Ministry : Ministry of Agriculture and Farmers Welfare

Department/Board : Agriculture, Co-operation and Farmers Welfare

Notification No. : SO1813(E)

Date of Notification : 18.05.2016

Date of Publication : 18.05.2016

Industry: Agriculture and Agro Products

Licensing and Formats for GM Technology Agreement Guidelines, 2016

S.O.1813(E).--Whereas, in order to provide an effective system for fixation of maximum sale price of cotton seeds to ensure their availability to the cotton farmers at uniform as well as fair, reasonable and affordable prices, the Central Government, in exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955) made the Cotton Seeds Price (Control) Order, 2015 (hereafter to referred to as the Order);

And whereas, in India intellectual property rights for innovation are provided under the Patents Act, 1970 (39 of 1970) and the Protection of Plant Varieties and Farmers Rights Act 2001 (53 of 2001) apart from others and the patent protection is provided for any inventions, whether products or processes in all fields of biotechnology, provided that there is the involvement of novelty and an inventive step and are capable of industrial applications;

And whereas, section 3 of the Patents Act, 1970 excludes a method of agriculture or horticulture and plants and animals in whole or any part thereof other than microorganisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals from the inventions;

And whereas, even though biotechnology inventions are patentable, once the GM Traits developed through biotechnology are transferred into a variety ("transgenic variety"), the transgenic variety per se cannot be patented; the seeds carrying such trait also cannot be patented and hence, the plant varieties including transgenic varieties carrying the GM Traits can be protected only under the Protection of Plant varieties and Farmer's Rights Act, 2001.

And whereas, the transgenic varieties become the intellectual property of the breeder or company who has developed it;

And whereas, based on the existing intellectual property rights regime for biotechnology, plants and varieties in the seed industry, it is felt necessary to prescribe the licensing guidelines so that all seed companies have access to the GM Traits without any restraint and at the same time biotech trait development is adequately rewarded under the fair, reasonable and non-discriminative mechanism (FRAND mechanism);

And whereas, under sub-clause (b) of clause 4 of the said Order, the Controller has been assigned the function of advising the Central Government on the prescription of licensing guidelines and format for all the GM Technology Licensing Agreements;

And whereas, under sub-clause (5) of clause 5 of the said Order, the Central Government is empowered to fix the Maximum Sale Price (MSP) as well as the price components of the MSP namely the "Trait Value" and the "Seed Value";

And whereas, sub-clause (8) of clause 5 of the said Order required that License Agreements shall be as per the format, as may be prescribed by notification;

Now therefore, in exercise of the powers conferred by sub-clause (8) of clause 5 read with sub-clause (b) of clause 4 of the Cotton Seed Price (Control) Order, 2015, the Central Government, based on the advice of the Controller and after consultation with the Committee referred to in sub-clause (2) of clause 5, hereby prescribes the following licensing guidelines and formats for GM Technology Agreements, namely:--

1. Short title and commencement.--

(1) These guidelines may be called as the Licensing and Formats for GM Technology Agreement Guidelines, 2016.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Definitions.--

In these guidelines, unless the context otherwise requires,--

(a) "Order" means the Cotton Seeds Price (Control) Order, 2015;

(b) the words and expressions used in these guidelines but not defined shall have the same meanings assigned to them in the Essential Commodities Act, 1955 (10 of 1955), the Seeds Act, 1966 (54 of 1966), the Seeds (Control) Order, 1983, the Environment (Protection) Act, 1986 (29 of 1986), the Protection of Plant varieties and Farmer's Rights Act, 2001 (53 of 2001) and the Cotton Seeds Price (Control) Order, 2015 and the rules framed there under.

3. Licensors and Licensees.--

(1) All agreements shall be executed only by the Licensors and Licensees, who shall fulfill the criteria as provided herein.

(2) In the case of the Licensor,--

(i) the Licensor shall have the ownership or valid license to the GM Technology which is used for developing the GM Trait it is offering to license and shall have the necessary approvals from GEAC for commercial release under the Environment (Protection) Act, 1986 and the rules framed thereunder or shall undertake to obtain the same either independently or in collaboration with any other party; and

(ii) all such details shall be submitted to the Controller by the Licensor.

(3) In the case of the Licensee,--

(i) the Licensee shall possess valid and subsisting approvals and necessary license from the regulatory authorities as provided under the Seeds Act, 1966 and Seeds (Control) Order, 1983; and

(ii) who possess or have access to a laboratory for carrying out necessary tests required for breeding and testing GM Traits.

(4) Based on the need to encourage competitiveness in the cotton seed market in the interest of and for the benefit of the cotton farmers, all applications seeking license to obtain GM Trait shall be considered by Licensor, subject to fulfilling the aforesaid qualification criteria. Access to the GM Trait shall not become a barrier for entering the market by an eligible seed company.

