, leading to enhanced farmers’ profits, improved soil health, and an increase in agrobiodiversity. The rapid adoption of these farming systems and the associated adoption of heterogenous seeds across India (and beyond) calls into question the rationale and assumptions underlying the DUS criteria that have been employed to incentivize the creation of uniform plant varieties.

I. Traditional Ecological Knowledge and Agrobiodiversity

Traditional Ecological Knowledge (TEK) has been defined as a “cumulative body of knowledge, practices, and beliefs, evolving by adaptive processes and handed down through generations by cultural transmission, about the relationship of living beings (including humans) with one another and with their environment.”Footnote ¹³⁴ In TEK-based farming systems, plant genetic material and human knowledge co-evolve in close adaptation to climatic and cultural changes. This essentially means that various TEK-based farming systems have emerged independently across various parts of the globe.Footnote ¹³⁵ Nonetheless, TEK systems do follow certain basic principles, giving significant importance to the autonomy of farmersFootnote ¹³⁶ (local inputs only, on-farm nutrient recycling, saving seeds)Footnote ¹³⁷ and their knowledge, which is verified season after season.Footnote ¹³⁸ Since TEK-based farming systems presuppose and preserve the functioning of self-sustaining ecosystems, they are also described as agroecological farming systems.Footnote ¹³⁹ Unlike conventional farming systems that rely heavily on uniformity and stability, diversity (in seeds, crops, soil microbes etc.) is the lifeblood of agroecological and TEK-based farming systems.

Locally selecting, multiplying, saving, improving and exchanging seeds with desirable traits – such as stress resilience, hardiness, taste and yieldFootnote ¹⁴⁰ – has returned an astounding heterogeneity of planting materials that are genetically non-uniform, variable and diverse.Footnote ¹⁴¹ Such planting materials are characterized by a particularly high within-variety diversity (intra-varietal genetic diversity).Footnote ¹⁴² They adapt year by year to local climatic conditions and soil properties. Saved heterogenous seeds, therefore, lead to more robust plants.Footnote ¹⁴³

Apart from yielding diverse plant genetic material, agroecological practices contribute to stable ecosystems.Footnote ¹⁴⁴ The more diverse the in-soil living organisms, the better functioning are ecosystem services such as the cycling of vital nutrients for plant growth, regulation of water supply and food webs controlling pests.Footnote ¹⁴⁵ Together, seed and soil biodiversity constitute the backbone of TEK-based farming systems. We explore this further in the context of the NF movement in India.

II. TEK and the Natural Farming Movement in India

Natural farming is an agroecological farming system based on the TEK of India.Footnote ¹⁴⁶ Like most TEK-based farming systems, NF considers seed diversity and healthy soil as being fundamental prerequisites for efficient and sustainable crop cultivation.Footnote ¹⁴⁷ Over the last decade, NF methods in India have rapidly gained popularity and momentum due to their positive impact on overall farm resilience, particularly by rehabilitating degraded soilsFootnote ¹⁴⁸ and increasing farmer profits.

As an aftermath of the Green Revolution in India, in the late twentieth century, vast soil resources were significantly degraded from the intensive usage of pesticides, mineral fertilizers and soil mechanization.Footnote ¹⁴⁹ The NF practices support the ecological recovery of soil functions by using farming principles that revive, enhance, and protect the soil’s ecosystem functions, such as better nutrient provision.Footnote ¹⁵⁰ These functions are supported by farmer-made biostimulant preparationsFootnote ¹⁵¹ using local materials and agricultural waste.Footnote ¹⁵² Healthy soils allow farmers to cut dependencies on expensive inputs (e.g. mineral fertilizers, seeds, and pesticides),Footnote ¹⁵³ thereby reducing costs and increasing farmer profits. This scenario inspired the name “zero budget natural farming” (ZBNF).Footnote ¹⁵⁴

Due to their success, NF practices have spread rapidly throughout India and are recognized as the “largest ‘experiment’ in agro-ecology in the world.”Footnote ¹⁵⁵ The UN Food and Agriculture Organization (UN FAO) has defined ZBNF as simultaneously a set of farming methods and as a grassroots peasant movement.Footnote ¹⁵⁶ Natural farming has been adopted by several Indian states such as Andhra Pradesh, Himachal Pradesh, Gujarat, Haryana, Karnataka, and Kerala, with Andhra Pradesh implementing its NF program at a mass scale. According to the Andhra Pradesh government, as of March 2020, roughly 620,000 farmers (10.5 percent of all farmers) were enrolled in the program.Footnote ¹⁵⁷ Himachal Pradesh aimed to convert the entire state to NF by 2022.Footnote ¹⁵⁸ Civil society and several NF movements led by non-government organizations (NGOs) have also spread to states such as Karnataka, Tamil Nadu, and Maharashtra.Footnote ¹⁵⁹

Several NGOs, including the International Association for Human Values (IAHV) and the Art of Living Foundation (AOLF), are also actively engaged in imparting education in NF under the government’s Paramparagat Krishi Vikas Yojna (PKVY) (translated as “scheme for the promotion of traditional agriculture”). In March 2020, the Indian government declared a new sub-mission to specifically promote the adoption of NF under the name Bhartiya Prakritik Krishi Padhati (BPKP) (translated as “Indian natural farming method”’).Footnote ¹⁶⁰ These schemes are sub-components of India’s “Soil Health Management Scheme” under the “National Mission of Sustainable Agriculture,” which “aims to develop sustainable models of organic farming through a mix of traditional wisdom and modern science.”

Although research on the impact of NF on farm yields has not been consistent across states, the overall success and rising popularity of NF results from a combination of factors. These include widespread efforts by various individuals (notably, Subhash Palekar) and NGOs such as the AOLF, the Sri Sri Institute for Agricultural Sciences and Technology Trust (SSIAST), Kheti Virasat Mission, BAIF, IAHV, LiBird, and others to educate – or reeducate – farmers on the benefits of TEK and agrobiodiversity, thus raising farmers’ profits and reducing costs while improving the soil health and the personal health of farming families that have adopted NF in recent years.Footnote ¹⁶¹ Proponents of NF also emphasize its ability to revive and improve local agrobiodiversity, not only in the form of indigenous seeds but also by helping to revive indigenous cattle breeds and preventing their extinction, while enhancing soil microbial diversity.

III. Seed Biodiversity in TEK and Natural Farming

The cultivation of local varieties of indigenous and heterogeneous seeds lies at the heart of NF, serving as the prerequisite for food security and sustainability vis-à-vis the triple bottom line: people, planet and profits. The high adaptability and hardiness exhibited by landraces to their environment over an extended period allow for low-cost and low-input farming.Footnote ¹⁶² Migrating to NF gradually reduces farmers’ dependence on market-purchased “uniform” and “stable” seeds, as farmers rely on (and prefer) indigenous heterogenous seeds that perform better and can also be saved and exchanged without cost. The social practices of seed sharing and exchange further support the diversification of seed material over time,Footnote ¹⁶³ facilitating agrobiodiversity conservation as well as informal (farmer-led) seed innovations.

