Agribusiness Review - Vol. 6 - 1998

Paper 3
ISSN 1442-6951

Growing Plants, Evolving Rights: Plant Variety Rights in Australia

David Godden

Abstract

The recent and likely future evolution of the plant breeding and seeds industry in Australia is analysed in this paper. The context for this analysis is the enactment of Australian legislation for intellectual property rights in new plant varieties in 1987. A necessary preliminary to this analysis is a description of how plant breeders develop new plant varieties, and the conditions under which commercial plant breeding is profitable in the absence of intellectual property rights such as Plant Variety Rights (PVR). Such investigations also require an understanding of the conditions of seed production in Australia. This preliminary analysis also helps explain, conversely, the historical predominance of public plant breeding in Australia. Against this background is explained the evolution of PVR from a 1960s idea to 1980s reality.

The effect of PVR legislation on plant breeding in Australia is examined via statistics on actual grants of PVR from the inception of the scheme. However, prior to enactment of PVR in Australia, it was predicted that such legislation would not create plant property rights that were sufficiently effective to promote significantly greater plant breeding investment. Thus amendments in 1994 to the original PVR Act, ostensibly for consistency with the international PVR convention, reflected the industry's desire to strengthen commercial private plant breeding. Finally, recent advances in molecular biology have implications for future plant breeding techniques and the opportunities for commercial plant breeding. Some predictions are made as to possible future developments in PVR to accommodate these scientific advances.

• 1. Introduction
• 2. Plant breeding as a scientific and economic endeavour
• 3. Plant breeding and seeds industries in Australia
• 4. Institutional setting—plant intellectual property rights
• 5. Evolution of PVR/PBR in Australia
• 5.1 Enactment of PVR in Australia
• 5.2 Implementation of 1987 Act
• (a) PVRAC
• (b) Species coverage
• (c) Protecting discoveries
• 5.3 1994 Revised Act
• (a) Abandoned proposals for amending the 1987 PVR Act
• (b) Major Amendments
• 6. PVR/PBR Registrations
• 7. International dimension from Australia's perspective
• 8. Continued evolution—interaction of science and institutions
• 8.1 Genetic engineering
• 8.2 Patents, PBR and genetic engineering
• 9. Conclusion
• References
• Appendix - Farm-saved Seed

1. Introduction

Plant Variety Rights (PVR)—or Plant Breeders Rights (PBR)—create intellectual property rights in plant varieties. Australia enacted legislation for Plant Variety Rights (PVR) in 1987 after a protracted and often acrimonious debate and joined the international convention on PVR (called UPOV) in 1989. Australia followed most Western industrialised countries—and some Eastern bloc and developing countries—who had enacted PVR legislation up to three decades earlier. PVR were usually enacted with little controversy except in Australia and Canada.

This paper examines the evolution of PVR/PBR in Australia. The framework for this paper is provided by public choice theory and especially the dynamics of public choice ( Godden 1991, 1993, 1997 ). This discussion requires basic knowledge of plant breeding and seed reproduction (Section 2) and related Australian industries (Section 3). The way PVR create intellectual property rights in plants is outlined in Section 4. The evolution of PVR legislation in Australia is discussed in Section 5 and PVR registrations are analysed in Section 6. International aspects of Australian PVR are evaluated in Section 7 and the prospects for continued evolution of the PVR system are reviewed in Section 8.

2. Plant breeding as a scientific and economic endeavour

Over millennia of plant improvement, selection of improved plant varieties from the wild or farmers' fields has been the most common form of crop improvement. In the last century, plant breeders have utilised increasing knowledge of sexual reproduction and plant genetics to increase the rate of plant improvement. Science, skill and art provide plant breeders with the opportunity to develop new plant varieties which are superior to existing varieties (e.g. Austin et al 1986, chapter 2 ). New plant varieties are important across all plant kinds—commercial crops and pastures, commercial and home-garden fruit and vegetables, trees for timber and other uses, and ornamentals. New varieties may be superior on the grounds of higher yields; better pest, disease or weed resistance; better product or storage quality; better processing characteristics; or better appearance. Molecular biology (‘genetic engineering') may enhance plant breeding by identifying valuable genetic material; providing genetic markers which enhance breeding efficiency by improving the ability of plant breeders to identify and track desirable genes; enabling isolation and transfer of genes from any organism into plants without requiring sexual reproduction (thus permitting inter-species transfers wider than previously possible); and constructing new genes (e.g. Austin et al 1986, chapter 3 ).

3. Plant breeding and seeds industries in Australia

The plant breeding and seed industries encompass three key activities: storage and evaluation of plant germplasm; breeding new plant varieties; and reproduction of planting material (seeds, whole plants cuttings etc.) (cf. Figure 1a ). None of these activities is well-documented for Australia.

The estimated value of planting material used is reported in Table 1 by type of agricultural enterprise; some enterprises, such as sugar cane production, were not reported. The Australian Bureau of Statistics (1995) noted, with regard to the data in Table 1, that this data only reflects purchases of seed material, and does not include the imputed value of farm-saved seed. Particularly in the small grain cereals (e.g. wheat), most seed used is not purchased. A small amount of seed, principally of grasses and legume pastures, is imported (approximately $12.8m in 1993-94) and similar amounts were exported ($17.5m) ( Australian Bureau of Statistics 1993-94 ). The data in Table 1 also excludes some, perhaps most, propagation material sold by plant nurseries (of which there were 2,091 in 1994) and cut flower and flower seed growers (of whom there were 935) ( Australian Bureau of Statistics 1994 ). Volumes of seed production are not well-documented. Table 2 reports volumes of pasture and grass seed harvested, together with the author's estimates of seed usage in broadacre agriculture and vegetable production based on areas sown and assumed sowing rates.

Figure 1: Plant breeding and seeds industries, and new variety use

Table 1: Value of Reproductive Planting Material, Australia

Source: Australian Bureau of Statistics (1995)

Lazenby (1986, Table 1) reported the distribution of total Australian plant breeding effort across plant types. In 1985, plant breeders provided approximately 170 person years of plant breeding effort and, additionally, there were some 315 person years of technical support. Wheat accounted for 24% of plant breeders' effort. The other winter cereals accounted for 12% of breeder effort; summer crops (8%); oilseeds (11%); legume grains (4%); other crops (including cotton, rice, sugar) (16%); pastures (12%); horticulture (9%); and ornamentals (4%). Industry directly contributed some $6.4 million to support plant breeding. Based on the Industry Commission's (1994) assessment that government funded at least 80% of rural research, this ‘industry support' suggests that government probably expended some $25 million on plant breeding. Approximately 25% of plant breeders were in State government organisations, with Queensland, NSW and Victoria employing most of these breeders. CSIRO employed 16% of breeders; 22% were in higher education institutions; 12% in private enterprise; and the in the sugar industry, sugar cane breeders (4% of total breeders) were employed by the Bureau of Sugar Experiment Stations and CSR Ltd. (Lazenby 1986, p.35) .

Table 2: Estimated Volume of Seed Used in Australian Agriculture

(a) Crops (estimated)

(b) Pastures (recorded)

(c) Vegetables (estimated)

Clements et al (1992) reported a survey of Australian crop breeding activity; a comparison of Lazenby's and Clement et al's data for crops is reported in Table 3. The apparent reduction in breeder numbers seems genuine, but the change in total staff is probably an artefact of differences between the surveys. Lazenby (1986) only reported breeder professional staff, whereas Clements et al 1992, Appendix V Table 1) also included ‘other scientists, research students and other staff. In the period 1985-1992, there appears to have been a real increase of some 9 per cent in the GRDC's funding of plant breeding and related activities, even though the number of plant breeders appears to have fallen by 25 per cent.

