The Neem Tree Debate
Joris Kocken and Gerda van Roozendaal
Keywords:  Biopesticides; Patent law; India; United States of America. 
Correct citation: Kocken, J. and Roozendaal, G. van (1997), "The Neem Tree Debate." Biotechnology and Development Monitor, No. 30, p. 8­11. 

Private sector efforts in patenting neem tree­related processes and products have raised a major controversy. The focus of the debate is a 1992 US­patent on a process for extracting and stabilizing azadirachtin (aza A), granted to the US company W.R. Grace. A coalition of non­governmental organizations is opposing this patent on political and legal grounds.

Since the 1970s, many neem­related products have been patented in, among others, the USA and European countries. The number of US patents is over 50, covering a wide range of products from toothpaste to contraceptives. Aza A, a neem compound which is used to protect plants against insects (see box), was first approved for use on the US market by the Environmental Protection Agency in 1985. In 1988 Robert Larson, a US timber importer who received this approval, sold the patent on an extraction process to the US company W.R. Grace. Four years later, W.R. Grace began to market the insecticide under the name Margosan­O for use on non­food crops. In 1994, Grace brought Neemix to the market for use on food crops. In 1996, Grace launched a new neem­based product, Trilogy 90EC. Grace's biotechnology pesticide business was sold recently to Thermo Ecotek Corporation, a subsidiary of Thermo Electron Corporation, USA. Since 1993, stabilized neem products have also been produced and sold in India, in cooperation with the Indian company Margo Private Ltd. A part of this production is exported.
Aside from Grace, aza A derived biopesticides are marketed by another company. AgriDyne Technologies Inc., USA, has also commercialized three biopesticides: Azatin, for non­food crop use in nursery and ornamental crops; Turplex, for lawn and turf application; and Align, for food crop application.
The market competition between the two companies was intense. In 1994, Grace accused AgriDyne of infringing its patent. The matter was settled when Grace granted AgriDyne a non­exclusive royalty bearing licence. In the meantime, AgriDyne has established a joint­venture with Aftaab Investment Co. Ltd of the Tata Group of India to manufacture and sell plant­based biopesticides on the Indian market. For agricultural pesticides, the annual estimated value of the Indian market is US$ 495 million, the 13th largest in the world.

The politics of neem
Neither the traditional extraction methods (farmers in India use neem as a pesticide), nor the modern methods developed by Indian scientists, used to be patented. However, since the potential value of neem­based pesticides has been recognized, commercial interests have increased. Scientists and companies predominantly from industrialized countries have applied for patents on neem­tree related products and processes. Nevertheless, the Indian company Godrej Soaps Ltd (Bombay) has also received a US patent on a neem fatty oil distillation residue­based pesticide.
The controversy about foreign patent claims seems to have escalated because a big multinational corporation was involved. The Grace US­patent no. 5,124,349 concerns a process to extract and stabilize an aza A­based pesticide from neem seed. In 1995, a coalition of 200 non­governmental organizations from 40 countries was established to protest Grace's patent. In September of that year, the initiators of this coalition, Jeremy Rifkin of the Foundation on Economic Trends (USA) and Vandana Shiva, president of the Research Foundation for Science, Technology and Ecology (India), petitioned the US Patent and Trademark Office (PTO) to revoke Grace's patent. Although the petition is made primarily on legal grounds, the underlying concerns of the coalition are the following:

The coalitions fears that "(i)f the neem patent and other similar patents are allowed to stand, it will mean that indigenous populations around the world will be excluded from freely using many of the biological resources that have been carefully developed and nurtured for over hundreds of years". Whether the fears of the coalition are justified, given the nature and scope of the patent, remains to be seen. Let us look more closely at the coalition's concerns. In addition, since the patent applies only to adding certain solvents to the pesticide's active ingredient that extends shelf­life and stability, it does not restrict the use of neem­based products in general. Legal obstructions: India
The controversy on the US patent is partly the result of a difference in the legal systems among countries. In India, many of the existing innovations on neem­related products and processes cannot be patented. Under Indian law, patents are not allowed on products with a certain use (food, medicine, agriculture), and processes which lead to products with a certain use. India's 1970 Patent Acts refers to these products as related to "medicines for human beings, products used to keep plants and animals free of diseases or to increase their economic value or that of their products". Grace's process of stabilizing the neem­extract falls in these categories that are excluded from patenting in India. Therefore, the Indian law cannot grant such a patent.