In addition to conserving knowledge on diversities and traits, NF in India also includes knowledge of how to enhance the germination rate of indigenous seeds for better plant vitality and stress resistance.Footnote ¹⁶⁴ For example, the seed stimulant preparation called Angara or Bheej-Amrut (or Beejamrut) is derived from Indian TEK texts.Footnote ¹⁶⁵ Composed of cow manure, water, limestone and local soil,Footnote ¹⁶⁶ the preparation stimulates plant growth. Farmers report negligible seed mortality rate, improved seedling length and vigor as well as enhanced seed germination rates.Footnote ¹⁶⁷ Bheej-Amrut has been found to contain N-fixing, P-solubilizing bacteria, actinomycetes and beneficial fungi.Footnote ¹⁶⁸

IV. Soil Biodiversity in TEK and Natural Farming

The revival of seed biodiversity in TEK systems is dependent on the diversity of soil organisms, which are protected and promoted by a plethora of farming practices. For example, applying plant residues as mulch provides a nutritious carbon source for soil organisms.Footnote ¹⁶⁹ Particularly under dry conditions, mulching can significantly increase the grain yieldFootnote ¹⁷⁰ and reduce the amount of irrigation needed, thereby also minimizing the risk of high salinity in soils connected to irrigation.Footnote ¹⁷¹ Similarly, low tillage is an effective practice to maintain soil health in TEK-based farming systems.Footnote ¹⁷²

Farm waste-based preparations that act like microbial plant biostimulants are also an integral part of NF. Most plant biostimulant formulations under NF are based on local (cow) manure. Specific fermentation methods transform the manure into a potent biofertilizerFootnote ¹⁷³ that significantly enhances the soil’s biological, physical and chemical properties.Footnote ¹⁷⁴ For example, the formulation called Jeev-Amrut is based on (cow) manure, sugar (e.g. ripe fruits), proteins (e.g. pea flour), minerals (e.g. mineral flour), and local soil. The mix has been found to significantly increase yields,Footnote ¹⁷⁵ effectively control various plant pathogensFootnote ¹⁷⁶ and increase the availability of nutrients, while decreasing the concentration of contaminants such as chloride and sulfate.Footnote ¹⁷⁷

The TEK-based farming systems are growing in popularity partly because of the need to recover degraded soils and to meet the growing demand for healthy, nutritious, and organic food. They are also growing out of social movements seeking to move away from high-input farming, which is considered expensive and highly vulnerable. Recent studies and developments are helping people to better understand, interpret, and improve upon ancient practices for modern application.Footnote ¹⁷⁸ These studies point to the importance of TEK-based farming and formulations in promoting sustainable agriculture that can support the cause of enhanced food and nutritional security.

Despite its recent boom in India, TEK systems are globally endangered.Footnote ¹⁷⁹ They are mostly used by smallholder farmers, who are outcompeted by intensive agricultural systems, or by the loss of habitats, altered lifestyles,Footnote ¹⁸⁰ negative attitudes toward the word “traditional,”Footnote ¹⁸¹ and aggressive introduction of new (“improved”) seed varieties, even though they do not perform consistently in marginal environments.Footnote ¹⁸² Legal and regulatory changes are urgently needed to help revive a diversity of TEK-based farming systems as possible and beneficial substitutes for conventional farming systems, particularly for marginal environments. Corresponding shifts are also needed in the educational curriculums of universities and the training of regional agricultural extension officers.

I. Trends in Europe

The relevance of agrobiodiversity is widely acknowledged, not only in countries of the Global South but also within Europe. In 2018, the European Union adopted Regulation (EU) 2018/848 of 30 May 2018 on organic production and the labeling of organic products (published on June 14, 2018). The regulation, for the first time, permits and encourages, inter alia, the marketing for organic agriculture of “plant reproductive material of organic heterogeneous material.” It defines “organic heterogeneous material” as

Such heterogeneous materials do not need to fulfil the registration and certification requirements under various EU laws.Footnote ¹⁸⁵ The regulation clarifies that “heterogeneous materials,” unlike current proprietary seeds, need not be uniform or stable, and notes that based on “Research in the Union on plant reproductive material that does not fulfil the variety definition… that there could be benefits of using such diverse material… to reduce the spread of diseases, to improve resilience and to increase biodiversity.”

Accordingly, the regulation removes the legal bar on the marketing of “heterogeneous materials” and encourages their sale for organic agriculture, thus clearing the way for the more expansive use of indigenous non-uniform seeds in agriculture. It is expected that “once the delegated [A]cts under the EU regulation are formulated, they will support the creation of markets and marketplaces facilitating trade in heterogeneous seeds, including by small farmers who have, thus far, been left out of the competition in seed markets.”Footnote ¹⁸⁶

Further, in the context of nutrient recycling and organic fertilizers for organic agriculture, the amended recital 5a of the proposed EU regulation (which is a part of the EU Circular Economy (CE) Package) of “CE marked fertilizers” is very relevant. The recital as proposed by the EU Parliament reads: “(5a) To ensure effective use of animal manure and on-farm compost, farmers should use those products which follow the spirit of ‘responsible agriculture’, favoring local distribution channels, good agronomic and environmental practice and in compliance with union environmental law …. The preferential use of fertilizers produced on-site and in neighbouring agricultural undertakings should be encouraged.”Footnote ¹⁸⁷ Despite the crucial role this provision could have played in the revival of TEK-based farming that teaches farmers how to produce biostimulants and organic fertilizers on-farm, the fertilizer regulation (EU 2019/1009) dropped the proposal.Footnote ¹⁸⁸

The importance of locally adapted seeds has, nevertheless, been further emphasized in the Farm to Fork Strategy (2020), which states that “the Commission will take measures to facilitate the registration of seed varieties, including for organic farming, and to ensure easier market access for indigenous and locally-adapted varieties.”Footnote ¹⁸⁹ The strategy also emphasizes the need for more agroecological farming practices in the European Union.

These legal and regulatory trends suggest a small but decisive step in the direction of diversifying the marketplace for agricultural seeds. They are also in line with the emerging scientific understanding of the urgent need to revive seed and soil microbial diversity for the sake of sustainable farming and food security. However, based on past scientific understanding, the European Union has, for decades, strictly regulated the agricultural seeds and inputs sector, outlawing active participation by farmers in the creation of agricultural seeds and associated organic fertilizers produced on-farm. These regulations have resulted in the development of specific practices and mindsets in agriculture, including among small and marginal farmers. Changing laws at the high level of the European Union will not lead immediately to a shift in local practices and mindsets.

In accordance with the principles of translational ethics and order ethics, to ensure compliance with ethically appropriate behavior (including environmentally sustainable behavior), it is necessary to ensure that legal, regulatory and governance structures incentivize the appropriate action. This can be done by, inter alia, removing perverse incentives and ensuring the necessary structural changes within existing institutional frameworks (e.g. by imparting balanced and updated education to farmers, rural agricultural extension officers and university students). This will facilitate the steering of human choices toward accomplishing more sustainable outcomes. Here, the European Union can learn from the NF movement in India, which was steered by NGOs and civil society groups but is now receiving support from the central and state governments.

