TED Case Study -- Neemtree

The United States and India are currently involved in a biopiracy dispute over the rights to a tree indigenous to the Indian subcontinent, the neem tree. While the neem tree has been used in India for over 2000 years for various purposes such as pesticides, spermicides and toothbrushes, a US company has been suing Indian companies for producing the emulsion because they have a patent on the process. The dispute is over the rights of companies to conduct research and development by using patents against the interest of the people who live at the source of the resource. To what extent can multinational companies claim and patent resources from the develping countries, like India? The movement around the issue of the neem tree and trade-related aspects of intellectual property rights (TRIPS) represents a challenge to the developing countries..

There are approximately 14 million neem trees (Azadirachta indica) in India. Access to neem products was very cheap (if not free) and easy to get. It is a tropical evergreen, related to the mahogany, that mainly grows in arid regions of India and Burma and Southwest Asia and West Africa. When temperatures do not drop below freezing, it may grow up to 50 feet tall. They are estimated to live up to 200 years.

The neem tree has many versatile traits that can be traced back to the Upavanavinod, an ancient Sanskrit treatise dealing with agriculture. This treatise cites the neem tree as a cure for ailing soil, plants and livestock. The tree has been referred to as the 'curer of all ailments' and the 'blessed tree' by both the Hindu and Muslim population in India. The leaves and the bark have been used to treat illnesses such as leprosy, ulcers, diabetes and skin disorder. It has also been used to make spermicides and pesticides.

The neem tree is known as the tree for all seasons because of its versatility. Here is a list of its many uses::

1)Medicine - Many ancient and traditional medical authorities Indian texts place neem as a vital resource for pharmacy. They mention the usefulness of the leaves, bark, flowers, seeds and fruit for treating several diseases such as diabetes, ulcers and skin disorders. For example, some people chew neem leaves in the morning for 24 days to protect the body from diseases like hypertension and diabetes. The juice of the neem tree (5ml) mixed with equal amounts of honey reduces oozing from ears and also removes inflammation. The ash of the dry neem leaves is used to remove urinary stones. (www.healthlibrary.com/ready/neem/chap3.htm).

2)Timber - The chemical in neem makes it resistant to termites, which is an extremely useful quality to have in construction. It is interesting to note that there is a new EPA regulation that bans certain chemically treated wood.

3)Toiletries - Neem twigs have been used by millions of Indians (including my parents) as an antiseptic tooth brush. Its oil is used for preparing soap and toothpaste.

6)Agriculture - Even dating back to the ancient Sanskrit treatise dating about 600 BC dealing with forestry and agricultural, the Upavanavinod, neem was seen as a cure for ailing plants and livestock. The cake, or residue, is fed to livestock and its leaves increase the fertility of soil. The most important, and controversial, is its use as a potent insecticide. It is effective against approximately 200 insects.

Making pesticides emulsion does not take highly sophisticated equipment, as native peoples have been making it for over 2000 years. Indians have developed their own process of cracking off the top that would then be used on plants as a pesticide. Neem based pesticides, medicines and cosmetics have been produced by some laboratories in India, but there has not been an attempt to make ownership of the formula legal because Indian law does not allow agricultural and medicinal products to be patented.

In 1971, a timber company in the United States figured out that the neem tree's usefulness in acting as a pesticide and began planting neem tree seeds. He received a patent on it and, in 1988, sold the patent to the US based company W.R. Grace. In 1992, W.R. Grace secured its rights to the formula that used the emulsion from the Neem tree's seeds to make a powerful pesticide. It also began suing Indian companies for making the emulsion.

The controversy over who has the rights to the Neem tree raised many questions. India claims that what the US Companies are calling discoveries are the actual stealing and pirating of the indigenous practices and knowledge of its people. The Indians and members of the Green Party in the European Union oppose big businesses owning the rights to living organisms, otherwise known as biopiracy, because they believe that the rights of poor farmers in developing countries will be harmed.

The villager supplier of neem products ranging from pesticides to formulations for creams to cure skin disorders, Raju, was not the first in his family to use the "blessed tree" for as many purposes as possible. His family revered and know all of the tree's sacred qualities. While Raju did not know the exact word for the extract of the neem seed, Azadirachtin, he did know that it helped all the people in his village in one way or another.