Table 3: Comparison of 1985 and 1992 surveys

Sources: Lazenby (1985) and Clements et al (1992)

Notes: (a) adjusted by the 8 capital cities consumer price index

 Australian public germplasm conservation includes collections for winter cereals (wheat, barley, oats), temperate field crops excluding cereals, temperate forage legumes ( Medicago and associated species), temperate forage legumes ( Trifolium and associated species), tropical crops, tropical forages, sugar cane, indigenous wild relatives of crops ( Francis 1986, p.8 ), and trees. Such activities are coordinated at the national level by the Plant Industries Advisory Group of the Standing Committee on Agriculture and Resource Management, and advised by the Plant Genetic Resources Advisory Committee.

4. Institutional setting—plant intellectual property rights

4.1 Nature of PVR

Plant Variety Rights are a property right in plant material which confers legal title in a new plant variety to its breeder or discoverer. PVR enable breeders to generate revenue through two broad, but not mutually exclusive, avenues. Firstly, breeders may elect to remain solely as plant breeders and license varieties granted to PVR on condition that a royalty is paid on subsequent seed sales. Secondly, breeders may choose to undertake seed multiplication as well as plant breeding, arrange the total marketing of their varieties, and gain return on their plant breeding—as well as their seed multiplication activities—by the value of seed sales.

Eligibility for PVR is determined by government bodies analogous to patent offices. Eligibility for a grant of PVR requires that a variety must generally satisfy the following criteria: (i) new —not previously known; (ii) distinct —distinguishable through identifying characteristics from existing varieties; (iii) uniform —sufficiently homogeneous by having acceptable variation in its identifying characteristics among individuals; (iv) stable between generations by exhibiting minimal changes in its identifying characteristics over time; and (v) have an approved name.

Two differing approaches have been adopted to determine whether a variety satisfies the criteria of distinctness, uniformity and stability. In countries following the original UPOV Convention, field trials have been required to assess these characteristics. In Australia and the USA, by contrast, the breeder's description of a variety is compared with descriptive records of varieties of the same species; if there is no exact match, a grant of PVR may be made.

Plant Variety Rights are an intellectual property right very similar to patents, and may be justified on similar grounds. Machlup (1958, pp. 20-24) outlined four basic ethical and pragmatic grounds on which patents have been advocated—'natural law', ‘reward by monopoly', ‘exchange for secrets', and ‘monopoly profit incentive' (cf. Godden 1982 for an evaluation of these ideas with respect to PVR). The primary economic justification for PVR is the ‘monopoly profit incentive' thesis.

The purpose of a property right is to legitimise and assist the defence of the appropriation of value from commodities or assets. However, this appropriation can occur without property rights (as with secrets), and the existence of property rights does not necessarily enable the effective appropriation of value. In the absence of formal property rights in plant varieties, breeders may appropriate value from their varieties in several ways ( Crofts 1981 ; Godden 1981, 1982 ).

Factors enhancing profitability in private plant breeding are frequent re-seeding, large amounts of seed required, peculiarities of seed production causing high production costs (e.g. cross-pollinating plant kinds), and little use of home-grown seed (e.g. because of poor seed harvesting conditions). Where these characteristics could be reinforced by factors leading to partial or effective exclusion of competition in a particular variety— e.g . by creation of a brand image—some private plant breeding is possible without PVR.

The effectiveness of PVR as a property right depends on three aspects. Firstly, plant breeders have at least three distinct groups of rivals against whom PVR could be used to reinforce commercial interests: (i) other breeders, who may acquire and reproduce rival breeders' varieties; (ii) specialist seed producers who are not plant breeders, and who may acquire and multiply a variety in competition with the original breeder; and (iii) farmers and gardeners who—especially in the case of self-pollinating cereals and asexually reproduced species—may acquire initial reproductive material from breeders and subsequently produce their own planting material. Initial PVR schemes only protected a breeder's interests against rival breeders and specialist seed producers since farmers and gardeners were generally permitted to freely reproduce their own planting material for their own use (cf. farm-saved seed below). PVR increase breeders' control over their own varieties, but do not create absolute control. Especially where the use of home-grown planting material is significant— e.g. the Australian cereals sector—PVR may not create an effective plant property right.

Secondly, monitoring and enforcement of PVR, like with patents, is an economic decision because of the costs of these activities—especially in extensive agricultures like Australia's (cf. Godden 1982 ).

Thirdly, as with patents, PVR are unlikely to provide a complete monopoly in a species or a varietal type for the legal life of the PVR grant. Rather, PVR grants will lengthen the lead time between a breeder's release of a variety and the acquisition of similar varieties by commercial rivals. Selection among off-types of varieties granted PVR or backcrossing could enable rival breeders or seedsmen to quickly acquire essentially similar varieties (but cf. below on ‘essentially derived').

PVR thus do not create a perfectly effective right in new plant varieties. Enactment of PVR legislation will reduce the capacity of commercial rivals to appropriate the value of a breeder's variety. However, PVR will not eliminate the ability of rivals to appropriate value at the breeder's expense. Farm-saved seed, the costs of monitoring and litigating infringement of the PVR grant, and the possibility that rivals may relatively quickly produce similar varieties will limit the effectiveness of PVR as a property right. The degree to which PVR legislation creates effective plant variety property rights is a consequence of economic as well as legal phenomena. The evolution of Australian PVR documented below is partly a response to these limitations of the PVR right.

4.2 Development of PVR

The scientific development of plant breeding provided both the incentive and the means for developing and enhancing private property rights in plant varieties. Key events in the evolution of plant breeding towards PVR included:

• the development of systematic botany to provide the means of uniquely describing a variety, and thus enabling a given plant variety to be distinguished from any other;

  the development of organised plant breeding as an applied science, demonstrating how plant breeding could be systematically organised as a production process; and

  the switch to F1 hybrid varieties in the US maize industry, which demonstrated the commercial potential of private sector plant breeding.

Such events highlighted the prospects for significant income redistribution arising from a private plant breeding industry, and provided the impetus for the development of the institution of PVR. The consequences of the institutional innovation of PVR may be illustrated through a schematic representation of the plant breeding and seeds industry ( Figure 1 ). Without intellectual property rights in plants such as PVR, and in the absence of any mechanism for conferring ‘natural' property rights in plant varieties (cf. Godden 1981, 1982 ), the private sector will normally be confined to those activities in the plant breeding and seeds industry where property rights are well defined—e.g. where there is a physical planting material such as seed or nursery plants (Figure 1a). Activities associated with the discovery, evaluation and storage of germplasm, and plant breeding, would normally be carried out in the public sector because of ‘market failure' attributable to an absence of effective property rights (e.g. Godden 1997, chapter 1 ). Exceptions would occur where—as with F1 hybrids—there were ‘natural' property rights in plant varieties. Establishment of PVR strengthens opportunities to appropriate value from new plant varieties, and thus enhances incentives for the private sector to expand into plant breeding activities previously dominated by the public sector ( Figure 1b ).