II. Reviving Agrobiodiversity and Local Food Cultures

The revival of traditional agriculture based on indigenous and heterogenous seeds can also support the revival and nourishment of local agro-food systems (LAFS). These LAFS comprise local identity-based foods emerging from specific “territorial dynamics of agriculture, food and consumption networks.”Footnote ¹⁹⁰ By mobilizing territorial dynamics based on collective action, LAFS revive and encourage local food identity and add value to local resources, including agricultural landscapes and ecosystems, local knowledge, local social networks, food traditions and cultures, and native vegetable varieties and animal breeds.Footnote ¹⁹¹ While recognizing that many of the LAFS in Europe have been lost following the widespread adoption of conventional agriculture,Footnote ¹⁹² LAFS research currently focuses on studying remaining local systems or on using the concept as an approach for analyzing local agriculture and food-specific resources. Researchers are also studying its close connection with and impact on (agro)biodiversity.Footnote ¹⁹³

The ongoing COVID-19 pandemic is a reminder of the urgent need to ensure local self-sustainable food production. Given the vast and diverse agro-climatic zones present in various regions of the world, farmers in all countries can benefit socioeconomically as well as environmentally by adopting farming systems and regulatory policies that encourage the use of local biodiversity in agriculture and incentivize farmer-level innovations with this diversity.

III. Rethinking the DUS Test

In the light of mounting evidence in the form of scientific research as well as on-farm experiences of small and marginal farmers, it is necessary to rethink the DUS test and identify approaches that can incentivize and promote sustainable seed innovations, not in isolation of environmental and soil interactions, but in combination with sustainable farming practices. Such innovations can include seed improvements that go hand in hand with innovative and sustainable soil management practices, manure and farm waste (nutrient) recycling methods, and/or seed storage techniques that are cost-effective and implementable in rural, low income and low-tech environments.

Beyond regulatory efforts, recent research based on extensive consultations with natural farmers in India has also recommended the adoption of technological means such as blockchain or distributed ledger technology to support the transparent and traceable sourcing of materials and know-how from farmer-innovators and ensure benefit sharing with the help of smart contracts.Footnote ¹⁹⁴ Further research as well as funding for research and development, together with concerted international efforts, are needed to conduct more in-depth farmer interviews, build necessary prototypes and test the prototypes in real conditions to determine their acceptability, suitability and sustainability.

This is not to say that uniform varieties and the DUS test need to be done away with altogether. However, it is necessary to recognize that the unidirectional focus under current IP laws and associated regulations that incentivize and protect innovations only by the formal seed sector, or that permit the marketing only of certified uniform materials, is both inequitable and non-sustainable. Diversity in regulatory approaches is necessary to ensure that all potential innovators – in both the formal and informal sectors – can equitably participate in the landscape of seed innovations, while also protecting and enhancing agrobiodiversity for present and future generations.

I. IP First Movers

When globalization gained momentum, economic policies logically mainly looked inward – that is, they were aimed at fostering domestic growth. The history of IP teaches that this general assumption also holds true for first movers in IP, namely Venice and England. Interestingly, both jurisdictions were very active and even dominant in international trade when they first adopted IP laws.Footnote ²¹ By the time the city of Venice enacted, in 1474, what is considered to be the first patent Act in history,Footnote ²² Venice had – over the course of several centuries – achieved the status of being the “cradle of dawning capitalism,”Footnote ²³ the “chief trading city in the West,”Footnote ²⁴ and a manufacturing hub.Footnote ²⁵ When the Statute of Monopolies of 1624 established the basis for the British patent system,Footnote ²⁶ the commercial center of gravity in Europe has already shifted from the Mediterranean to the ports facing the Atlantic, in particular to Amsterdam and London as the dominant cities.Footnote ²⁷ Before the seventeenth-century civil war, England had experienced 150 years of significant annual output growth in agriculture, industry, and services, as well as population growth,Footnote ²⁸ and the country was about to become the greatest naval and economic power on earth.Footnote ²⁹ England would later also adopt the first modern copyright Act.Footnote ³⁰

Ranking high among the many reasons for the rise of Venice and England before the era of modern IP are policies that were specifically aimed at introducing foreign technologies through the immigration of skilled artisans.Footnote ³¹ One important regulatory tool to attract and establish certain high-tech industries of the time was the privilege awarded to people who introduced a new manufacture to the jurisdiction.Footnote ³² The first IP statutes were derivatives of these early modern privileges, both in terms of their legal-doctrinal structureFootnote ³³ and regarding their purpose. Just like the privilege regime, the new patent and copyright laws implemented an inward-looking economic policy. The Venice Patent Act expressly refers to the “utility and benefit to our State” of granting exclusive rights to “men in this city, and also … other persons … from different places” in their “ingenious contrivances.”Footnote ³⁴ The Statute of Monopolies was intended to further the interests of industry “within this Realme,” without, however, unjustifiably raising prices of commodities “at home.”Footnote ³⁵ And the Statute of Anne was meant to encourage learned men to compose and write useful books for the British public.Footnote ³⁶ Although Venice and England operated within a highly internationalized trade context, none of their early IP statutes specifically targeted foreign markets and the export of new contrivances, manufactures, and books. Their main – if not sole – purpose was to foster domestic growth and innovation.Footnote ³⁷

II. Discrimination against Foreigners

This inbound perspective becomes even more apparent in the practice of many jurisdictions until the late nineteenth century to grant IP protection only to local people. Examples are numerous and well documented. They were observed in particular in middle-income countries that, at a given point in time, had established a certain level of industrialization and the capacity to absorb new technologies but still lagged behind the economic and technological leading countries.Footnote ³⁸

One of these purposefully discriminatory measures was the granting of privileges or patents for the introduction – that is, the first domestic practice – of inventions that were made and implemented abroad. What would today be considered an unfair incentive for piracy was long-standing practice in many European countries, such as in Renaissance “Italy,” during the late French Ancien Regime, and even as late as the early nineteenth century in Prussia and Wuerttemberg.Footnote ³⁹ Another way to foster local industry was to declare that only citizens or residents of the respective state were eligible for IP protection. This strict discrimination against foreigners was applied by, for example, the 1815 Prussian Patent ActFootnote ⁴⁰ and the US patent and copyright laws from their first enactment until 1836 and 1891, respectively.Footnote ⁴¹ Even when foreigners were in principle granted access to the local IP regime, they had to fulfill additional requirements such as paying significantly higher patent fees than did locals.Footnote ⁴² Local working requirements like the famous manufacturing clause in US copyright law had the purpose of promoting the national publishing and paper industries.Footnote ⁴³

The effect of discriminating against foreign inventors and authors was that foreign patenting and copyrighting remained infrequent. Nations that imported IP thereby prevented IP-export nations from taking advantage of the protection available in their territories. In this way they avoided paying license fees, which would have increased the costs of absorbing knowledge and burdened the balance of trade.

