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TED Case Studies

BASMATI

CASE NUMBER: 493
CASE MNEMONIC: Basmati
CASE NAME: India-US Basmati Rice Dispute

Agricultural and Processed Food Products Export Development Authority (APEDA)



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I. Identification

1. The Issue

In late 1997, an American company RiceTec Inc, was granted a patent by the US patent office to call the aromatic rice grown outside India 'Basmati'. RiceTec Inc, had been trying to enter the international Basmati market with brands like 'Kasmati' and 'Texmati' described as Basmati-type rice with minimal success. However, with the Basmati patent rights, RiceTec will now be able to not only call its aromatic rice Basmati within the US, but also label it Basmati for its exports. This has grave repercussions for India and Pakistan because not only will India lose out on the 45,000 tonne US import market, which forms 10 percent of the total Basmati exports, but also its position in crucial markets like the European Union, the United Kingdom, Middle East and West Asia. In addition, the patent on Basmati is believed to be a violation of the fundamental fact that the long grain aromatic rice grown only in Punjab, Haryana, and Uttar Pradesh is called Basmati. According to sources from the Indian Newspaper, Economic Times, "Patenting Basmati in the US is like snatching away our history and culture."(1)

2. Description

Basmati rice means the "queen of fragrance or the perfumed one." This type of rice has been grown in the foothills of the Himalayas for thousands of years. Its perfumy, nut-like flavor and aroma can be attributed to the fact that the grain is aged to decrease its moisture content. Basmati, a long-grained rice with a fine texture is the costliest rice in the world and has been favored by emperors and praised by poets for hundreds of years. According to the Agricultural and Processed Food Products Export Development Authority (APEDA), India is the second largest producer of rice after China, and grows over a tenth of the world's wheat. In 1993, Basmati rice attracted the highest premium because it is a very-long grained rice, with an aroma of its own which enhances the flavors its mixed with.


The Rice Patent

RiceTec Inc, was issued the Patent number 5663484 on Basmati rice lines and grains on September 2, 1997.
In abstract, "the invention relates to novel rice lines and to plants and grains of these lines. The invention also relates to a novel means for determining the cooking and starch properties of rice grains and its use in identifying desirable rice lines. Specifically, one aspect of the invention relates to novel rice lines whose plants are semi-dwarf in stature, substantially photoperiod insensitive and high yielding, and produce rice grains having characteristics similar or superior to those of good quality Basmati rice. Another aspect of the invention relates to novel rice lines produced from novel rice lines. The invention provides a method for breeding these novel lines. A third aspect...relates to the finding that the starch index (SI) of a rice grain can predict the grain's cooking and starch properties, to a method based thereon for identifying grains that can be cooked to the firmness of traditional Basmati rice preparations, and to the use of this method in selecting desirable segregants in rice breeding programs." (2)

Importance of Rice on Indian and Pakistan Economy

Rice is an important aspect of life in the Southeast and other parts of Asia. For centuries, it has been the cornerstone of their food and culture. During this period, farming communities throughout the region developed, nurtured, and conserved over a hundred thousand distinct varieties of rice to suit different tastes and needs. It is for this reason that patenting of Basmati by RiceTec Inc. is perceived as not only intellectual property and cultural theft, but it also directly threatens farm communities in Southeast Asia. According to Dr Vandana Shiva, director of a Delhi-based research foundation which monitors issues involving patents and biopiracy, the main aim for obtaining the patent by RiceTec Inc. is to fool the consumers in believing there is no difference between spurious Basmati and real Basmati. Moreover, she claims the "theft involved in the Basmati patent is, therefore, threefold: a theft of collective intellectual and biodiversity heritage on Indian farmers, a theft from Indian traders and exporters whose markets are being stolen by RiceTec Inc., and finally a deception of consumers since RiceTec is using a stolen name Basmati for rice which are derived from Indian rice but not grown in India, and hence are not the same quality."(3)

In fact, Basmati rice has been one of the fastest growing export items from India in recent years. In the year to March 1997, India exported more than half a million tonnes of Basmati to the Gulf, Saudi Arabia, Europe and the United States, a small part of its total rice exports, but high in value. More substantively, Indian farmers export $250 million in Basmati every year and U.S. is a target market. (4) RiceTec Inc. had attempted to sell its long-grain rice in Europe under such brand names as 'Texmati' and 'Kasmati' but not as Basmati. However, if the patent is not revoked, RiceTec Inc., can now sell its rice under the brand name Basmati which will definitely cut into India's and Pakistan's global market share, especially as the rice grown in the US could be sold cheaper than the Indian and Pakistani varieties.