5. Evolution of PVR/PBR in Australia

5.1 Enactment of PVR in Australia

An Australian industry lobby group to promote PVR was formed in the 1960s, and draft legislation was prepared by the late 1970s ( Godden 1982 ). The controversy aroused by Mooney's (1979) argument against PBR resulted in the Senate Standing Committee on National Resources' (1984) study of PVR which recommended in favour of its enactment. The Australian Government subsequently commissioned an additional study of Australia's plant breeding needs ( Lazenby 1986 ) and ultimately decided to legislate for PVR ( Kerin 1986 ). Federal Parliament passed the Plant Variety Rights Act in 1987; major amendments to the 1987 Act followed rapidly in 1990 and the Act was totally revised in 1994.

The 1987 Plant Variety Rights Act was a compromise whose principal features were detailed in the Minister's Second Reading speech ( Kerin 1986, pp.1651-1652 ). This compromise included that no species would be included at the outset, and that there would be wide consultation by the Plant Variety Rights Advisory Committee on the admission of species. Fungi, algae and bacteria were to be excluded from the scheme. New plant varieties had to be ‘invented' not merely ‘discovered' to be eligible for the scheme. There would be ‘extensive provisions to protect the interests of consumers, be they users of plants or their products', and rights granted via PVR would not be extended to products. There was a clear anticipation that there would be full cost recovery from the operation of the Scheme within a relatively short period.

Some detail of this compromise was rapidly jettisoned—e.g. non-coverage of ‘discoveries' in the 1987 Act—although satisfactory evidence was never publicly provided as to why these original compromises had become non-operative. Other aspects of this compromise—e.g. exclusion of non-plant organisms, extension of rights granted under PVR not to include products, and civil enforcement of rights—were overturned in the 1994 Act (see below).

5.2 Implementation of 1987 Act

(a) PVRAC

While Parliament legislates, the Government is advised by the Plant Variety Rights Advisory Committee (PVRAC) established under the PVR Act. In his Second Reading speech, the Minister said that:

• The Bill provides for a broad-based advisory committee to be appointed and responsible for advising the Minister on the admission of species and genera and the technical administration of the scheme. I expect that committee to consult widely in its deliberations. ( Kerin 1986, p.1651 )

The interests and expertise of the four Advisory Committees that have so far operated under the 1987 and 1994 Acts are shown in Table 4.

Table 4: Interests Represented on Plant Variety Rights Advisory Committees*

Source: Plant Varieties Journal

• Notes: * names in bold are members who have served in more than one Committee; at least one of the members of the second committee unsuccessfully applied for appointment to the third Advisory Committee; three members of the Committees have alternated in the interests they have represented.

  ** Plant Variety Rights Act 1987 , s.45(1)

  # re-appointed under Plant Breeder's Rights Act 1994 as the Plant Breeder's Rights Advisory Committee.

The Advisory Committee was clearly designed to represent the major interests that were involved in debates leading up to enactment of the Plant Variety Rights Act 1987 . Presumably such an Advisory Committee would make recommendations about the Act representing a satisfactory compromise between competing interest groups in society. The validity of this presumption implies that the Advisory Committee was constituted in a way that represented the strengths of relevant interest groups in the community, and thus its recommendations would reflect the appropriate compromise. It also reflects the implication that appropriate compromises can—and should—be developed away from the political process of Parliament, and that the compromises should represent the relative strengths of the interests represented on PVRAC rather than some broader social perspective. Farmers, as ‘users' of plant varieties, were formally represented on the Advisory Committee only under the 1994 Act.

Under section 44(2) of the Plant Variety Rights Act 1987 , the Advisory Committee's formal functions were quite narrow; its powers under the 1994 Act (ss.49,63(2)) are slightly broader. Its principal function was to ‘advise the Registrar on such technical matters arising under this Act, and such other matters relating to the administration of this Act, as the Registrar refers to the Advisory Committee.' If the Advisory Committee focussed solely on technical matters, then such compromises might be both possible and appropriate because they would generally be limited to relatively uncontentious matters. However, a Committee which essentially represented the beneficiaries of the scheme being its major advisers in a policy context suggests that its recommendations should be evaluated cautiously. At the very least, it would be inappropriate to seek only the views of the Advisory Committee on important policy matters (cf. Watson 1993, pp.7-8 )

(b) Species coverage

The acrimonious debate prior to the enactment of PVR revealed that many interested parties—and not merely opponents of the proposed legislation—were disturbed that PVR would encompass all plant species. In his Second Reading speech, the Minister noted:

• All species and genera of plants will be potentially eligible for the granting of rights. However, no species will be included in the scheme at the outset. ( Kerin 1986, p.1651 cf. section 13 of the 1987 Act )

The Plant Variety Rights Office and first Advisory Committee worked diligently, proposing a schedule in early 1988 that led to the development of regulations by which all types of plants would be included under the Act by March 1990 ( Plant Varieties Journal 1988, March); this schedule was realised ( Plant Varieties Journal 1990, March, p.2). There is no evidence publicly available that the Advisory Committee actually did ‘consult widely in its deliberations' on this issue.

The Primary Industries and Energy Legislation Amendment Act 1990 consummated this process. The original 1987 Act required regulations to specify the genera or species to which the PVR legislation did apply; regulations to the amended 1987 Act specified which genera or species the PVR legislation did not apply to. Thus, under the amended 1987 Act, PVR could be granted for varieties of a genus or species unless that plant type was specifically excluded from being granted PVR.

(c) Protecting discoveries

A principle of patenting is that ‘discoveries' cannot be patented. Under the 1987 Act, newly-discovered plants could not be granted PVR. ‘Discoveries' were initially excluded from Australian PVR because the Commonwealth could initially enact PVR only by reference to the Commonwealth's patent power under the Australian Constitution (s.51(xviii)). In his Second Reading speech, the Minister said:

• It is not the government's intent that the legislation apply to selections from a natural or wild environment ... It is a scheme for new plant inventions. ( Kerin 1986, pp.1651-1652 )

However, once PVR had been enacted, and once Australia had joined the UPOV Convention in 1989, the external affairs power of the Australian Constitution (s.51(xxix)) could be used to provide a constitutional basis for granting PVR for discoveries. This opportunity arose because Article 6 of the 1978 UPOV Convention permitted varieties to be granted PVR irrespective of whether they were bred or selected. Notwithstanding the Minister's firm commitment in his Second Reading speech not to allow PVR to be granted for merely discovered varieties, discovered varieties were admitted as candidates for PVR under the 1990 amendments. Since PVR could be granted to the ‘originator' of any variety, the addition of a new section 3(3)(3A) to the 1987 Act via s.27 of the Primary Industries and Energy Legislation Amendment Act 1990 , which extended the definition of ‘originate' to include ‘selected', meant that merely ‘discovered' varieties could then be protected. This was confirmed in the 1994 Act (see below).

The Plant Breeder's Rights Act 1994 simply avoids the problem of the meaning of ‘plant breeding' by not defining what constitutes ‘plant breeding' and therefore does not link ‘breeder' to the act of breeding. The definition of ‘breeder' (s.3(1)) simply defines a breeder as a legal entity who has ‘bred' a variety, without specifying a meaning for ‘bred'. The supposed ‘Definition of breeding' (s.5) fails to define breeding, but merely defines ‘the discovery of the plant together with its use in selective propagation' as an act of breeding. ‘Breeding' is therefore defined by inference (s.43) as a breeder's act in producing a variety that is eligible for a grant of Plant Breeders Rights.

This evolution of the type of varieties eligible for PVR—from ones which were the result of plant breeding effort, to any variety not in common knowledge—shows (if proof were needed) that politicians' declarations of intent at the time legislation is originally enacted can quickly become non-operative. It may confidently be expected that, if the 1994 Act does not meet the demands of the plant breeding industry, the Act will again be suitably amended irrespective of contemporary declarations to the contrary.