The first prominent renunciation of this inbound nationalist IP policy was a French law of 1852, which for “reasons of universal justice” also granted protection to authors of works published abroadFootnote ⁴⁴ – and at the same time targeted unauthorized foreign copying; this new law thus adopted an outbound perspective.Footnote ⁴⁵ Whether that law was an expression of a genuinely globalist attitude or was still driven by the nationalist motive to improve the legal position of French right holders is considered below.Footnote ⁴⁶

The formerly popular strategy of discriminating against foreign right holders in order to allow domestic industries to free-ride on foreign innovations – and at the same time, protect their own – is nowadays prohibited for most IP markets, on the ground of national treatment obligations under the global IP acquis. In particular, it is not permissible to wholly exclude foreigners or certain areas of technology, such as pharmaceuticals, from industrial property protection or to provide that formalities must be fulfilled in order to secure a copyright.Footnote ⁴⁷ In practice, patent offices and courts may favor domestic inventors and litigants,Footnote ⁴⁸ but such practices must not become official policy. The globalization of IP law thus limits the leeway for economic nationalist approaches significantly and thereby complements the deep integration of national economies in intercontinental value chains.

Discriminatory measures have not, however, vanished completely. An interesting example is the “press publishers right” in the 2019 EU Directive on copyright and related rights in the Digital Single Market (DSMD).Footnote ⁴⁹ According to Art. 15 DSMD, EU Member States must provide publishers of press publications with the exclusive rights of reproduction and making available “for the online use of their press publications by information society service providers,” in particular by news aggregators like Google News. This two-year related right in press publications is independent of any rights in respect of works and other subject matter incorporated in a press publication. Whereas this content is already subject to international copyright treaties,Footnote ⁵⁰ its “publication” is not.Footnote ⁵¹ There is thus no applicable national treatment obligation.

The German press publishers’ right of 2013, which served as a model for the DSMD, had not addressed the status of non-German, non-EU, and non-European Economic Area press publishers explicitly.Footnote ⁵² The DSMD, however, is clear on the issue. Art. 15(1) DSMD only applies to – and thus benefits – press publishers “established in a Member State,” that is, those legal persons that have their registered office, central administration, or principal place of business within the Union.Footnote ⁵³ There is no reference to applicable international treaties (which do not exist anyhow) or to other exceptional avenues to protection, such as via simultaneous first publication in the European Union or reciprocal protection of EU publishers in the third country. The DSMD thus completely excludes the publishers of Neue Zürcher Zeitung, The New York Times, and all other third-country journalistic publications from the press publishers’ right, despite the fact that many of those websites are indexed by news aggregators for a significant EU readership.Footnote ⁵⁴

In the past, such strict discrimination against foreigners had the purpose of fostering economic catch-up through cheap access to foreign works and lawful free-riding on foreign innovations. This, however, is not what the press publishers’ right is meant to achieve. Its purpose is to ensure the sustainability of EU news publishers and news agencies by providing them with additional licensing revenues. The respective royalties are to be paid by news aggregators and similar online services, for whom the reuse of press publications is said to constitute an important part of their business models and a source of revenue.Footnote ⁵⁵ In line with this telos, the German and Spanish precursor laws had indeed been asserted by local mainstream press publishers against Google.Footnote ⁵⁶ The new IP right is thus not meant to foster dynamic catch-up and innovation but to support media companies that were established in analog times during their transition to digital journalism.Footnote ⁵⁷ It nevertheless represents an inward-looking protectionist measure that discriminates in favor of the local economy.

III. Weak IP Catch-up Policies

Since early modern times, the economic and technological ranking of countries has corresponded to a pyramidal form. Few countries take a leading position, some follow as emerging economies, and most belong to the bottom group – with low levels of specialization, innovation, and export orientation. Although this structure is surprisingly stable, individual countries have moved up and (less frequently) down the ladder.Footnote ⁵⁸ Countries like Germany, Switzerland, and the USA, whose economies nowadays are among the most technologically advanced and export-oriented, lagged behind the UK economy throughout most of the nineteenth century. In so far as those follower countries adopted IP during the nineteenth century at all, they pursued – well into the twentieth century – a weak IP catch-up strategy. They either forewent patents and copyrights altogether or limited these rights in a way that allowed local enterprises to copy or imitate on a massive scale, in full compliance with applicable local laws, in order to absorb foreign innovation and establish a highly industrialized formal economy.

Again, examples are plentiful and well documented.Footnote ⁵⁹ In the area of copyright law, until the late nineteenth century there existed several European “copying hubs” that did not provide any protection to authors or publishers; among them is again the German state of Wuerttemberg.Footnote ⁶⁰ In patent law, the Prussian patent office rejected up to 90 percent of patent applications and thus strictly controlled and effectively minimized the practical relevance of the patent system.Footnote ⁶¹ The German Patent Act of 1877 exempted precisely those two branches from patent protection – medicines and chemical products – in which German companies were particularly active and successful.Footnote ⁶²

Switzerland introduced a Patent Act only in 1888, under massive international pressure, but granted no protection for methods or for chemical products until 1907. This allowed the Swiss chemical and pharmaceutical industries to copy products that were patented in France and other places without hindrance; at the same time, the late nineteenth and early twentieth century are seen as the golden age of the Swiss pharmaceutical and chemical industry. In 1869, the Netherlands completely revoked their patent law, which up until that point had been used predominantly by foreign registrants, and did not reinstate it until 1912. In the meantime, the Lever Brothers (Unilever) were able to lawfully produce margarine in disregard of the patent protection that existed in several European countries, and Philips manufactured light bulbs without paying license fees to Edison. Again, that period marked the high point of industrialization in the Netherlands.Footnote ⁶³

India pursued a similar strategy in doing away with product patents in the pharmaceutical and food sectors in 1972. This gap in protection, which under the maximum transition period for TRIPS was valid until 2005, is said to have contributed to the creation of the Indian generic sector.Footnote ⁶⁴ Japan, to name one last example, has had a patent law since as far back as 1885. But until the late 1990s, the scope of protection of a patent was construed so narrowly that Japanese companies had an easy time in circumventing this protection by means of slight changes in the drafting of the claims.Footnote ⁶⁵

All these policies purposefully discriminated against foreign right holders, to the benefit of local industries. They can therefore be characterized as economic nationalist strategies of IP importers. This weak IP catch-up strategy is still considered to be an effective strategy in developing countries in order to adapt to, replicate, and distribute innovations along the international productive chain, with the long-term aim of inducing domestic economic complexity and productivity.Footnote ⁶⁶ As with the discrimination of foreigners, however, weak IP catch-up policies are largely ruled out by international IP treaties, in this case by obligatory minimum levels of protection.Footnote ⁶⁷ The remaining room to maneuver concerns some “residual policy space” allowing for “IP calibration.”Footnote ⁶⁸

It is doubtful whether this remaining leeway is sufficient to account for the vastly different levels of absorptive capacity and innovativeness among national economies. The most prominent test case is China, which the United Nations still counts among the developing economiesFootnote ⁶⁹ but which has risen to become the second-largest economy in the world in terms of gross domestic product.Footnote ⁷⁰ In 2019, the patent office of China received nearly half of all patent applications in the world and had the second highest number of international patent applications via the Patent Cooperation Treaty, just behind US-based applicants.Footnote ⁷¹ Being bound to the TRIPS Agreement since 2001 has apparently not hampered but potentially fostered this impressive performance of the Chinese economy.