(5) The Licensor shall not refuse grant of a license to any eligible seed company fulfilling the aforesaid criteria. The Licensor shall award the license for the Genetic Engineering Appraisal Committee (GEAC) approved GM Trait within 30 days of receipt of a request from Licensee along with proof of fulfilling the qualification criteria. An Agreement shall be signed by the Licensor and the Licensee in accordance with the approved License Format as specified in the ANNEXURE. If the Licensor fails to meet the above obligation, the Licensee is deemed to have obtained the license for the GEAC approved GM Trait as per FRAND mechanism and the deemed license holder shall abide the terms of such licensing guidelines and agreement issued under the Order.

(6) If any Licensee is aggrieved by denial of GM Trait license by a Licensor as provided in paragraph (5) above, such Licensee can make an appeal to the Controller stating the grievance and the Controller shall have powers to issue necessary directions to the concerned party to ensure non-discriminative licensing to encourage competition and availability of GM cotton seeds to cotton farmers at fair and reasonable prices.

(7) From the date of publication of these guidelines and the License Agreement Format, all the existing GM Trait License Agreements in any other Format dealing with the production and sale of GM cotton seeds and payment of "Trait value" to the concerned Licensor shall become invalid, inoperative and shall have to be executed in the new format within 30 days of from the date of publication of these guidelines.

4. Trait Value.--

(1) In order to effectively operationalise the Order for the benefit of the farmers it is imperative for License Agreements to conform to the stipulations laid down under the Order and in particular the Licensor and Licensee are required to ensure that the "Trait Value" collections and sale of cotton seeds effected through bilateral agreements between Licensors and Licensees so as to conform to the "Trait Value", "Seed Value" and "Maximum Sale Price" fixed by the Central Government pursuant to the Order.

(2) The Central Government while fixing the "Trait Value" shall have regard to the efficacy of the GM Trait to the farmers, the reward and return on investment already made by the concerned proprietor or as the case may be, the authorized user of the GM Technology used for developing GM Trait and the applicable ceiling limits on royalty collections prescribed, if any, by regulations and press notes issued under the Foreign Exchange Management Act, 1999 (42 of 1999). The Central Government shall also consider factors like the year of patenting and commercialization of the trait in India, efficacy of trait, gradual reduction in trait value from the year of commercial use in India etc. For a new GM Trait, commercialized after this notification, the maximum trait Value may be up to 10% of Maximum Sale Price (MSP) of GM cotton seeds as fixed by the Central Government under the said Order every year, for the initial period of five years from commercialization. From the sixth year onwards, it shall taper down every year @ 10% of initial trait value as above fixed under the Order.

(3) As the GM Traits are expected to have a limited period of efficacy, any GM Trait which loses its efficacy as reported by States and verified by the Indian Council of Agricultural Research (ICAR) shall not be eligible for any trait value whatsoever. Presence of the trait in the seed after the loss of efficacy shall not be a reason for claiming any trait value merely on the basis of patent for the technology which is used to develop the trait.

(4) In case the GM Trait is to be combined with any other GM Trait, the trait value amounts in respect of both the GM Traits shall also be subject to conditions as prescribed above and the launching year of the combined (stacked) trait becomes the first year of the launch of the trait even though both or any one of the traits have been launched earlier separately.

(5) The Licensee is obligated to pay the trait value as fixed under the Order even if they surrender or terminate agreements or obtain the license as per sub-paragraph (5) of paragraph 3 as long as the GM Trait is effective and they continue to sell the seeds of the transgenic varieties or hybrids containing the GEAC approved GM Trait.

5. Upfront Fee.--

(1) For all GM Trait License agreements executed before the publication of these guidelines or cases where upfront fee was paid earlier, no new upfront fee shall be charged. In case of new GM Traits which shall be commercialized after the publication of these guidelines, the upfront fee shall be as mutually agreed but subject to the maximum ceiling not exceeding Rs.25 Lakhs payable in two equal annual installments.

6. Appeal Provisions.--

Any Licensor or Licensee may seek a review or modification of the License Format or the determination of the Trait Value by providing adequate and appropriate justifications under clause 6 of the Order, from the Controller.


Format for the GM Technology (GM Trait) Licensing Agreement

The following stipulations shall be incorporated in the GM Trait Licensing Agreement to be entered into between each Licensor and Licensee. In addition any other clauses may be added to capture commercial understanding as mutually agreed.

1. The Agreement shall be in compliance with the Indian Contract Act, 1872 (9 of 1872) as well as the Licensing Guidelines framed under the Cotton Seeds Price (Control) Order, 2015 and shall be based on principles of equity and Fair, Reasonable and Non-discriminative (FRAND) licensing guidelines.

2. The words and expressions used in the Agreement but not defined shall have the same meaning assigned to them in the in the Essential Commodities Act, 1955 (10 of 1955), the Seeds Act, 1966 (54 of 1966), the Seeds (Control) Order, 1983, the Environment (Protection) Act, 1986 (29 of 1986), the Protection of Plant varieties and Farmer's Rights Act, 2001 (53 of 2001) and the Cotton Seeds Price (Control) Order, 2015.