Discrimination by US law
In general, patents cannot be granted on invention if there is a 'prior art', this means that the invention is not novel, and is already known and applied abroad. The US patent law has some disputable rules of evidence in this respect.
Shayana Kadidal, a US­based lawyer, points out that the US system favours the 'inventor' in the USA over the 'inventor' in foreign countries. The 'prior art' has two different sets of rules of evidence: domestic and foreign. The domestic rule states that any domestic use or any availability of the knowledge embodied in the subject submitted for patenting will pre­empt it. In this way, US users and inventors have a strong protection against any patent claimants.
The 'foreign' rule is very different. Foreign use or knowledge gives no immediate reason to pre­empt a patent application, except in the case of specific availability of the knowledge. This means that the foreign 'prior art' is only recognized when there is a written patent or a written publication of the knowledge embodied by the patent application. However, this is very arbitrary. Kadidal quotes one case wherein even a typewritten  Argentinean patent was not considered as proof of 'prior art'.

The neem tree and its uses

The neem tree (Azadirachta indica) originates from the Indian subcontinent and now grows in the dry regions of more than 50 tropical countries around the world. The neem tree has multiple uses. For centuries, parts have been used as allelochemicals, soap, dentifrice and medicines. Since scientists, predominantly from India, started to research the possible applications of the different parts of the neem tree, they also found new uses. Scientists at the National Institute of Immunology, New Delhi, discovered that neem oil has compounds that can be used as spermicides and abortifacients. This has resulted in patents. In 1995, for instance, scientists at the Indian Defence institute of Physiology and Allied Sciences (DIPAS) filed for three patents on neem products related to contraceptives. 
However, the tree's most important use is as a biopesticide. In this respect, neem has more than 60 valuable compounds, among which the widely used azadirachtin A (aza A). There is increased interest in aza A since it has been identified as the key compound that works as an insect feeding deterrent and as an inhibitor of ecdysis and growth. Research conducted by, amongst others, the United States Department of Agriculture has shown that aza A protects against more than 130 insects, while it is partly active against more than 70 other insects. It seems therefore a good alternative to chemical pesticides. 

New and novel?
The legal case regarding Grace's patent on extracting and stabilising aza A is still pending at the US Commissioner of Patents and Trademarks. The concern is whether the process patented is sufficiently new and novel. In its Request for Re­examination, the coalition states that there is enough evidence to the claim of 'prior art' outside the US (in India).  It also claims prior art inside the US. In its request, the coalition sums up proof for 'prior art' in an attempt to get the patent revoked.
Firstly, the coalition claims the patented process has already been used by Indian farmers for many centuries. However, when Grace states that their method differs substantially from the method used by Indian farmers, they may have a point. Traditionally, the farmers have used water as solvent for the extracted oil from the neem seeds. The protic solvent cannot stabilize the azadirachtin for a long time. This is not a problem because the product is used within a few days of production. Therefore there is no immediate need for a process of stabilizing the extract. The need for extract preservation only arises in case of mass production for broader and distant export markets.
Secondly, the coalition claims the knowledge for the process patented was already available in India and elsewhere. The properties of the neem tree as pesticide and insecticide were discovered by Indian scientists decades ago. "The treatment of neem seeds with aprotic solvents has been used since the 1950's, and scientists had prepared neem seed extracts with the same solvents that W.R. Grace used in its patent, and solvents similar to those identified by W.R. Grace, years before the company's earliest efforts". The coalition points out that much of the research and experimentation has been conducted by small­scale organizations which have no interest in or capability of using foreign patents. This foreign knowledge as prior art is supported by several letters from foreign scientists.
Thirdly, the coalition claims that the process patented was not new and novel from a domestic point of view. In their request, they presented many scientific publications to prove that the knowledge of the use of protic solvents in stabilizing organic material was publicly accessible. They also presented letters from US­based scientists who state that 'no new novel chemistry was discovered' and that the process patented makes 'only trivial changes to known products and processes'.