The seemingly happy relationship between strong IP and Chinese economic development has been tarnished, however, by long-standing complaints of the USA and the European Union about insufficient IP enforcement, and, more recently, about so-called forced technology transfers.Footnote ⁷² Both practices support the local acquisition of knowledge and the building of innovative capacity and thus, eventually, technological and economic catch-up. The significance of these informal, weak IP policies is confirmed by the fact that the 2020 US–China Economic and Trade Agreement specifically addresses these issues; it obliges China firstly to stop the manufacture and block the distribution of pirated and counterfeit products, and secondly to not require or pressure persons of the other party to transfer technology to its persons in relation to acquisitions, joint ventures, or other investment transactions.Footnote ⁷³ The agreement thus documents and at the same time aims to contain a conflict between Chinese inbound and US outbound nationalist IP policies.

Like the USA, the European Union generally also pursues an outward-looking, pro-IP policy.Footnote ⁷⁴ In the already mentioned 2019 DSMD, the EU legislature has, however, adopted yet another version of an inward-looking IP regulation. As explained, Art. 15 DSMD strengthens IP to the benefit of EU press publishers. Art. 8 DSMD, in contrast, weakens EU copyright by permitting the non-commercial mass digitization of out-of-commerce works. It also reverses the discrimination. Whereas Art. 15 DSMD discriminates against third-country press publishers, Art. 8 DSMD discriminates against EU right holders and leaves exclusive rights in third-country out-of-commerce works intact. Under Art. 8 DSMD, only out-of-commerce-works of EU origin may be digitized and made available online.Footnote ⁷⁵ Recital 39 DSMD explains this discrimination against EU works and right holders with “reasons of international comity.” And indeed, this rarely adopted measure eliminates any concerns that the limitation of copyrights in out-of-commerce works might go too far and run afoul of the international acquis of minimum copyrights, which does not apply to the internal copyright regulations of a country for works of that origin.Footnote ⁷⁶ It thus seems that Art. 8 DSMD expresses a concern for foreign right holders and international law. The European Union’s globalist attitude is so strong that the Union is even prepared to discriminate against its own citizens.

From an historical perspective, however, Art. 8 DSMD appears in a very different light. According to this view, Art. 8 DSMD is a late reaction to events that took place in the USA between 2004 and 2015, namely the Google Books Project, the Google Books Settlement, and the Second Circuit Court decision – which eventually held that Google’s unauthorized digitizing of more than twelve million copyright-protected works, the creation of a search functionality, and the display of snippets from those works were non-infringing fair uses under US copyright law.Footnote ⁷⁷ Many non-US copyright holders, as well as the German and French governments, had actively intervened in these developments. They successfully argued that a settlement reached between Google and certain US authors and publishers would violate international copyright law, although the settlement only covered works of US, Canadian, UK, and Australian origin plus foreign works registered with the US copyright office.Footnote ⁷⁸ In Germany and other European countries, the Google Books Project and settlement were portrayed as an impertinent global misappropriation of the rights of European authors and publishers by the same US internet giant that, by the way, is the primary target of the new press publishers’ right.Footnote ⁷⁹

At the same time, the unavailability of millions of orphan and out-of-commerce works in the digital age was generally acknowledged to pose a real problem. The first response in line with European copyright values, the 2012 EU Orphan Works Directive, unfortunately proved unfit for the purpose because of its requirement of a prior diligent search in every single case.Footnote ⁸⁰ In 2016, a French effort to allow for the mass digitization of out-of-commerce works was struck down by the Court of Justice of the European Union because of its incompatibility with the EU copyright acquis.Footnote ⁸¹ In order to finally allow for mass digitization projects, Art. 8 DSMD now adopts the “digitize first and opt out later” mechanism that had infuriated European right holders and governments against the Google Book settlement ten years earlier. The EU legislature therefore took great pains to avoid international law-related complaints by US or other third-country right holders.

It is finally worth noting that not only US works are beyond the scope of Art. 8 DSMD. Google and other private internet companies also cannot rely on the provision, which only permits non-commercial digitization projects. In sum, Art. 8 DSMD is not only an inward-looking but also a hermetical EU measure: it benefits EU cultural heritage institutions in their taxpayer-funded efforts to preserve and make available their collections of EU works, for future generations of EU citizens.Footnote ⁸² With this cultural, etatist focus, and considering its historical background, the provision represents a (supra-)nationalist approach to IP. Together with the new press publishers’ right, it forms part of the overall EU digital policy that strives for a European version of digital sovereignty, independent from and often opposed to US and Chinese approaches.Footnote ⁸³

I. Sanction Foreign Pirates

An interesting example in IP history is the already mentioned French International Copyright Act of 1852.Footnote ⁸⁵ That law did not merely extend the French droit d’auteur to works published abroad and thus, in practice, to foreign authors for “reasons of universal justice.” It also made counterfeiting and piracy within France a criminal offense – in fact, this is the only substantive content of the law.Footnote ⁸⁶ The immediate purpose of this criminalization was to curb the influx of cheap copies of works by French authors from Belgium and the Netherlands, where this activity was perfectly legal.Footnote ⁸⁷ The indirect effect was that after the “pirates” lost their biggest market, their governments were more inclined to enter into bilateral treaties with France – and finally to protect French authors in Belgium and the Netherlands.Footnote ⁸⁸ Thus, a law that according to its preamble pursued a noble universalist aim turns out to be an outbound nationalist policy move.

The US trade policy in the late twentieth century provides a more straightforward example of efforts to fight unauthorized foreign copying and imitation. The US Trade and Tariff Act of 1984 made the adequate and effective protection of foreign IP a principal US negotiating objective, and it declared inadequate or ineffective protection of IP in third countries a trade practice that could lead to trade retaliation by the USA.Footnote ⁸⁹ The Reagan Administration used this tool intensively, for example vis-à-vis South Korea and Brazil.Footnote ⁹⁰ In 1988, the US Congress amended the Trade Act “to provide for the development of an overall strategy to ensure adequate and effective protection of intellectual property rights and fair and equitable market access for US persons that rely on protection of intellectual property rights.”Footnote ⁹¹ As part of this overall strategy, the Office of the US Trade Representative has since then published an annual “Special 301 Report” in which it identifies foreign countries where IP protection and enforcement have deteriorated or remained at “inadequate” levels, which may result in actions under US trade law or in dispute settlement proceedings pursuant to WTO or other trade agreements.Footnote ⁹² More than thirty countries find themselves on the 2020 watch and priority watch lists, among them well-known targets like China, but also Canada and Romania.Footnote ⁹³

Some thirty years after the USA, the European Union adopted very similar measures. As part of a comprehensive “[s]trategy for the protection and enforcement of intellectual property rights in third countries,”Footnote ⁹⁴ the European Commission has since 2006 carried out biannual surveys among EU stakeholders and Member States in order to identify third countries in which the state of IPR protection and enforcement gives rise to concern, so that the Commission can focus its efforts and resources on those countries. The most recent report lists twenty countries in four priority categories, with China as the only country in Category One, and, somewhat ironically, the USA listed among the problem countries in Category Three.Footnote ⁹⁵

On an abstract level, one can thus observe a convergence of EU and US policy aims and measures. In practice, however, the two actors apparently regard each other with suspicion. Each tries to extract as much revenue from foreign IP markets as possible.