5.3 1994 Revised Act

Following revisions to the UPOV Convention in 1991, the Australian Plant Variety Rights Office commenced revising the Plant Variety Rights Act 1987 . These amendments were discussed by the Plant Variety Rights Advisory Committee during 1992 and 1993. A brief summary of some of the amendments as proposed in mid-1992 was circulated by the Plant Variety Rights Office in 1992 ( anon. 1992 ) and evaluated in Godden (1993) . Proposed amendments as of late 1992 were also evaluated as part of a consultant's review of the Plant Variety Rights Scheme ( Watson 1993, pp.24-28 ). Following advertisement in the Press in early February 1994, the proposals to amend the 1987 Act were made publicly available as the Plant Breeder's Rights Bill 1994 (the ‘1994 Bill') although only two weeks were allowed for public comment. The Bill was tabled in Parliament on 24 March 1994 ( Collins 1994a,b ). When introduced into the Senate, the Bill was referred to the Senate Standing Committee on Rural and Regional Affairs (1994); the Bill subsequently passed both houses and received vice-regal assent on 5 September 1994.

(a) Abandoned proposals for amending the 1987 PVR Act

During consideration of revisions to the 1987 Act, two important proposals were abandoned. Firstly, it was initially proposed to change the name of the 1987 Act to the ‘Breeders' Rights Act' ( anon. 1992 ). Inconsistently with the 1991 UPOV Convention, it was simultaneously proposed to change the type of material to which ‘breeders' rights' applied. The 1991 UPOV Convention defines ‘variety' as ‘a plant grouping within a single botanical taxon of the lowest known rank' ( UPOV 1991, Article 1, emphasis added ). Initially-proposed amendments to the 1987 Australian Act would have deleted the ‘botanical' reference. These proposed changes would have substantially extended potential coverage of ‘breeders' rights' from plants (which remained the explicit objects of the 1991 UPOV Convention) to include organisms not normally considered as plants—e.g. algae, bacteria, viruses and fungi—and potentially animals ( Godden 1993, 1994 ).

Section 13 of the amended Plant Variety Rights Act 1987 allowed all plant kinds to be included under the Act unless they were expressly excluded. By omitting any reference to ‘plants' under the definition of organisms eligible for ‘breeders rights', the initially-proposed changes would have included all other kinds of organisms as legitimate subjects for breeders' rights. Unless particular non-plant kinds of organisms were expressly excluded, all that would have been necessary for the granting of breeders' rights for these non-plant organisms would have been for the Plant Variety Rights Office to establish procedures to define the criteria of novelty, distinctiveness, uniformity and stability. Unless these ultimately-abandoned proposals had been accompanied by regulations which expressly excluded all non-plant species, the new Act would have immediately applied to all species, including animals. Nothing would have excluded humans from this provision. Concern about the proposal to dramatically change the potential scope of organisms covered by the proposed amendments—apparently ranging from the churches to the Patent Office—led to their abandonment. The Plant Breeder's Rights Act 1994 essentially retains the ‘botanical/plant' orientation of the original legislation, except for algae and fungi (see below).

Secondly, in the 1987 Act, the public's interest in plant varieties was protected in ss.33-35 (adequate supplies, conditions and revocation); s.38 which provided for PVR not to restrict sales for food, fibre, fuel etc.; and in s.39 by providing for compulsory licensing of varieties if reasonable quantities of a variety were not made available by the grantee of plant variety rights. The public interest provisions of s.38 of the 1987 Act were deleted and its provisions incorporated in an abbreviated s.18 of the 1994 Act. The public interest provisions of s.39 of the 1987 Act were largely, but not completely, reproduced in s.19 of the 1994 Act. Two public interest provisions of s.39 of the 1987 Act excluded from the 1994 Bill were re-incorporated into the 1994 Act, but the following modifications were retained (cf. Godden 1993, 1994 ):

• a restriction to a singular individual , rather than plural individuals , to whom compulsory licences may be granted (s.39(3) of the 1987 Act cf. s.19(3) of the 1994 Act); and

  a licence only granted to produce and sell propagating material (s.19(3) of the 1994 Act) rather than plants and propagating material (s.39(3) of the 1987 Act).

The most dramatic case of diluted public interest provisions concerned extension of PBR to cover non-commercial varieties (see below). Section 19(11) of the 1994 Act expressly excludes non-commercial varieties from any action by government in the public interest.

Section 49 of the 1994 Act provides that the Minister may, if the public interest so dictates, impose (unspecified) conditions on the grant of PBR. Prior to imposing conditions, the Minister may refer the matter of imposing conditions to the Plant Breeder's Rights Advisory Committee. However, the Act specifies neither the circumstances under which such conditions are appropriate nor the nature of the conditions that might be imposed, and only provides that these conditions ‘may'—rather than ‘shall'—apply. As in the 1987 Act (s.34), the existence of public interest protection through s.49 of the 1994 Bill is more apparent than real.

(b) Major Amendments

In his Second Reading Speech, the Minister noted that the aim of revising the 1987 Plant Variety Rights Act was ‘principally to conform to the 1991 revision of the UPOV Convention' and ‘is consistent with Australia's obligations under the UPOV Convention' ( Collins 1994a, pp.2305,2306 respectively ). The Minister also noted that ‘The opportunity was also taken ... to introduce other provisions ... that would further increase ... the effectiveness of varietal protection without going beyond the limits of the 1991 UPOV Convention or compromising the public interest provisions of the PVR Act' and ‘all the public interest features of the Plant Variety Rights Act [1987] have been retained and even extended' ( Collins 1994a, pp.2305,2306 respectively ). Contrary to the Minister's assertion, many of the major changes either were not required for consistency with the 1991 UPOV Convention or were optional under that Convention (cf. Godden 1993, 1994 ).

 The principal changes in the 1994 Act were:

1. Breadth of coverage. The 1994 Act extended the range of organisms protectable under PBR to include ‘fungi and algae' (s.3(1)), inconsistent with the 1991 UPOV Convention which is expressly only for plants . The Act also provided legal recognition to gene transfers between the plant kingdom and other kingdoms (s.6). There was little debate whether or not gene transfers across kingdoms should be legitimised in this way. The 1991 UPOV Convention appears not to explicitly mention inter-kingdom transfers of genetic material and so, to this extent, the 1994 Act is inconsistent with the 1991 Convention.

Since the definition of ‘plant' in s.3(1) of the 1994 Act also includes explicit reference to types of organism expressly excluded from PBR—i.e. ‘bacteria, bacteroids, mycoplasmas, viruses, viroids and bacteriophages'—this definition also provides a simple mechanism for the subsequent inclusion of these now-excluded organisms (viz. by a ‘simple', ‘tidying-up' amendment deleting these ‘superfluous' words which might evade rigorous Parliamentary scrutiny). No indication is given in s.3(1) as to how much genetic material could be introduced into a plant before a particular variety could be considered as constituting a distinct species, or no longer a plant. A plant genome could conceptually be replaced by non-plant genetic material but still be denominated as a plant so that an ‘animal' could possibly be declared a ‘plant' for the purposes of the Act.

