The Neem Tree Debate
Joris Kocken and Gerda van Roozendaal
||Biopesticides; Patent law; India; United States of America.
||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.
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
for use on nonfood crops. In 1994, Grace brought
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
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
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
biological resources are common heritage and should not be patented;
the patent will restrict the availability of living material to local people,
whose ancestors have spent centuries developing the material;
the patent may block economic growth in developing countries.
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.
Subject matter: The coalition seems to claim that Grace's patent
is on a biological resource. Is this claim justified? The patent has been
granted on an extraction and solving process which makes the end
product more stable and therefore gives it a longer shelf life. Isolating
certain active chemicals and adding aprotic solvents (the process patented)
is at least one or more steps away from the biological resource.
Availability for farmers: One could argue, as Shiva does, that the
patent on this process indirectly gives a 'factual' property claim. This
is because the patent on the process may lead to shortages, since Grace
may buy up all the seed and extracted oil supply. According to Shiva, this
implies that in the future, farmers may not have freeofcharge
access to the seeds, as they do now. It is estimated that Grace is willing
to pay US$ 300 per tonne of seed. Although it is estimated that Grace (and
now Thermo Ecotek) currently buys just three per cent of the seed supply,
no one can prevent the company from increasing its share. However, whether
or not farmers will be forced to purchase Grace's product will depend on
the future availability of the seed. The seeds are currently not scarce
Preventing farmers from using neem: At this moment, the patent will
not have any consequences for Indian farmers in terms of royalty payments
since Grace does not hold a patent in India. However, under the rules of
the General Agreement on Tariffs and Trade/World Trade Organization
(GATT/WTO) on intellectual property Grace's patent may become effective
in India. In such a situation, could Indian farmers be prevented from using
neem seeds and processing them in the traditional way? Shiva acknowledges
that the patent does not prevent farmers from using their traditional methods
of extracting pesticide from neem seeds. She is, however, concerned that
if the patent were broadly granted, it could prevent Indians from processing
the seeds in some ways. It is, however, unclear what exactly she is referring
Legal obstructions: India
Obstructing development? The neemrelated patent can obstruct
development. Stabilizing the active ingredients of the neem seed is essential
for marketing the product overseas. When foreign companies patent neemrelated
processes which are essential for making export feasible, India will lose
that potential. This is a structural problem. As long as developing countries
are lagging behind in technology, they will also be slower in obtaining
many patents. Therefore, the controversy surrounding neem is not an isolated
case. In the near future, it will become a common problem for countries
who are behind in technological development.
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
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
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:
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.
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.
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
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
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
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
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.
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