Understanding the Biological Diversity (Amendment) Bill, 2023

8th September, 2023 - 2:33 pm Categories: Biological Inventions 0 Comments

In recent legislative developments, the President has assented the Biological Diversity (Amendment) Bill 2023 (“Bill”), amending the Biological Diversity Act, 2002 (“Act”). This bill aims to strike a delicate balance between promoting innovation, streamlining processes, and safeguarding the nation’s rich biological diversity. The amendments introduced by this Bill are significant and will have far-reaching effects for researchers, indigenous knowledge practitioners, businesses and local communities. In this article, we will delve into the key changes brought about by this legislation and analyse its potential impact.

The amendment starts with changes to the preamble of the Biological Diversity Act, 2002. It replaces the term “party” with “Party” signifying India’s role as a Party to the Nagoya Protocol.

Definitions:

The amendment also brings about several changes to the definitions within the Act:

1. Access: This term now includes the collection, procurement, or possession of biological resources occurring in India or traditional knowledge associated with them for research, bio-survey, or commercial utilization.
2. Benefit Claimers: This definition covers those who conserve biological resources, their by-products, creators or holders of traditional knowledge associated with these resources (excluding codified traditional knowledge only for Indians), and information related to their use, innovations, and practices.
3. Biological Resources: This category now includes plants, animals, micro-organisms, or parts of their genetic material and derivatives (excluding value-added products) with actual or potential use or value for humanity. However, it explicitly excludes human genetic material.
4. Codified Traditional Knowledge: This term pertains to knowledge derived from authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940.
5. Derivative: It now refers to naturally occurring biochemical compounds or metabolisms of biological resources, even if they do not contain functional units of heredity.
6. Folk Variety: This definition applies to cultivated varieties of plants developed, grown, and exchanged informally among farmers.
7. India: This definition includes the territory of India as referred to in Article 1 of the Constitution, along with its territorial waters, seabed, sub-soil underlying such waters, continental shelf, exclusive economic zone, or any other maritime zone as mentioned in the Territorial Waters, Continental Shelf, Exclusive Economic Zone, and Other Maritime Zones Act, 1976, and the airspace above its territory.
8. Landrace: This term pertains to primitive cultivars grown by ancient farmers and their successors.
9. Member-Secretary: This now refers to the full-time Secretary of the National Biodiversity Authority or the State Biodiversity Board, as applicable.

Access to Biological Resources Amendment:

The addition of a new sub-clause (ii) in Section 3(2)(c) is a substantial amendment to Section 3. According to the definition of the Companies Act of 2013, this sub-clause governs entities formed or registered in India that are controlled by foreigners. With this innovation, access by foreign-controlled businesses would be monitored and regulated in order to stop any illicit exploitation of India’s biological resources.

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Sharing of Research Results:

Restrictions on sharing or transferring research findings on biological resources derived from India or traditional knowledge connected to them are outlined in Section 4. Except for study publications that adhere to government regulations and codified traditional knowledge for Indians, such sharing now requires prior written clearance from the National Biodiversity Authority.

Certain Provisions Not Applicable to Collaborative Research:

A clarification is added that Section 3 provisions do not apply to collaborative research projects involving the transfer or exchange of biological resources or traditional knowledge between Indian institutions and institutions in other countries, provided these projects meet specified conditions. This ensures that genuine collaborative research is not burdened by regulatory requirements.

Expanding the Scope of Approval from NBA:

One of the most important changes introduced by the Bill is the expansion of the scope of approval required from the National Biodiversity Authority. NBA’s role is to oversee access to biological resources and the dissemination of research findings involving these resources, including plants, animals, microorganisms or their genetic materials that hold value or utility for humanity. Under the Act of 2002, approval from the NBA was mandatory before obtaining biological resources or filing applications for patents involving biological resources. The Bill maintains this requirement but introduces an important shift.

Now, as per amended Section 6 of the Act, Indian residents and Indian companies that are not controlled by foreign entities are no longer required to seek prior permission from the NBA before the filing application of a patent. Approval from the NBA will be required only before the grant of patent rather than before the application itself. This adjustment is expected to simplify the process of acquiring patents for research and commercialization. It will facilitate innovation by reducing bureaucratic hurdles.