2. Depth of coverage. While previous versions of PVR granted rights in commercial varieties of plants, both the 1991 UPOV Convention (Article 14(1)) and the 1994 Act envisage that any plant variety may be granted PBR. The 1987 PVR Act specifically connected the grant of PVR to the sale of plants or reproductive plant material of that variety (s.12). By contrast, s.11 of the 1994 Act defines these rights as the exclusive right in relation to propagating material to do all the following: produce or reproduce the material; condition the material for the purpose of propagation; offer the material for sale; sell the material; import the material; export the material; stock the material for any of the preceding purposes.

These changes dramatically expanded the concept of PBR: any newly-discovered plant, not currently described, could have PBR granted for it. The new definition of the types of plant material protectable by PBR appears to include genetic material used in the breeding of new varieties, including basic germplasm which has previously been held to be in the public domain. PBR could be granted to newly-discovered or modified germplasm—and, using DUS criteria and subsequently applying the ‘essential derivation' criteria proposed in the 1991 UPOV Convention and the 1994 Act (cf. below)—PBR protection could potentially be extended to all important existing germplasm resources. This change to the Act shifts the boundary of varieties to which PVR can be granted very much towards germplasm (cf. Figure 1b ), substantially expanding the scope of protection envisaged under the 1987 Act. With rapid developments in molecular biology leading to better knowledge of the value of basic genetic material, future demands to extend protection increasingly towards germplasm are inevitable.

Extension of PBR to non-commercial varieties appears to conflict with Article 15(1) of the 1991 UPOV Convention and s.16 of the 1994 Act which permit plant varieties which have been granted PVR to be used in the development of other new varieties (‘research exemption'). Viewed prospectively, however—and given the way in which PBR evolved from the 1987 Act—it would not be surprising to find that future amendments to the Convention and/or Australian PBR legislation modified the research exemption in PBR for plant breeding activities.

3. Strengthening rights—'essential derivation'. Under previous UPOV Conventions and the 1987 Act, a variety was eligible for an unqualified grant of PVR if it was ‘distinct, uniform and stable' (DUS). Some plant breeders have apparently been concerned about the ‘research exemption'. The 1991 UPOV Convention and the Plant Breeder's Rights Act 1994 dramatically departed from this specific, original intention of PVR. Two classes of variety are now defined: those eligible for ‘full' PBR, and those ‘essentially derived' varieties which will only be eligible for a grant controlled by the grantee(s) of PVR in the variety from which it is supposedly ‘essentially derived' ( UPOV, 1991, Article 14(5) ). An ‘essentially derived' variety infringes an existing PVR grant in a variety from which it is deemed to have been essentially derived, although neither ‘predominantly derived' nor ‘essential characteristics' are defined in the UPOV Convention.

In the 1994 Australian Act, an ‘essentially derived variety' is defined with reference to ‘essential characteristics' which ‘means heritable traits that are determined by the expression of one or more genes, or other heritable determinants, that contribute to the principal features, performance or value of the variety' (s.3(1)). The 1994 Act departs from the 1991 UPOV Convention since ‘essential characteristics' are not defined in the Convention (Article 14(5)(b)(i)). However, the Act achieved this apparent improvement in defining ‘essential characteristics' by introducing the undefined notions of ‘principal features, performance or value'.

Plant varieties are most easily distinguished when there is at least one characteristic that is unequivocally different in two varieties—e.g. leaves being hairy or not hairy, flowers being yellow or red. However, many varietal characteristics are not expressed binomially, but by quantitative differences of continuous characteristics—e.g. how hairy are leaves, or how yellow are flowers. The concept of essential derivation additionally complicates this issue by separating plant characteristics into those that constitute the ‘essential' characteristics of a plant type or variety, and those that are not ‘essential' to that plant.

The identification of essential derivation under the 1994 Act is primarily left to administrative discretion. In previous versions of PVR, and in intellectual property law generally, the resolution of disputes between parties over the exact ownership of intellectual property is left to the courts. In the 1994 Act, this function is initially exercised by bureaucrats, essentially the Registrar of PBR (ss.12, 40), despite the considerable power and potential for conflicts between breeders and bureaucracy its exercise bequeaths.

Further, the 1991 UPOV Convention actually specifies breeding techniques —e.g. backcrossing, genetic engineering—which may give rise to ‘essentially derived varieties' (Article 14(5)(c)). The specification of plant breeding techniques as means of obtaining ‘essentially derived varieties' is bizarre. A reasonable implication is that these techniques—key weapons of the plant breeder's essential armoury—can only be used to produce essentially derived varieties and cannot be used to produce varieties eligible for a ‘full' grant of PVR. Although this part of the 1991 UPOV Convention is not carried into the Plant Breeder's Rights Act 1994 , the identification of breeding techniques with constraints on the way varieties may be bred to be eligible for ‘full' PBR marks a very dangerous trend. Article 14(5)(c) appears to define which scientific techniques may not be used for ‘real' plant breeding—i.e. to produce varieties eligible for unqualified PBR.

4. Strengthening rights—scope of right. A major purpose of the revisions contained in the 1991 UPOV Convention was to strengthen breeders' rights. The exclusive rights protected by both the 1991 UPOV Convention (Article 14(1)), and the 1994 Act (s.11), dramatically enhance the scope of the breeder's right. Under the 1991 UPOV Convention, the breeder's control over acts which require the breeder's authorisation is reinforced by Article 14(1)(b) which enables the breeder to ‘make his [sic] authorization subject to [unspecified] conditions and limitations'. Although the 1994 Act does not include this form of words, the opportunity to license grants of PBR under such conditions as the grantee of PBR agrees to (s.11 of the 1994 Act), provides similar benefits.

Such changes substantially strengthen the commercial bargaining power of the plant breeder relative to seed multipliers, distributors or users. While the 1987 Act granted breeders the ‘exclusive right' to produce and/or sell plants or reproductive plant material, or to license others to undertake these activities, the 1994 Act specifies a much wider range of acts in respect of the propagating material of the protected variety that are the ‘exclusive right' of the breeder (cf. 2 above). The 1994 Act indicates that a reproducer of propagating material—e.g. a seed multiplier—cannot undertake any activity relative to the specified acts without the specific authorisation of the breeder. The changes grant the breeder power not only over the right to produce or sell, but also provide the breeder power to specify how this production or sale should occur. This latter set of powers, over the manner of production or sale, are properly the concern of trade practices legislation, not PVR.

5. Strengthening rights—extension to products. Under the 1987 Act and UPOV Conventions before 1991, the central protection offered by PVR related to the sale of propagating material. For example, sections 12 and 38 of the 1987 Australian Act explicitly restricted breeders' rights to plants and reproductive plant material, and excluded breeders from controlling the sale of plant products. The 1991 UPOV Convention directs that countries adhering to the Convention must provide for extension of breeders' rights from reproductive plant material to harvested material of protected varieties when such harvested material or product is obtained by the ‘unauthorized use of propagating material ... unless the breeder has had reasonable opportunity to exercise his [sic] right' to this material (Articles 14(2) and 14(3). The 1994 Act implements these provisions in ss.14 and 15. This change strengthens a breeder's right by extending its domain under some circumstances from propagating material to harvested plants and products.

Breeders have frequently sought to control much more than the sale of reproductive material. For example, Straus (1987b, p.726) noted that ‘breeders have a legitimate interest not only in the protection of the plants and their parts as propagating material, but also as a source of industrially relevant material'. Straus (1987b, p.730) also noted that UPOV had suggested:

• ... a model provision which would grant the breeder's rights very similar to those afforded to an inventor by patents. According to this proposal, ‘the effects of the rights granted to the breeder shall be that his prior authorization shall be required ... for use of any kind ... of plant material of the variety.'