Socio­economics of neem

The insecticide derived from neem is especially important for resource­poor farmers, since it requires no financial inputs, and causes no health hazards. Yet, in most developing countries the adaptation rate of neem as a method of pest control is still low because of a variety of reasons, such as: 

  • Availability and costs of raw material: Neem grows abundantly in Africa and in Asia, but not in Latin America. Also, neem grows mostly in dry regions, and is not found in the areas most suitable for neem insecticide applications, the humid vegetable growing regions. Therefore, wide­spread application is dependent on marketing structures, which are still underdeveloped in most countries.
Another, related, factor is the price of neem seed. In most regions, the seeds are collected on the ground. In Latin America, however, the scarce seeds are gathered from the tree, which is more expensive. Latin American farmers often buy the neem seed extracts from the traders and this costs the same as a synthetic pesticide. 
  • Efficiency of neem­based pesticides: The ingredient that determines the efficiency of the pesticide is aza A. For unknown reasons, however, the content of a seed can vary significantly. In addition, if the seeds are not dried and stored properly, it can lead to an easy degradation of the aza A.
  • Labour intensity: Although the technology needed to prepare a neem seed extract is simple, the labour intensity of collecting and processing is high. For example, an African farmer spends about 32 hours on extraction for 1 ha crop. Many farmers are not willing to spend so many hours on this, and will therefore rely on the market if the prices are low enough. Other limiting factors are the fact that the neem harvest time can compete with the time needed for other harvests; that the land needed for neem is also needed for other crops; and that the harvesting time of neem does not usually coincide with the need for the insecticide.
  • Socio­cultural attractiveness: In general, the potential use of neem will occur in a situation were farmers are environmentally consciousness, are aware of health problems of other insecticides, and possess processing knowledge.
Source: C. Hellpap and W. Leupolz (1996), Influence of Socio­Economic Factors on the Use of Neem Insecticides by Farmers. Paper presented at the 5th International Neem Conference, University of Queensland, Brisbane Australia. 

On the whole, we think that the prospect that Indian farmers would experience negative economic consequences because they have to buy seeds will depend on the future availability of the seed. This availability is currently not a problem in India. However, it is hard to estimate if and how this would change. There is, therefore, a need to research these kinds of consequences in its specific socio­economic context, which not only differs from region to region, but also from country to country (see also box). These differences will make it hard to extrapolate the Indian experiences to other countries. In addition, this potential availability problem seems not to be the result of the Grace patent, but more of commercialization of neem­related products. In addition, prohibition of the use of traditional extractions seems unlikely. There are, however, some serious reasons for concern.
Firstly, if there was prior knowledge of this process outside the USA, then the commercial value of that knowledge is at least annulled in the USA. For India, it will be more difficult to penetrate the markets of developed countries once specific neem­related products and processes have been patented there.
Secondly, the rules of the General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO) on intellectual property can induce damage to the Indian economy. Patents are always national in character. Nevertheless, under the rules of the GATT/WTO, India has to eliminate the exclusions in its patent law. However, it is unclear whether India can be forced to acknowledge the existing neem­related patent. If so, India may find 'its' knowledge, assuming that the coalition's claim is correct, turned against it in the form of a patent held by a foreign company.
Thirdly, an additional question concerns the control over biological resources (neem is originally native to southeast and southern Asia). Issues such as how and who compensates developing countries or farmers for the use of 'their' biological resources remains an important issue. This deserves the attention that the neem patent debate is now attracting.
Joris Kocken*/Gerda van Roozendaal**

* Lecturer Sociology of Law, University of Amsterdam Law School, Post Box 1030, 1000 BA Amsterdam, the Netherlands. Phone (+31) 20 5253565; Fax (+31) 20 5253358.
** Editor Biotechnology and Development Monitor

David Dickson and K.S. Jayaraman (1995), "Aid Groups back challenge to neem patents." Nature, 14 September 1995, p 95.

Shayana Kadidal (forthcoming), "Subject­Matter Imperialism? Biodiversity, foreign prior art, and the neem patent controversy." Idea. The Journal of Law and Technology, Vol.37, No.2, forthcoming March 1997.

Kurt Kleiner (1995), "Pesticide Tree Ends Up in Court." New Scientist, 16 September 1995, p.7.

Foundation on Economic Trends (1995), Call for support to oppose Grace's patent. Washington D.C.: Foundation on Economic Trends.

Request for Examination. Submitted to the United States Patent and Trade Mark Office, September 14 1995.

Contributions to the Biotechnology and Development Monitor are not covered by any copyright. Exerpts may be translated or reproduced without prior permission (with exception of parts reproduced from third sources), with acknowledgement of source.


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