New subsections are introduced, requiring certain categories covered under Section 3(2) and Section 7 to obtain prior approval from the National Biodiversity Authority when applying for intellectual property rights involving biological resources accessed from India.These categories include non-citizens, non-resident citizens, organizations not registered in India and organizations registered in India with any non-Indian shareholding or management.

The recent Bill has broadened the scope of the last category to encompass not only companies with non-Indian shareholding or management but also ‘foreign-controlled’ companies that are registered in India under the Companies Act of 2013. This expansion of scope means that any company registered in India, regardless of the extent of foreign control, must seek clearance from the NBA when dealing with biological resources or applying for intellectual property rights related to them.The term “control” includes the authority to appoint a majority of directors or influence management and policy decisions, directly or indirectly. This includes rights derived from shareholding, management rights, shareholders agreements, voting agreements or any other means.As a result, Indian applicants no longer need to be concerned about obtaining NBA permission before filing a patent application.

Benefit Sharing and Exemptions:

Benefit sharing had been an important part of the Act of 2002 as well. Under the amended Section 21, the National Biodiversity Authority is now mandated to ensure that approvals granted secure fair and equitable benefit-sharing. The provision also allows the Authority to direct payments to benefit claimers or organizations when resources or knowledge are accessed from individuals or groups. The change is that they are now obligated to enter into a benefits haring agreement with the NBA at the time of commercialization of the patented product or process. This makes sure that benefits arising from commercialization are shared fairly with appropriate stakeholders.

Under the Act of 2002, any monetary benefit derived from the research, bio-survey and bio-utilization of accessed biological resources was required to be shared with the local community. The Bill brings significant changes to this aspect.

One important change is the elimination of the obligation of benefit sharing with the local community for bio-survey or bio-utilization. This move is seen as an attempt to encourage investment in research and commercialization while at the same time ensuring that businesses are not burdened with unreasonable benefits haring obligations.

Moreover, the Bill introduces exemptions for certain categories. AYUSH practitioners and users of ‘codified traditional knowledge’ are now exempted from benefit sharing with local communities for cultivated medicinal plants and their products. This exemption is aimed at promoting traditional medicine and the cultivation of wild medicinal plants, thereby contributing to the production of plant-based medicines.

In the case of Divya Pharmacy v. Union of India[1], the issue at hand was whether an Indian company without any foreign participation in terms of shareholding and management is obligated to comply with the Access and Benefit Sharing (ABS) or fair and equitable benefit sharing (FEBS) provisions under the Act of 2002.The Uttarakhand High Court, in its ruling, clarified that all Indian companies engaged in the extraction of biological resources  need to seek prior approval and share a portion of their revenue with indigenous and local communities holding traditional knowledge. If the case were to be tried today, as per the amendments, it will not be required to seek prior permission from the NBA before filing a patent application. This could potentially affect the liability of such companies under ABS or FEBS provisions. Also, the amendments exempt it from the obligation of benefit sharing with the local community.

National Authority and Local Community Involvement:

The amendment to Section 19 introduces a requirement for persons applying for intellectual property rights based on research involving biological resources accessed from India to make an application to the National Biodiversity Authority. It also mandates registration for those covered under Section 7 and prior approval for those covered under Section 6.

Under the amended legislation, the National Authority will represent and negotiate on behalf of local communities when determining the terms of benefit sharing. This shift reduces the direct involvement of local communities in the benefit-sharing process.The amended Section 20 introduces provisions for persons intending to transfer research results on biological resources accessed from India. It requires them to seek approval from the National Biodiversity Authority.

This change aims to streamline the negotiation process and make it more efficient. However, it also raises questions about the level of local community participation and whether their interests will be adequately represented by the National Authority.

State Biodiversity Board:

The amended Section 22 revises the composition of State Biodiversity Boards, adding legal experts, scientists, and experts in conservation, sustainable use and benefit-sharing. This change ensures that State Biodiversity Boards have a diverse and knowledgeable composition, thereby enhancing their capacity to make informed decisions related to benefit-sharing.