The 1994 change and the determination of breeders to extend the right might be seen as part of a slow process of extending breeders' control throughout the marketing chain, although this potential extension is currently limited by UPOV (1991, Article 16(1) which ‘exhausts' PBR once a variety has been sold with the breeder's consent for a use other than further propagation. However, future amendments to the UPOV Convention may further extend breeders' control down the marketing chain by allowing them to claim royalties on product produced from varieties granted PBR (cf. Watson and Kingwell 1998 on end-point royalties ).

6. Strengthening rights—duration of grant. In preliminary drafts of the 1994 Bill, it was proposed to extend the duration of a grant of PVR from a maximum of 20 years to a minimum of 20 years, and to set the actual grant for particular plant types in consultation with ‘industry'. In the 1994 Act a grant of PVR was increased from a maximum of 20 years to 25 years for trees and vines, but the 20 year maximum duration for all other plant kinds was maintained (s.22(1)).

However, the 1994 Act also provides that ‘The regulations may provide that PBR in a plant variety included within a specified taxon lasts for a longer period than is specified in subsection (2)' (s.22(3), emphasis added) and that one of the functions of the Plant Breeder's Rights Advisory Committee is: ‘at the request of the Minister, to advise the Minister on the desirability of declaring: ... in regulations made for the purposes of subsection 22(3)—that the duration of PBR in a particular taxon will be longer than provided in subsection 22(2)' (s.63(2)(ii)). Apart from the italicised inconsistency between ss.22 and 63, these subsections potentially allow permanent grants of PBR to be recommended and granted because there is no time limit on the extension. No other intellectual property right allows an infinite time for the duration of the right. Over time, it can be expected that increasing numbers of taxa will be granted extensions of duration, ultimately leading to a general extension of duration of PBR grants.

7. Strengthening rights—farm-saved seed. Under the 1987 Act (s.12), farmers were permitted to save propagating material they had produced of a PVR-protected variety for their own use and not be liable for any payment to the PVR owner. This provision is especially relevant in Australia where much seed in broadacre agriculture is ‘farmer-saved seed' (and also in sugar cane production). Under the pre-1991 UPOV Convention, there were also no restrictions on farmers from saving seed from their harvest, or saving other propagating material, for their own use. This ‘farmer-saved seed' provision is now only an optional exemption in UPOV 1991 (Article 15(2)). Unless countries explicitly permit ‘farmer-saved seed', farmers will not be permitted to retain seed from their own harvest unless ‘authorised by'—i.e. buy seed from or pay a royalty to—the breeder.

The 1994 Act permits farm-saved seed (s.17(1)), but the ‘regulations may declare a particular taxon [i.e. plant kind] to be a taxon to which subsection (1) [i.e. farm-saved seed] does not apply' (s.17(2)). The Plant Variety Rights Advisory Committee advises on exceptions to farm-saved seed (s.63(2)(a)(i), but not mentioned in s.17). Since the Advisory Committee is likely to be dominated by plant breeding interests, farmers' interests are unlikely to prevail. Farm-saved seed provisions in particular plant varieties are likely to begin to disappear by recommendations of the Advisory Committee and, within a short space of time, farm-saved seed will probably disappear for all varieties and ultimately from the PBR statute.

8. Monitoring and enforcement costs. Under the 1987 Act, it was expressly intended that any action for infringement of a grant of PVR—e.g. for selling reproductive material of a PVR-protected variety without the breeder's authorisation—must be taken by the breeder in the civil courts ( Kerin 1986, p.1652; Plant Variety Rights Act 1987 , s.41 ). In the 1994 Act, infringement of PBR may be prosecuted by the state:

• 74.(1) A person must not, in relation to propagating material of a plant variety in which PBR has been granted, intentionally or recklessly do any of the acts referred to in a paragraph of section 11 if such an act would, under section 53, infringe the PBR in that variety. Penalty: 500 penalty units.

Under the Commonwealth's Crimes Act 1914 (as amended), a penalty unit is $100 for natural persons and $500 for bodies corporate, and thus any proved infringement of PBR carried an enormous—and totally unjustified and unjustifiable—maximum criminal penalty of $50,000 for natural persons and $250,000 for bodies corporate in addition to any damages recovered in the civil courts (expressly permitted in s.74(2)). Under the Crimes Act rule for relating penalty units to imprisonment (s.4B(2)), the natural person's fine for infringing PBR is equivalent to eight-and-a-half years' imprisonment—a truly extraordinary penalty. The effect of this change has three dimensions: (i) the coercive power of the State becomes involved in the detection and prosecution of breaches of the Act, and thus breeders' costs in defending their property rights are substantially reduced; (ii) a ‘double jeopardy' is created because alleged infringers of PVR become liable for both statutory and civil sanctions; and (iii) an uneven legal playing field is created with respect to defending other intellectual property rights.

The criminalisation of PBR infringements introduced in the 1994 Act is a good example of the power of interest groups. Throughout the second PVRAC, some committee members complained incessantly about the ‘costs' and ‘difficulties' of enforcing rights under the 1987 Act, even though one of the principal complainants was actually employed by government. Since breeder and industry representatives dominated the committee, it was not surprising that disproportionate criminal sanctions were incorporated into the 1994 Act in parallel with existing civil sanctions.

9. Advisory Committee. The specific and general functions of the Plant Breeder's Rights Advisory Committee are designated in s.63(2) of the 1994 Act, explicitly referring to ss.17(2), 22(3) and 42(1). An additional policy function given to the Advisory Committee in the 1994 Act, not mentioned in s.63(2), is to advise the Minister concerning the appropriateness of attaching conditions to grants of PBR (s.49). The granting of these functions to a Committee of individuals who have, or whose employers or companies or competitors have, direct or indirect vested interests in the matters at issue is totally undesirable and contrary to the Federal Government's general reform of statutory authorities over the last decade (cf. Watson 1993, pp.7-8 ). For example, suppose the Advisory Committee were to consider a breeder's application to eliminate farm-saved seed for a particular variety, and a member of the Advisory Committee knew that their own firm would shortly make a similar application. The member concerned would be highly unlikely to reject, or even closely enquire into, relevant issues relating to the first claim for fear of jeopardising the success of the subsequent claim.

10. Public interest provisions. The 1991 UPOV Convention (Articles 21 and 22) directs that grants of breeders' rights can only be nullified or cancelled under a set of circumstances much narrower than existed under the 1987 Act (ss.35 and 37 together with ss.33-34, or effective revocation in s.39). For example, under the 1987 Act, Australian grants of PVR could have been revoked if breeders failed to lodge reproductive plant material in a specified genetic resources centre. Article 17(1) of the 1991 UPOV Convention states: ‘Except where expressly provided in this Convention, no Contracting Party may restrict the free exercise of a breeder's right for reasons other than of public interest.' However, because breeders rights cannot be revoked for failing to adhere to public interest provisions, the ‘Contracting Party' (e.g. the Australian Government) has no ultimate sanction against breeders who refuse to comply with directions relating to public interest provisions. Articles 17 and 21-22 are clearly unsatisfactory for ensuring the public interest is protected in Australian PBR.