3. The name, address and other particulars of both Licensor and Licensee and any other concerned party as required under the Contract Act, 1872 (9 of 1872) to be set out in the Agreement itself.

4. The details of the GM Traits to be transferred by Licensor to the Licensee.

5. The GM Trait transfer will be on non-exclusive basis covering entire India.

6. "LICENSOR" affirms that they have the rights to license the GM technology used for developing GM Trait in India to the Licensee.

7. The GM Technology used for developing the GM Trait by "LICENSOR" shall be the property of "LICENSOR". However, the commercial exploitation rights and intellectual property rights under PPVFR of transgenic cotton varieties developed by "LICENSEE" under this agreement shall rest with "LICENSEE".

8. Necessary approvals have been obtained or are in process of being obtained by licensor under the Environment Protection Act, 1986 and the rules made thereunder for commercialization of the GM Trait. The licensor also shall meet other applicable legal requirements for executing the Agreement with Licensee for transfer of the GM Trait. The Licensee shall not produce and sell seeds of transgenic varieties till the GM Trait carried by them is approved for commercial release under provisions of the Environment (Protection) Act, 1986 and the rules made thereunder.

9. The "LICENSEE" has valid approvals under the Seeds Act, 1966, Seed Control order, 1983 for carrying out cotton seed business in India, and has recognition with ICAR if applicable for Research and Development activity and has proprietary cotton hybrids and parent lines with ability to integrate new GM Traits and is desirous of collaborating with "LICENSOR" to utilize the GM Trait and expertise available for the development and commercialization of transgenic crop varieties / hybrids, for resistance to certain insect pests or any agronomic useful GM Trait. The commercial life of the GM Traits is considered as 10 years subject to review in case of efficacy of trait is lost earlier.

10. "LICENSEE" cannot transfer the GM Trait under the Agreement to any party without prior approval of the "LICENSOR". However, the Licensee may license the transgenic variety developed by them under the agreement having intellectual property rights under the Protection of Plant varieties and Farmer's Rights Act, 2001, to any other company.

11. As per the law currently in force in India, LICENSOR shall be liable for any legal problem/disputes relating to the ownership of the genes developed, modified, patented. The Licensor affirms that, as per the present intellectual property rights laws (IPR laws) in force in India, they are not infringing the Indian Patent Law.

12. The trait Value or trait fee which shall be charged by the Licensor from the Licensee shall also not exceed the trait value fixed by the Central Government under the Cotton Seeds Price (Control) Order, 2015. The Licensor and Licensee shall ensure at all times that all cotton seeds incorporating the GM Trait under this Agreement are sold to the farmers not exceeding the Maximum Sale Price (MSP) notified by the Government of India pursuant to the Cotton Seeds Price (Control) Order, 2015.

13. The Licensor shall transfer GM Trait (through transfer of seeds of transgenic variety) to the licensee within fifteen days of receipt of first installment of upfront fee.

14. The Licensee is obligated to pay the trait value as fixed under the Order even if they surrender, terminate agreements or the Licensor terminates the license as long as the GM Trait is effective and they continue to sell seeds produced from the transgenic variety developed while the license was in force. In case of nonpayment of the trait value by the Licensee, the Licensor shall have all the rights to recover the dues as per the law and under this agreement.

15. Even if a seed company incorporates into its varieties or hybrids, a GM trait which is approved by GEAC under EPA, 1986 and commercialize them, they shall be liable to pay trait value to Licensor/technology owner as per the notifications issued under the Order from time to time.

16. The Licensor shall not put any restrictive condition in the Agreement restraining licensee to get similar or other GM Traits or any other technology from other technology developers/licensor. The Licensor shall also permit the Licensee to stack any other appropriate GM Trait from any other Licensor or trait developer as and when required so as to provide better agronomic value to the farmers.

17. Each party undertakes to keep information provided under this agreement confidential and not to disclose to any person or persons including the employees not directly associated with the matter. The parties shall also ensure that confidential information is made available to employees only on a need to know basis.

18. Any dispute arising out of or in connection with this Agreement, which cannot be settled by good faith between the parties within ninety days shall be referred to arbitration in accordance with the Arbitration and Conciliation Act, 1996 (26 of 1996). The number of arbitrators shall be three with each party appointing one arbitrator and the two arbitrators so appointed shall appoint a third arbitrator, who shall act as the Chairperson of the proceedings. The seat of arbitration shall be as mutually agreed to and within India.

19. The validity, interpretation and performance of this Agreement and any dispute connected with this Agreement shall be governed by and determined in accordance with the statutory, regulatory and decisional laws of India (including the conflicts of laws principles thereof).

[No. 6-2/2015-SD.V]