The Amended Section 23 adds functions for State Biodiversity Boards, including advising on conservation, sustainable use, benefit-sharing and regulating activities under Section 7. This expansion of functions of the board empowers State Biodiversity Boards to play a more active role in regulating and overseeing biodiversity related activities in their respective states.

Previously, to acquire any biological resources for commercial purposes, Indian individuals and organizations registered in India were required to inform the appropriate State Biodiversity Board and obtain clearance from the National Biodiversity Authority. This Bill is set to alter this process by making it obligatory for anyone seeking to utilize biological resources without requiring NBA approval to initially notify the relevant SBB. Furthermore, the Bill empowers the SBB to decide on ‘benefit sharing’ when evaluating or processing approval applications.The Board also can restrict or reject activities if they are detrimental to biodiversity objectives.

National Biodiversity Authority:

This amendment to Section 25 empowers the Central Government to determine the terms and conditions of service for the Chairperson and Members. The amended Section 26 states that a Member-Secretary shall not hold office for more than two terms.

The amended Section 26 allows the NBA to appoint its staff. It even provides the freedom in selecting personnel with the necessary expertise to carry out its functions effectively.The Amendment to Section 27 grants the NBA the power to delegate powers and duties to its Chairperson, Member-Secretary, or officers and employees.Under the amended Section 29, the NBA can also constitute advisory committees to assist in its functions.

This amended Section 30 expands the scope of the National Biodiversity Fund to include contributions from individuals, institutions, and organizations. Under amended Section 31, National Biodiversity Fund can now provide grants to various entities for projects and activities related to biodiversity conservation, sustainable use and benefits haring.

Biodiversity Management Committee:

Under the 2002 Act, state governments were obligated to establish BMCs aimed at promoting habitat preservation and documenting the conservation efforts related to specific plant species, animal breeds, and microorganisms. However, with the amended Section 41, BMCs must now comprise a minimum of 7 and a maximum of 11 members. State governments have also received directives to create BMCs in both rural and urban areas to safeguard landraces, folk varieties, domesticated stocks and more. The exact composition of these BMCs will be determined by the respective State Government as per their guidelines.

Decriminalization of Offenses:

A significant departure from the previous the Act of 2002 is the complete decriminalization of all offenses related to biological resources. Under the 2002 Act, the offenses were categorized as both cognizable and non-bailable, where imprisonment may be up to 5 years and fines. Under amended Section 39, Penalties for offenses under the Act have been increased.The Bill replaces criminal sanctions with penalties ranging from 1 lakh to 50 lakhs for violations. Repeat offenders may face penalties of up to 1 Crore.As per amended Section 40, if an offense under the Act is committed by a company, every person associated with the company in the management of its affairs may be held liable. An Adjudicating Officer will be appointed to conduct inquiries and determine the appropriate penalties.

According to the modified Section 41, only the National Biodiversity Authority, State Biodiversity Board, or any other authorized person can  file a complaint  action for violations under the Act. It ensures that lawsuits are pursued by individuals having a direct interest.

Challenges and Uncertainties:

While the Bill brings significant changes, it is not without challenges and uncertainties. The role of local communities in determining benefit-sharing provisions has been reduced with the National Authority deciding all matters. This shift poses questions on whether the local communities will continue to have a strong voice in decisions related to the usage of biological resources.

Conclusion:

The Bill brings significant changes with the aim to encourage innovation and streamline processes while at the same time ensuring biodiversity conservation. The changes that have been made to the definitions help to make things clearer and reduce the confusion that was within the community. This legislative overhaul seeks to reshape the approach to biological resources while benefiting researchers, indigenous knowledge practitioners, businesses and local communities. While several important aspects are addressed the reduced role of local communities in decision-making is concerning. Further, the absence of criminal sanction scan lead to over exploitation. Effectively tackling these challenges is challenging for the successful realization of the bill’s intended objectives.

Author: Uthresh Gobu Naidu, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

[1]2018 SCC Online Utt. 1035

Footnotes:^[1]Divya Pharmacy v. Union of India, 2018 SCC Online Utt. 1035