What is the Biological Diversity Act?
What requirements does the Act currently impose?
Why is the Act being amended?
What changes does the Bill introduce?
What are the advantages and disadvantages of the Bill?
What are the next steps?
What is the Biological Diversity Act?
The Biological Diversity Act was enacted in 2002 and regulates the access to and use of biological resources in India. The Act has gained a lot of attention in recent years in view of the National Biodiversity Authority's (NBA's) active enforcement of its key provisions.
What requirements does the Act currently impose?
All foreign entities engaged in research and commercialisation involving any Indian biological resource must sign benefit-sharing agreements before initiating research. Further, if any IP rights are sought involving such research, both Indian and foreign entities must enter into benefit-sharing agreements in lieu of permission by the NBA. Any such patent will remain pending until such time as the necessary permission from the NBA is submitted to the Indian Patent Office. Contravening the provisions attracts criminal penalties.
There has been widespread discussion regarding the need for simplification of the Act. To address these concerns and ensure that the Act is relevant in the current and future contexts, an amendment – namely, the Amendment Bill 2021 – has been submitted to the Indian Parliament.
What changes does the Bill introduce?
Biological resources
The Bill seems to have widened the definition of "biological resources" – it now includes the following, where they have actual or potential use or value for humanity:
- plants;
- animals;
- microorganisms or parts of their genetic material; and
- derivatives (excluding value-added products).
Human genetic material, however, remains excluded. The proposed definition seeks to remove the term "by-products" and replace it with the term "derivatives". A "derivative" is further defined as "a naturally occurring biochemical compound or metabolism of biological resources, even if it does not contain functional units of heredity". This amendment seems to have expanded the scope to include more components than noted previously.
Entities incorporated in India
The Bill further proposes to exempt entities incorporated in India from seeking NBA approval prior to access for research, commercial utilisation or bio-survey and bio-utilisation, except when they are controlled by a foreign company within the meaning of section 2(42) of the Companies Act. This seems to provide more flexibility that the existing provision, which mandates that entities which have "foreign participation" must obtain approval before accessing the biological resource, meaning that the provisions currently apply to even those Indian entities that may have minor foreign stakes.
Another significant amendment to note is that the relaxation is extended to companies that are registered or incorporated in India, which only require registration with the NBA prior to an IP right being granted. However, foreign entities will continue to be required to obtain approval from the NBA. Once an IP right is granted, both Indian and foreign entities will require prior approval from the NBA for any commercialisation. Further, according to the proposed amendments, registration and/or prior approval will also apply to biological resources from India that are deposited in repositories outside India.
Alternative Indian medicine
The amendments further propose an exemption to registered Ayush (ie, alternative Indian medicine) practitioners – along with local people and communities of the area, including growers and cultivators of biodiversity – from providing prior notice to the state biodiversity board when biological resources are accessed for commercial utilisation for codified traditional knowledge, cultivated medicinal plants and related products. The Bill also clarifies that biological resources and the items derived from them, including agricultural waste, when normally traded as commodities, cultivated medicinal plants and their products, would not fall under the purview of the Act. This exemption, however, is applicable only to Indian entities. No such exemption will apply if biological resources are employed for obtaining IP rights.
Penalties
Another significant change that the amendments propose is to withdraw the penal provision of imprisonment and limit the penalty only to a heavy fine.
What are the advantages and disadvantages of the Bill?
The Bill clarifies certain points in the Act in its provision of exemptions for certain situations. However, the Bill still lacks information on value-added products, which are currently defined as "products that may contain portions or extracts of plants and animals in unrecognizable and physically inseparable form". In the past, applicants and the NBA have failed to agree on whether a particular biological resource or product is a value-added product or not. It would therefore be helpful to have some clarity (with examples) in the accompanying guidelines that may be issued once the Bill is approved.
Currently, the proposed Bill is under review by the Joint Committee of the Parliament based on the suggestions and recommendations provided by the public and stakeholders. It is also expected that clarification will be provided through guidelines on, for example, terms such as "derivative" and "value-added products". It is not anticipated that significant changes will be made to the proposed procedure to seek permission and/or approval for accessing or obtaining biological resources for research, commercialisation, or bio-survey and bio-utilisation, as this is largely viewed as a welcome change.
For further information on this topic please contact Deepa Tiku at K&S Partners by telephone (+91 80 4042 7900) or email ([email protected]). The K&S Partners website can be accessed at www.knspartners.com.