II. Unilateral Reciprocity Requirements

Another way to induce other countries to adopt or strengthen their IP laws is to demand some form of reciprocity. It was common practice in nineteenth-century Europe for governments to make eligibility for their IPRs dependent on a corresponding treatment of their own citizens in the other country.Footnote ⁹⁶ Reciprocity is a particularly promising tool if the domestic market is of a significant size and there is some corresponding demand for international protection. Accordingly, the 1838 UK International Copyright Act made the protection within Her Majesty’s vast dominions of literary works that were published abroad conditional upon the reciprocal protection of British books in those foreign countries.Footnote ⁹⁷ Within a few years, this carrot-and-stick strategy had led to copyright treaties with German states in 1846 and 1847 and with France in 1851.Footnote ⁹⁸

Whereas France initially adopted, as explained, a different tactic to internationalize copyright law, it successfully implemented reciprocity in trademark law. The decisive move here was the law of 1857, according to which protection of foreign trademarks in France was not simply dependent upon reciprocal protection but also upon a diplomatic agreement with the home country of the foreign trademark owner. Countries that sought protection for their citizens’ marks in France therefore had to negotiate and usually to legislate. Within a few years, France concluded several treaties on the matter, starting with its great rival, Britain.Footnote ⁹⁹ Thus, the targeting of foreign pirates and the discrimination of foreign right holders contributed to the emergence of international IP treaties, first in the form of numerous bilateralFootnote ¹⁰⁰ and eventually in the form of the permanent multilateral IP Unions of the 1880s, with their guarantee of automatic national treatment.Footnote ¹⁰¹

Beyond this emerging international IP acquis, however, reciprocity requirements have remained an attractive tool for export-oriented countries. One example concerns layout designs (topographies) of integrated circuits. The 1984 US Semiconductor Chip Protection Act only applies to nationals and domiciliaries of the USA and of countries with which the USA has concluded a respective IP treaty.Footnote ¹⁰² The 1986 European Economic Community Directive on the legal protection of topographies of semiconductor products is equally restricted to nationals and residents of a Member State, with a proviso that Member States may conclude agreements with third countries concerning that subject matter.Footnote ¹⁰³ Whereas such bilaterals did not occur, and the 1989 WIPO Washington Treaty on Intellectual Property in Respect of Integrated Circuits remained dead letter law,Footnote ¹⁰⁴ Arts. 35–38 TRIPS eventually made this new form of IP obligatory for all WTO Members.

The protection of geographical indications (GIs) by the European Union provides an example of where the use of reciprocity to globalize new types of IPR partially failed. The original 1992 Regulation made GI protection for agricultural products and foodstuffs coming from a third country dependent upon equivalent GI protection for EU products in that country, “without prejudice to international agreements.”Footnote ¹⁰⁵ Arts. 22–24 TRIPS indeed address this issue but only set out very limited obligatory GI protection levels. Also within WIPO, the European Union has thus far failed to establish its preferred high standard as the global norm, mainly because of US opposition.Footnote ¹⁰⁶ The inclusion of GI protection in the TRIPS Agreement even backfired when in 2005 a WTO panel found that excluding WTO nationals from the EU system for GIs violates the national treatment obligation owed to them.Footnote ¹⁰⁷ As a result, the European Union has to accept third-country GIs within its market, but only a handful of other countries have committed to offer EU GI producers comparable levels of protection.Footnote ¹⁰⁸

Just like the discrimination against foreigners, unilateral reciprocity requirements have also largely been ruled out and replaced by mutual national treatment provisions in IP treaties. Nowadays, reciprocity is thus useful only beyond the international acquis. At these edges of the international IP system, however, reciprocity is still popular – and it has retained its purpose, namely, to provide a country’s own nationals or residents with protection abroad.

The first example concerns German copyright law vis-à-vis “non-ressortissants,” that is, nationals of non-members of the international copyright system. In a move that somewhat contradicts the rhetoric of purportedly universal authors’ rights (Urheberrecht),Footnote ¹⁰⁹ generally only nationals of Germany, the European Union, and the European Economic Area are eligible for exploitation rights in works, performances, and other subject matter.Footnote ¹¹⁰ Third-country (“foreign”) nationals qualify for German copyright protection only according to international treaties, because of first publication in Germany, or on condition of reciprocity.Footnote ¹¹¹ In a case that went all the way up to the German Federal Constitutional Court in the 1980s, Bob Dylan fell prey to these restrictions. The civil courts dismissed his claim for an injunction against the distribution of an Italian bootleg in Germany based on his rights as a performer because of his US nationality and the lack of applicable international treaties. The Federal Constitutional Court also denied a violation of the principle of equality before the law, because Dylan’s exclusion from property protection was justified by the purpose of inducing the USA either to join the Rome ConventionFootnote ¹¹² or to enter into a bilateral treaty with Germany.Footnote ¹¹³ In the former alternative, reciprocity helps to expand the international IP system and thus the level global playing field in IP. But the latter alternative, a reciprocal bilateral treaty, still situates reciprocity in a nationalist setting of individual countries that pursue separate interests. In any case, the ultimate purpose is to guarantee German performers reciprocal protection in the USA and that remains an outbound nationalist policy aim.

The second recent example of IP reciprocity concerns the protection of non-original databases, for which no multilateral treaties exist.Footnote ¹¹⁴ Consequently, states are generally free to decide whether and under which conditions foreign producers of such databases are eligible for protection. In the case of the EU sui generis right in databases, only those persons qualify who are nationals of a Member State or have their habitual residence, central administration, principal place of business – or at least their actively operating, registered office – in the European Union.Footnote ¹¹⁵ In contrast to Art. 15 DSMD, the Database Directive refers to the possibility that the EU Council may extend the sui generis right to third-country database producers on the basis of an international agreement.Footnote ¹¹⁶ Reciprocity is not expressly mentioned in this context, but it was discussed in the course of the legislative proceedings and is not ruled out under the terms of the directive.Footnote ¹¹⁷ In any case, the sui generis right in databases has not been an export hit. There is neither clear evidence for an investment stimulus,Footnote ¹¹⁸ nor has the European Union concluded treaties on reciprocal database protection with third countries. An endeavor to globalize the Database Directive via a WIPO treaty equally failed.Footnote ¹¹⁹ If that was a cooperative effort to advance a global public good (that is, more databases), then why did the European Union not adopt a universal approach in the first place? It is therefore more plausible to again interpret these moves as attempts to provide EU database makers with the benefit of transplanting the EU acquis to foreign markets – an instance of outbound IP (supra-)nationalism.Footnote ¹²⁰

III. International IP Treaties

I. A Dialectic Virtuous Circle

This article has demonstrated the complex and indeed dialectic relationship between economic nationalism and globalism in the area of IP. On the one hand, outward-looking policy perspectives have largely taken precedence over inbound IP nationalism. Even self-contained measures like Arts. 8 and 15 of the EU DSMD are embedded in and reflect upon the deep levels of global economic integration. Moreover, today’s international IP acquis establishes an effectively global and substantively comprehensive level playing field for IP producers and users alike. The leeway for inbound IP nationalist catch-up policies, whether in the form of no or weak IP or as discrimination against foreigners, has shrunk considerably – and in certain core areas of patent, copyright, and trademark law has shrunk to effectively being nothing at all. In those regards, IP nationalism has clearly lost ground.