The Government of India's response to the Patent

In an official release, the government of India reacted immediately after learning of the Basmati patent issued to RiceTec Inc., stating that it would approach the US patent office and urge them to re-examine the patent to a United States firm to grow and sell rice under the Basmati brand name in order to protect India's interests, particularly those of growers and exporters. Furthermore, a high level inter-ministerial group comprising of representatives of the ministries and departments of commerce, industry, external affairs, Council for scientific and industrial research (CSIR), Agriculture, Bio-technology, All India Rice Exporters Association (AIREA), APEDA, and Indian Council of Agricultural Research (ICAR) were mobilized to begin an in-depth examination of the case. The contents and implications of the patent are currently being analyzed in consultation with patent attorneys and agricultural scientists. The government of India is particularly concerned about the patenting of Basmati because of an earlier case where the US granted a patent to two Indian-born scientists on the use of Turmeric as a wound healing agent. This case worked in favor of India because the patent was subsequently revoked after scientists of (CSIR) successfully challenged the patenting on the ground that the healing properties of Turmeric had been 'common knowledge' in India for centuries. There is a clause in US patent laws that will accept any information already available in published or written form anywhere in the world as 'common knowledge'. As a result, India was able to furnish published evidence to support their case that the healing characteristics of Turmeric is not a new invention and as such cannot be patented.

In the presence of widespread uprising among farmers and exporters, the nation of India as a whole feel confident of being able to successfully challenge the Basmati patent by RiceTec Inc. According to the Economic Times of India, the law firm of Sagar and Suri who won the Turmeric patent case and presently representing the government against RiceTec Inc. in existing cases, said; "RiceTec has got a patent for three things: growing rice plants with certain characteristics identical to Basmati, the grain produced by such plants, and the method of selecting the rice plant based on a starch index (SI) test devised by RiceTec Inc." The lawyers plan to challenge this patent on the basis that the above mentioned plant varieties and grains already exist and thus cannot be patented. In addition, they encountered some information from the US National Agricultural Statistics Service in its latest Rice Year book 1997, released in January 1998, which states that almost 75 percent of US rice imports are the Jasmine rice from Thailand and most of the remainder are from India and Pakistan,"varieties that cannot be grown in the US" This piece of information is rather interesting and can be used as a weapon against the RiceTec Basmati patent. (5)

Legal procedures of Obtaining a Patent in the US and India

The law firm representing India in the dispute, Sagar and Suri, criticized the procedures for granting patents in the US claiming it is diametrically opposite to the one followed in India and Europe. According to them, India first examines a patent application, then widely publishes it for third parties to challenge, and only then grants the patent. However, the US keeps the patent application a closely guarded secret and grants it without allowing other parties to challenge it. After the patent has been granted, third parties are then allowed to petition against the patent as India is currently doing in the Basmati case. This criticism clearly illustrates the shortfalls in the patent process in the US that ultimately needs to be revised to prevent future cases like this from occurring. (6)

TRIPS and World Trade Organization

Indians feel that the US government's decision to grant a patent for the prized Basmati rice violates the International Treaty on Trade Related Intellectual Property Rights (TRIPS). The president of the Associated Chambers of Commerce (ASSOCHAM) said Basmati rice is traditionally grown in India and Pakistan and granting patent to it violated the Geographical Indications act under the TRIPS. The TRIPS clause defines Geographical indication as "a good originating in the territory of a member, or a region or locality in that territory, where a given quality, reputation, or other characteristic of the good is essentially attributable to its geographical origin." As a result, it is safe to say Basmati rice is as exclusively associated with India and Pakistan as Champagne is to France and Scotch Whiskey is to Scotland. Indians argue that just as the US cannot label their wine as champagne, they should not be able to label their rice Basmati. If the patent is not revoked in the US because unlike the Turmeric case, rice growers lack documentation of their traditional skills and knowledge, then India as have been urged by many activist in the field should take the case to the WTO for an authoritative ruling based on the violation of TRIPS. (7)

In the wake of the problems with patents that India has experienced in recent years, they have now realized the importance of enacting laws for conserving biodiversity and controlling piracy as well as intellectual protection legislation that conform to international laws. There is a widespread belief that RiceTec Inc., took out a patent on Basmati only because of weak, non-existent Indian laws and the government's philosophical attitude that natural products should not be patented. According to some Indian Experts in the field of genetic wealth, India needs to formulate a long-term strategy to protect its bio-resources from future bio-piracy and or theft. (8)

India and Pakistan who are joining hands to tackle the crisis have a strong case against RiceTec Inc. British traders are also supporting India and Pakistan. According to Howard Jones, marketing controller of the UK's privately owned distributor Tilda Ltd, "True Basmati can only be grown in India or Pakisatn. We will support them in any way if its necessary." (9)
The Middle East is also showing support by only labeling Indian or Pakistani rice as Basmati. The case is still unfolding and it will be interesting to find out what happens in the end once the government and government agencies have gathered the necessary data and information to support their case and to prevent their cultural heritage from being taken away from them.