The 1994 Act broadly followed the 1991 Convention. Grants of PBR may only be revoked if information obtained subsequent to the original grant of PBR would have resulted in the original application for PBR being refused or fees not being paid (s.50(1)), if assignment of grants of PBR has not been appropriately recorded (s.50(2)(a) together with s.21) or if grantees of PBR do not comply with (unspecified) conditions imposed on the grant (s.50(2)(b) together with s.49). Section 50(2)(b) is actually inconsistent with Article 21 of the 1991 UPOV Convention which proscribes the revocation of grants of PBR for other than administrative reasons.

The principal justification for continuing amendments to PVR legislation appears to be that these rights are not delivering expected returns to owners of new varieties. This argument is reinforced by the recent Australian debate to supplement or replace PVR with ‘end-point royalties' (cf. Watson 1997 ).

6. PVR/PBR Registrations

Until 27 March 1997, there were 793 grants of PVR/PBR (some of which have been terminated or withdrawn) ( Table 5a ). Another 735 applications were awaiting processing, and 280 applications had been refused or withdrawn ( Tables 5b,c ). Of the grants, 72% were for ornamental species, and 20% of all grants were for roses ( Table 6 ). Although only 28% of all grants have been for crop, pasture, fruit and vegetable varieties, the economic implications are unclear: only if sales of propagating material and the value of the corresponding production were known could firm conclusions be derived. Amongst the ‘pending' applications, there is a greater representation of non-ornamental varieties (39%; Table 6 ). Three-quarters of refused or withdrawn applications were for ornamentals. Applicants for multiple grants of PBR are summarised in Table 7 . Most private grants were for ornamental varieties, many of which appear to be imported. Most grants to public breeders were for crops, pastures, fruit and vegetables, which may well have been bred in the absence of PVR. There is also a surprising amount of public breeding of ornamentals, for which there does not appear to be a substantive market failure justification.

 Table 5: Grants and Applications for PVR/PBR Grants in Australia

(a) PVR/PBR Grants by Grant Date (may have been subsequently terminated or abandoned)

Notes: Total number of applications = 1808 (to 27 March 1997); 92 applications terminated after grant (includes timber species).

(b): PVR/PBR Applications by Acceptance Date, as pending at 27 March 1997 (accepted and received)

(c) PVR/PBR Applications Refused or Withdrawn, as at 27 March 1997 (by date received)

Source: data provided by Plant Breeder's Rights Office

Table 6: PVR/PBR Grants or Applications for Some Genera

Source: as for Table 4

Table 7: Individual Applications for PVR/PBR

(a) Private breeders

Note: originally public, now privatised

Table 7: Individual Applications for PVR/PBR (cont.)

(b) Public breeders

Source: as for Table 4

7. International dimension from Australia's perspective

Part of the original debate preceding enactment of PVR in Australia involved whether or not the Commonwealth had the constitutional power to legislate for PVR. To establish its claim to constitutional competence for enacting PVR, the Commonwealth included two subsections in the 1987 Act: s.5(a) which justified its constitutional competence in terms of its patent power under s.51(xviii) of the Constitution; and s.5(b) which invoked the external affairs power through adherence to an international treaty (UPOV).

The dual appeal to both the patent power of the Constitution, and the external affairs power using UPOV, is still required for the 1994 Act because it covers organisms not explicitly covered by the UPOV Convention. If the 1994 Act only related to plants, then s.10(b) which refers to the patent power would be superfluous. Reference to the patent power seems to be somewhat inconsistent with the 1994 Act—and, indeed, with the 1990 amendments to the 1987 Act—because patent law does not extend to ‘discoveries' but only protects ‘inventions'. Similarly, the 1994 Act is inconsistent with the 1991 UPOV Convention because the Act refers to organisms that are not plants and therefore not the subject matter of the UPOV Convention.

The UPOV Convention falls into the narrowly economic class of international convention because it is primarily aimed at maintaining and, wherever possible, reinforcing the ability of plant breeders to obtain a greater financial return from their varieties. Australia should participate in UPOV to the extent—and only to the extent—that this Convention increases total economic welfare in Australia, not just breeders' financial returns. Assessment of the relevance of the 1991 revisions to the UPOV Convention, and adoption by Australia of all or any of these provisions in its own statutes, should be evaluated by the test of the effect of these revisions on overall economic welfare. There are two different but closely related issues associated with Australia's ratification of the 1991 UPOV Convention. The first issue concerns whether or not Australia should ratify this Convention and, if so, in what form. The second issue concerns the effects of accepting particular provisions of the 1991 Convention on the Australian system of PVR represented by the amended 1987 Act.

Most of the provisions of the revised Convention strengthen the intellectual property right conferred by PVR (cf. Böringer 1991, p.5 ); and, similarly, most of the revisions to the 1987 Act contained in the 1994 Act, whether or not deriving from the revised UPOV Convention, were designed to strengthen the breeders right. The essential question that should have been asked of the revisions to the 1987 Act deriving from the 1991 Convention was ‘Are they desirable for Australia?' Was the amended 1987 Act so defective in the right that it conferred on breeders—which was a compromise accepted by the community at the time—that it required substantial modification only 7 years after its initial enactment? In what ways did circumstances change so much that major revisions to the 1987 Act were required? There appears to have been little detailed assessment of the implications of the UPOV revisions for Australia (cf. Godden 1993, 1994 ).

Whether or not Australia should have amended its existing PVR legislation so that it could ratify the 1991 Convention depends on a comparison of the benefits of staying with the old (1978) Convention compared to ratifying the new (1991) Convention. Both choices were possible in 1994, but the former was not seriously considered. The older (1978) UPOV Convention continues in force in parallel with the new 1991 Convention. There was no necessity for Australia to ratify the new 1991 Convention; Australia could continue to be a member of the 1978 Convention indefinitely, obtaining those benefits and responsibilities available from it ( UPOV 1991, Article 31(2) ). It is therefore necessary to decide whether or not the benefits to Australia from ratifying the 1991 UPOV Convention would outweigh the costs of any consequential changes that might arise from this ratification. Australia needs to decide whether or not it is in Australia's interests to strengthen the position of both its own plant breeders, and overseas plant breeders who do, or might, export varieties or plant material to Australia. Australia could even decide, after an appropriate review, that the costs of belonging to the Convention are greater than attendant benefits, and could have both refused to ratify the 1991 Convention and resigned its membership of (‘denounce') the 1978 Convention ( UPOV 1978, Article 41(2)-(4 )).

Even if Australia ratified the 1991 UPOV Convention, not every provision of the new Convention needed, or needs, to be adopted by Australia. For example, UPOV (1991, Article 15(2) ) provides for countries allowing farmer-saved seed—previously a mandatory provision—as an ‘optional' exception to breeders rights (see above). There may also be the opportunity to adopt degrees of the UPOV mandatory provisions, rather than adopting them in every particular. For example, the 1991 UPOV Convention demands a minimum period of protection of 20 years for most plant kinds. Since Australia's 1987 PVR Act provided a 20 year protection period, it was unnecessary to amend the Australian Act for consistency with UPOV (see above). It is therefore crucial for Australia to decide exactly which of the provisions of the new Convention are in Australia's interests, and how these provisions could be best legislated for.

8. Continued evolution—interaction of science and institutions

8.1 Genetic engineering

The technological impact of genetic engineering is theoretically confined to increasing the speed and ease with which new traits can be incorporated into cultivars. However, particularly in the absence of easy mechanisms for inter-species hybridisation, genetic engineering also has the practical effect of dramatically increasing the range of potentially incorporated traits. Genetic engineering may affect the organisation and cost of plant breeding; the potential characteristics of cultivars; and screening methods in plant breeding ( Marshall 1988 ).