On the other hand, the overview of past and present IP policies confirms that economic nationalist motives were, and remain, the main driver of international IP policy and law.Footnote ¹⁷⁰ This is also true as regards the international IP treaty acquis. This poster-child of universal cooperation is indeed merely a side effect of outbound IP nationalist policies of powerful net IP exporters. These players adopt unilateral, bilateral, plurilateral, and multilateral measures as functional equivalents to pursue one and the same immediate goal, namely, to support domestic industries in an interconnected world market.

At this point, a dialectic virtuous circle emerges. The more that private parties depend upon foreign sales, the more they lobby their home governments for IP protection abroad. The deeper global economic integration, the greater the demand for global IP. Global economic integration thus turns selfish or nationalist short-term aims and benefits into drivers of an ever more comprehensive body of international IP law. This is the realist answer to the question of why IPRs and IP laws have continuously grown in number and expanded in scope, territorial reach, and duration – while at the same time having been contested far more than other branches of property law.Footnote ¹⁷¹

II. The Economic Nationalist DNA of IP

The resilience and dynamic of this virtuous circle vest in two universally accepted basic legal structures of IP. First, IPRs are private rights.Footnote ¹⁷² They are granted to private parties who acquire and enforce them at their will.Footnote ¹⁷³ While it is true that these property rights have to serve the public good,Footnote ¹⁷⁴ their immediate benefit is private. Accordingly, the political economy of IP differs greatly from branches of international law and policy that directly aim at global public goods, such as biological diversity. Whereas the latter require a global perspective of all stakeholders involved and equally global solutions, international IP protection is demanded by individual private parties who have strong vested interests. If governments respond to their demands, they can easily present themselves as putting local industries first and thus boost their domestic legitimacy.Footnote ¹⁷⁵

Secondly, the private IP privilege is “territorial in nature.”Footnote ¹⁷⁶ The principle of territoriality has been accepted by all states ever since the early call by France for universal cross-border protection was defeated by the pragmatic demands of greater national control during the negotiations of the Paris and Berne Conventions in the 1880s.Footnote ¹⁷⁷ Global trade and communication are still not governed by one world IPR but by a mosaic of more than 190 national IP territories or jurisdictions.Footnote ¹⁷⁸ In other words, fragmentation and particularism are the only truly universal aspects of IP. It is the nation state that ultimately guarantees IP protection. And those states that call for increasing levels of IP protection do so in the vested private interest of their local IP constituency.

The ensuing system could be considered universal only if it provided for a full harmonization or even unification of all existing national IP laws, which would logically rule out any IP nationalism. Such a level of integration has, however, not been achieved within the European Union, and it remains utopian on a global level.Footnote ¹⁷⁹ Even if a global IP code were adopted,Footnote ¹⁸⁰ it would not be normatively neutral, and jurisdictions on a lower regulatory level might, in addition, still pursue self-serving aims by turning their attention to non-IP mechanisms – such as prizes, grants, tax credits, or in-house government research – to foster local innovation.Footnote ¹⁸¹ In other words, the end of history and politics has not yet arrived.Footnote ¹⁸² And it requires strong visionary skills to imagine its realization.Footnote ¹⁸³

In conclusion, I want to stress the descriptive character of this analysis. It demonstrates how, in which forms, and why economic nationalism manifests itself so strongly in IP. The more important IP becomes, the more likely it is that its nationalist DNA will impact other policy areas. Such tendencies can only be successfully counteracted if “scholars … speak the same nationalistic language that the government understands.”Footnote ¹⁸⁴

I. The International Core of IP Protection and Its Multilateral and Regional Levels

The international protection of IP rights rests on numerous international agreements, called “conventions.” The most basic ones originated in the nineteenth century. They set out the basic elements of international protection in terms of national treatment and minimum standards, and they address specific details for those rights that depend on grants by authorities and applications. These conventions have been subject to revisions and amendments over time. Institutionally, the conventions are hosted by the WIPO, a specialized agency of the United Nations that was founded in 1964.

This array of conventions and the WIPO as an administering institution are open to all members of the United Nations and indeed, WIPO and most of the basic instruments enjoy almost universal membership. A number of other instruments, while also being negotiated and adopted within WIPO and open for any member state, have a less comprehensive membership. Nevertheless, the system altogether always has been and still is seen as a “universal” system, as its instruments – the WIPO conventions – as well as the institutions are open to all states. It should be noted that beyond this formal dimension, the term “universality” in international law is also seen to carry a substantive dimensionFootnote ¹ In this way, it might be seen as referring to an existing or “pre-positive” system of common values.Footnote ² More recently, universalism in this sense is contrasted with legal pluralism.Footnote ³

Nowadays, the term “multilateral,” which appears to have been borrowed from international trade terminology, is often used. The term in our sense, has different meanings. It first of all indicates that the organization and the agreements are open to all UN members and are not limited to a regional or even a bilateral set of members. In this way, multilateralism contrasts with bilateralism or unilateralism.Footnote ⁴ Second, “multilateral” signifies that the discussion, negotiation, conclusion, and the later administration of instruments are taken care of by a forum with UN-like membership, where all states have a voice. It is important at this point to recall that “multilateral” in this sense signifies the organizational frame and design of the conventions and does not necessarily imply that all WIPO conventions actually enjoy “universal” or “multilateral” membership. Furthermore, it should be noted, the notion of multilateralism probably lacks any substantive dimension, which as mentioned above would be inherent in the term “universalism.”

This “multilateral core” of international protection of IP is accompanied by a number of agreements – or regimes – which set up regional institutions, procedures, and rules, often relating to specific rights. The European and African patent organizations must be mentioned here as well as the regional trademark systems. Institutional links exist between the regional and the multilateral institutions. In addition, a relatively small number of bilateral agreements have been concluded over time, which specifically address the protection of IP.

II. The “Trade Turn”

The classic WIPO system of international protection of IP rights met with growing criticism in the 1980s. The standards of protection were believed to be too low and experts feared they would be further watered down by initiatives of developing countries in WIPO bodies. In addition, compliance and enforcement were at issue, as the WIPO conventions did not address the enforcement of IP rights in substance and barely contained any means to secure the compliance of state parties and to settle disputes among them.