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    4. Draft Author: Jolayemi Adewumi; June (1998)

    II. Legal Clusters

    5. Discourse and Status: Disagreement and Allegation

    6. Forum and Scope: Bilateral

    7. Decision Breadth: Three; India, Pakistan and US

    8. Legal Standing: Treaty

    III. Geographic Clusters

    9. Geographic Locations





























    a. Geographic Domain: ASIA

    b. Geographic Site: South Asia

    c. Geographic Impact: India and Pakistan

    10. Sub-National Factors: No

    11. Type of Habitat: Temperate

    Every crop species has its own ecological requirements. Rice is grown under a damp warm climate. A temperature range of 20ºC to 37.7º C (68º F to 100º F) is required for the optimum growth of rice. Rice being a semi-aquatic crop, grows best under submerged, waterlogged conditions. Rice is able to tolerate a wide range of soil reactions, but has a preference of acidic soils. Click here to learn more about the Climate and Landscape of Punjab where Basmati rice is grown.

    IV. Trade Clusters

    12. Type of Measure: Intellectual Property Rights

    The type of measure being utilized is accusing the RiceTec Inc and the US of violating the Geographical indication act of the TRIPS agreement in the WTO. But first, India and Pakistan would file a petition to the US patent office to re-examine the patent on Basmati claiming Basmati has been grown in their regions for thousands of years and is common knowledge in India and thus cannot be patented.

    13. Direct v. Indirect Impacts: Direct

    14. Relation of Trade Measure to Environmental Impact: None

    a. Directly Related to Product: Yes Basmati rice

    b. Indirectly Related to Product: No

    c. Not Related to Product: No

    d. Related to Process: Yes Bio-diversity loss

    15. Trade Product Identification: Basmati rice

    According to a major Indian exporter of rice,GN overseas, "Rice is the staple food of more than 70% of the world's population. The rice belt is distributed geographically over a wide range of conditions between latitudes 45 ºN to 40 ºS. However, 90% of total area under rice is situated in the wet tropical South and South East Asia. Among the rice growing countries, India has the largest area under rice in the world, accounting for about 31% of the total area under rice cultivation. India is producing about 80 million tonnes of rice annually."(10)

    Method for Identification of Rice

    Sl No. Characteristics Basmati
    (in-mm)    		 Basmati (Paraboiled) Parmal
    (PR-106)    		 Terricot
    1 Average Length of uncooked rice 7.3 7.5 7.0 7.6
    2 Average breadth of uncooked rice 1.9 1.9 2.1 1.9
    3 Average L/B ratio of uncooked rice 3.8 3.9 3.3 4.0
    4 Average length of cooked rice 8.9 8.9 5.6 8.0
    5 Average breadth of cooked rice 2.2 2.2 3.1 3.0
    Source: G.N Overseas quality rice exporters

    General Characteristics and Specifications of Rice


    Type of Rice Grade Purity Level Grain Broken Moisture Foreign Matter Red Streak & Wary Grains
    Basmati Superior 90% 7mm less than 14% Nil less than 1%
      & above (Avg.)   1%      
      A 85% 6-7mm less than 1% 14% Nil less than 1%
      B 75% 5-7mm less than 1% 14% Nil less than 1%
    Non Basmati Terricot 100%     14% Nil less than 1%
      PR 106 100%     14% Nil less than 1%
      IR8 100%     14% Nil less than 1%
    Source: G.N Overseas

    16. Economic Data

    India exports about 400,000 - 500,000 metric tons of Basmati annually. In 1996-97, India exported approximately 523,000 tonnes of Basmati to Europe.

    17. Impact of Trade Restriction: High

    18. Industry Sector: Food

    19. Exporters and Importers: India and many; US and many.

    V. Environment Clusters

    20. Environmental Problem Type: Habitat Loss

    21. Name, Type, and Diversity of Species: Many

    22. Resource Impact and Effect: Low and Regulatory

    23. Urgency and Lifetime: Low and 1 year

    24. Substitutes: Like products

    VI. Other Factors

    25. Culture: Yes

    As mentioned earlier, Basmati is a slender, aromatic long-grain rice with a nutty taste delicate texture that grows best in the valleys of Punjab in the Himalayan mountains . For countless generations, Punjabi (refer to the map above for its location) farmers in the region nurtured the fragrant seeds while improving the yield. Basmati originated in Punjab which spans areas of both India and Pakistan. This explains why its only grown in those two countries. Punjab is one of the smallest states in India. However, its geology that is, its deep and fertile soils as well as its exceptional climate has a far reaching impact on India's economy.

    Basmati is viewed as a cultural heritage. Below are pictures of different varieties of Basmati rice produced by an indian company Khushi Ram Behari Lal Ltd. This company, in their profile, claim that four generations of the family have been in the rice business since 1889. This further supports the argument that Basmati has existed in India and Pakistan for centuries and as such cannot be patented by the US.

    Three Varieties of Basmati Rice


    Golden Parboiled
    Basmati
    Raw Basmati
    Silky Raw Basmati

    26. Trans-Boundary Issues: No

    27. Rights: Yes

    28. Relevant Literature