Marshall argued that in the majority of cases, genetic engineering was unlikely to dramatically increase the genetic variation available to the breeder. He argued, however, that in some instances the opportunity existed for spectacular benefits from the incorporation of ‘alien' gene sources into crop plants (e.g. recently-released cotton varieties with genetic material from Bacillus thuringiensis for insect resistance). Between 1986-92, 864 approvals had been granted globally for the field release of transgenic plant varieties on 1,185 sites, with most releases (87%) occurring 1990-92. Of these releases, 72% were in Canada and the USA. The major plant kinds where transgenic varieties occurred were maize (7% of releases), canola (33%), potato (15%), tobacco (8%) and tomato (8%). These crops, together with cotton and soybean, dominated the number of release sites. Approvals by transgenic trait included herbicide tolerance (39%), use of genetic markers (30%), virus or insect resistance (16%) ( OECD 1993, Tables 1-4 ). ASTEC (1993) reviewed Australian activity in genetic engineering, including plants.

Marshall also argued that a third aspect of genetic engineering—the use of genetic probes and markers—offers potential advantages in plant breeding. Genetic probes may be used in screening procedures to detect specific enzymes, plant toxins, and plant pathogens or their toxic products. Genetic markers may be used to map linked genes conferring particular traits, and may ultimately be used to identify and manipulate genes in practical plant breeding, although it was suggested that the practical implementation of these techniques is still a long way off.

The ‘genetic engineering' revolution is likely to profoundly affect the conduct of plant breeding. These technological innovations on the supply side of plant breeding are also likely to spawn institutional innovations. The possible economic effects of genetic engineering include: (i) increased economies of scale, leading to increasing optimal firm size in plant breeding, because of economies of scale in utilising the science of genetic engineering; leading to (ii) increased corporate concentration in plant breeding, and the further horizontal integration of plant breeding with chemicals; and thus (iii) increased barriers to entry into plant breeding.

Public sector plant breeding is also likely to be affected by: (i) increased costs of plant breeding using the new technologies, reducing the opportunities for public breeders to utilise these technologies unless funding is commensurately increased; (ii) reduced funding through government-wide limitations on expenditure, leading to limitations to the access of public breeders to new technologies; and (iii) lobbying to reduce or change the direction of public plant breeding because of greater private activity in the industry.

8.2 Patents, PBR and genetic engineering

The patentability of genetic engineering technologies may have a dramatic impact on the institution of PVR itself. Comments that the property rights conferred by PVR are insufficiently strong were noted above (cf. Straus 1987b ). The institution of PVR is thus under threat from genetic engineering (cf. Goodman et al . 1987 ).

Extension of property rights beyond the variety originally granted PVR violates a fundamental principle of UPOV. This ‘research exemption' principle permits any variety granted PVR to be used in breeding to produce subsequent new varieties which may also be granted PVR, as long as the PVR-protected variety is not used ‘repeatedly' in the production of the new variety (e.g. Straus 1987a, p.435 ). The ‘research exemption' principle expresses the notion that it is only the assemblage of genetic material that is being protected by PVR, not the genetic material per se . The reason for not protecting the genetic material itself is that, in conventional plant breeding at least, genetic material used to create varieties is not the creation of the breeder but pre-existed in nature. This reluctance to grant property rights in genetic material reflects a fundamental principle in patent law that a patent cannot be granted for naturally-occurring substances. At least currently, genetic engineering appears to offer only better ways of incorporating existing genetic material in species where, using conventional breeding techniques, incorporation of that genetic material within the genetic constitution of varieties of that species would have been difficult if not impossible.

Unless PVR become more patent-like, breeders are likely to increasingly turn to patents—where available—as a source of property rights for plant varieties. Patents confer a much longer period of effective protection for new varieties, particularly for the products of genetic engineering, by eliminating the ‘research exemption'. Patents also provide a more complete mechanism for breeders to appropriate the value of their varieties by extending their control of varieties beyond the sale of reproductive material, and at least as far as the production of commodities using those varieties. The potential economic implications of these impacts of patents include: (i) elimination of the ‘research exemption' will enhance corporate concentration in plant breeding; (ii) increased concentration in the plant breeding industry will reduce the likelihood that this industry will be allocatively efficient, and will increase the likelihood of the redistribution of the benefits of plant breeding research away from consumers, farmers and seed multipliers, and towards plant breeders; and (iii) the more extensive the power of the private sector in plant breeding, the more the public sector will be reduced to a vestigial role and, in particular, the less the capacity of the public sector to directly mitigate allocatively inefficient activities in the private plant breeding sector.

9. Conclusion

Intellectual property rights for new plant varieties in the form of PVR/PBR have occasionally been controversial. But this controversy has had little effect on the evolution of PVR in Australia. The short history of PVR legislation, and quite dramatic amendments in 1990 and 1994 indicate that continued evolution is likely. There has been little analysis of PVR in Australia, but legislative evolution has proceeded regardless of this lack of analysis. Recent amendments to the legislation, and even the proposals that failed to be incorporated in the 1994 Act, indicate the likely direction of future evolution.

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Watson, A.S. (1997), The Impact of Plant Breeder's Rights and Royalties on Investment in Public and Private Breeding and Commercialisation of Grain Cultivars, paper prepared for the Grains Research and Development Corporation, Melbourne.

Watson, A.S. and Kingwell, R. (1998), End-point royalties for plantbreeding: Cornucopia or Coueism, Annual Conference Australian Agricultural and Resource Economics Society, Armidale, January.

Appendix

Farm-saved Seed

Farm-saved seed (FSS) is a superior technology to commercial seed (CS) if the gross margin for FSS (GMFSS) exceeds the gross margin for CS (GMCS) (ignoring risk).

Let the yield of crop using FSS = a.y, where y is the yield using commercial seed and a: 0£ a < 1 (a=1 means CS is used).

Let the cost of FSS = b.pcs, where pcs is the price of commercial seed and b: 0£ b < 1 (b=1 means CS is used).

then FSS is economic for the farmer if GMFSS > GMCS

i.e. a.y.py – b.pcs.sr – oc > y.py – pcs.sr – oc

where py is output price (assumed constant across FSS and CS); sr is the seed sowing rate (assumed constant across FSS and CS); and oc is total costs of all other inputs (assumed constant across FSS and CS). Clearly, if output price, sowing rate or other costs were different with FSS (e.g. because of poor seed labelling, poor germination percentage, inferior quality control with storage etc.) these assumptions will be violated.

Then FSS is economic if: (1-b)/(1-a) > y.py/(pcs.sr)

i.e. FSS is economic if the ratio of seed cost reduction to yield reduction with FSS is greater than the ratio of total return to seed cost with CS.

Particularly if the output price and yield are relatively low (as in relatively low input Australian cereal cropping), the seed cost reduction with FSS may readily offset yield reductions with FSS. Conversely, with relatively high output prices and/or yields (and the two are likely to go together—e.g. in highly-subsidised agriculture), then FSS may never be economic even if it is technically feasible.

An additional complication is that, if the supply of commercial seed is not perfectly elastic, an outwards shift in the demand for CS (as farmers change from FSS) may increase the price of commercial seed. In this case, the advantage of FSS for an individual farmer increases as more farmers switch to CS.

 Table 1: Resources Allocated to Plant Breeding in Australia, 1985

Source: Lazenby (1986, Table 1)

Table 2: Breeding Effort by Organisation, 1985

Source: Lazenby (1986, p.35)Crop