To remedy these shortcomings and concerns, the protection of IP rights was tabled in negotiations on a new trade regime. The hope was that linking IP rights with trade would allow for improvements in the protection of IP by offering trade advantages. In this vein, IP rights became part of a larger package, which resulted in the establishment of the WTO with its various agreements. The TRIPS Agreement extensively refers to existing WIPO agreements, often envisages a higher standard of protection, and for the first time adds enforcement provisions. In addition, as part of the WTO legal system, the agreement is subject to the WTO’s proper dispute settlement system.

Hence, a link has been established between matters of international trade and the international protection of IP rights. This link is well established and hardly questioned today. It is largely forgotten that at the time of the negotiation of the TRIPS Agreement, there was a clear controversy as to whether a trade body, the General Agreement on Tariffs and Trade (GATT) at the Uruguay Round, had any competence at all to negotiate on IP issues – which are after all part of the remit of WIPO.Footnote ⁵ The sheer existence of the TRIPS Agreement indicates these concerns did not prevail in the end. Indeed, the jurisdictional boundaries of international organizations and regimes are not very strict. Moreover, the proponents of an agreement on IP in the context of the nascent WTO argued that the agreement would confine itself to the trade-related aspects of IP rights protection, which were not addressed at all in the WIPO conventions. Even today, the frequent use of the term “trade-related aspects” testifies to the effort to relativize a potential conflict between WIPO and the international trading system.Footnote ⁶

In addition to the question of jurisdiction, the parallel regulation of the international protection of IP rights in WIPO and the WTO raises questions of international treaty law. At first glance, it is hard to overlook the fact that both systems deal with the international protection of IP rights. The differences between the two systems lie not so much in the substantive standards as in the enforcement, for which the TRIPS Agreement provides for private mechanisms and WTO dispute settlement, while the WIPO conventions merely refer to the International Court of Justice.

The question of whether this situation raises issues in view of the international law of treaties depends on how one interprets the lack of further enforcement mechanisms in the WIPO conventions. If one believes that relevant WIPO conventions expressly and conclusively exclude additional mechanisms for enforcement, the inclusion of private means of enforcement and trade dispute settlement in the TRIPS Agreement could be seen as a successive treaty among parties relating to the same subject matter, Art. 30 of the Vienna Convention on the Law of Treaties, or even as an amendment of a multilateral treaty. Moreover, the specific provisions on amendment as contained in various WIPO conventions would come into play. However, there is no indication that WIPO bodies or WTO committees or states have further considered the issue. Likewise, the issue has hardly ever been discussed in public or in academia.

III. The Bilateral Turn: Preferential Trade Agreements

However, much more relevant for this paper are the rules and regulations on IP rights that have been adopted and provided for in a different context. Regional integration is a particularly relevant issue in this regard and indeed, in addition to the regional IP systems already mentioned, some developments took place in the EU, for instance, and in the Andean Pact. In addition, the 1994 North American Free Trade Agreement explicitly addressed IP issues.Footnote ⁷

In addition to arrangements in a regional context and a focus on regional integration, a different type of agreement emerged in the 1990s – and in particular after the establishment of the WTO. They are often called “free trade agreements” (FTAs) and they reflect the desire of particular WTO members to establish better market access and closer cooperation in trade matters on a bilateral level. Today, such bilateral agreements make up the majority of preferential trade agreements. The WTO members initiate and conclude such agreements for various reasons. A number of agreements have been concluded by parties that are in a specific geographical situation, as is true for Chile or Singapore, which sometimes have been called “hubs.” In addition, big players such as the USA have established a network of such agreements. The USA maintains such agreements with quite a few partners.

The EU had originally been hesitant to conclude such agreements for fear that doing so might undermine the multilateral system. However, in 2006, a paper by the European Commission called “Global Europe” paper made a turnaround and advocated the conclusion of a whole set of FTAs. Indeed, from that point onwards, the EU started several negotiations to partner with a large number of countries around the world, including but not limited to the USA, Canada, Japan, Korea, Vietnam, Singapore, Mexico, and India. Obviously, the proliferation of such agreements also reflects the view that the WTO has not been able to achieve progress in the Doha round.Footnote ⁸

In substance, all these agreements contain provisions or chapters on IP. They recall the TRIPS Agreement and related obligations. In addition, in many cases, they contain a list of additional WIPO conventions that the parties shall ratify or maintain. Furthermore, they contain a number of additional standards of protection in view of substance and enforcement, and sometimes they envisage a kind of institutionalized cooperation on these topics.

IV. A Hybrid System

As already explained, the international protection of IP rights has been traditionally understood to rest on WIPO and its conventions. On closer examination, however, it becomes clear however that even in earlier times, other international institutions became involved. A second pillar was added by the establishment of the TRIPS Agreement, and ever since then a sort of a bipolar system has existed. The merits and challenges of this bipolar system have been widely discussed. Indeed, one could say that the TRIPS Agreement added a dispute settlement and enforcement dimension, whereas WIPO focused on substantive issues – and its work can even be seen to have been revitalized, whereas further negotiations in the WTO were stalled.

The bilateral and regional turn as seen above added an additional level of complexity. In addition to the bipolar universal – or multilateral – regimes, several regimes emerged that were focused at the bilateral, regional, or even “megaregional” levels, and the result could be described as a hybrid system.Footnote ⁹

I. Coherence and Effectivity

The escalation of a huge number of preferential trade agreements in recent times coincides with a general trend in international law. The “diversification and expansion of international law” has met with quite some concern, and in 2006 the trend prompted a well-received study by the International Law Commission.Footnote ¹¹ In its assessment, the Commission rightly understood that this trend is accompanied by the proliferation of international courts and tribunals, and that the growing number of both international agreements and of those dispute settlement institutions and procedures have to be seen in context. The Commission has addressed the overlap and the potential for conflict resulting from these developments in view of the proper functioning of the international legal order.

The key concern in this regard has been the coherence of this order and the potential for conflicts arising from inconsistencies in both the agreements and dispute settlement. Hence, coherence is a valid starting point for exploring the array of multilateral and regional and bilateral agreements in the area of the international protection of IP rights. Indeed, the question is whether this number of agreements fit together well.

II. The Governance Dimension

Beyond the existing rules and their coherence, the array of multilateral, bilateral, and regional agreements may also be seen as part of a system of regulation of the international protection of IP. Rather than looking only at existing rules and agreements, this perspective would suggest seeing the protection of IP as a continuing process of reflection, discourse, and regulation, where agreements and laws are newly concluded and enacted and amended to respond to relevant – and changing – circumstances, and they reflect the potentially changing views of relevant actors and stakeholders. Such a system can be assessed by looking at its ability to achieve certain objectives and to do so in a way that is legitimate.

Altogether what is at stake here may be said to be the governance dimension of the international protection of IP rights. While a comprehensive understanding of such governance has yet to be developed, some particularly relevant aspects can be discussed here.

III. Balancing

Yet another way to look at the system of international protection of IP rights and the related array of multilateral, bilateral, and regional agreements is to examine how this system achieves a balance between a number of potentially conflicting objectives and purposes. Such a view adds to the governance dimension as discussed before, in a more substantive perspective.Footnote ²⁰ This assessment would have to identify the different objectives and interests and study how they are taken into account and balanced in a rational way.