One day his life changed drastically. An American company called W.R.Grace patented the natural insecticide that had been used for generations by Indian farmers. The company was allowed to patent the process of making the insecticide because the Indian government did not patent agricultural or pharmeceutical products. This patent caused many problems for Raju because he could no longer use the traditional method of smashing the neem seeds, scooping the emulsion from the top, and selling it to local farmers as pesticide. This was the method he and his family had used for generations. He was told that he had to pay the company royalties for using their innovation because farmers in India did not hold a patent for the process. It just did not make any sense. The economy seemed to be overtaking his society. The worst part about it was that the community, his people, did not get any benefits from the patents.

Raju often asks, how is it possible for American companies to come into our country, steal our knowledge and make money off of it? He was also concerend why the Indian government did not protect the neem emulsion through patents themselves. This is a question that many intellectual property disputes have to answer.

There is an increasing awareness in India of the commodification of neem will lead to the expropriation by multinational corporations, like W.R. Grace (Shiva, Vandana "Piracy by Patent: The Case of the Neem Tree," in The Case of the Global Economy: and for a turn toward the local, edited by Jerry Mander and Edward Goldsmith, Sierra Club: San Francisco, 1996, p. 154). On Indian Independence Day in 1995, farmers in from Karnataka rallied outside the district office to challenge the demands for made by multinational corporations for intellectual property rights. As part of their protest, the farmers carried twigs and branches from the neem tree as a symbol of their collective indigenous knowledge of the properties of the neem (Shiva: 154).

The United States, on the other hand, states that what they are doing will help the Indian economy. India is not against sharing its information about the Neem tree's virtues, but it is against countries and corporations that intend to stop India's present use of it.

Another issue is whether the neem tree is patenable, since it is a product of nature, which shows that it is not a result of innovation and discovery. The problem is that W.R. Grace does not have a patent on the tree itself, but rather on the process of making the emulsion. They believe that this process is a discovery because it entails manipulation yielding greater and better results. In other words, discovery seems to have both old and new definitions. The problem is over the use of novel scientific advances on traditional Indian techniques. According to Vandana Shiva, the director of the Research Foundation for Science, Technology and Natural Resource Policy in India, "corporate processes are supposedly novel advances on Indian techniques" (Shiva: 152). She goes on to state that the reluctance of scientists in India to patent agricultural and pharmaceutical inventions may be a result of their recognition that the bulk of work had already been accomplished by generations of anonymous, Indian experimenters (Shiva: 153). For example, "Dr. R P Singh of the Indian Agricutural Research Institute asserts: `Margosan - O is a simple ethanolic extract of neem seed kernel. In the late sixties we discovered the potency of not only ethanolic extract, but also other extracts of neem ...... Work on the neem as pesticide originated from this division as early as 1962. Extraction techniques were also developed in a couple of years. The azadirachtin - rich dust was developed by me’" (http://www.healthlibrary.com/reading/neem/chap10.htm). Shiva also states that the discovery of the neem's properties and the means of processing the extract was not "obvious" but rather evolved through extended systematic development in non-Western cultures (Shiva: 153).

The World Trade Organization (WTO) is asking developing countries to open up to foreign direct investment from abroad and to liberalize their trade policies. There has been a restructuring of General Agreement on Tariffs and Trade (GATT) into the WTO. This resulted in agreements on trade-related aspects of intellectual property rights (TRIPS) made during the Uruguay Round. These agreements created a trend towards a legal framework for intellectual property rights including a consensus to follow and establish patent laws in conjunction with those of the developed world.

While this can be seen as a good sign for India, it still causes a problem because of the Indian government's reluctancy to issue patents on agricultural and pharmaceutical product. Also, there is a lack of knowledge of the legal process that surrounds intellectual property rights. Indian business owners argue that the lack of patents leads their technology to move to the developed world. India feels that by letting foreign companies control resources, they become more vulnerable to them. As a result, there has been a backlash on foreign investment and less joint ventures between India and the United States.

Sandalwd - India's attempt to limit the exportation of sandalwood because of its current trend towards extinction.

Tequila - In light of NAFTA, Mexico has demanded protection Tequila "as a geographically indicated product" under intellectual property law.

Mussel - Mussel harvesting is a new cause of concern for the sustainability of mussel populations.

II. Legal Clusters

The World Trade Organization (WTO) is encouraging developing countries to expand their legal protection of intellectual property rights in order to be on a similar "playing field" with the developed countries. In an effort to standardize trade rule, the WTO is also asking developing countries to open up to foreign direct investment from abroad and to liberalize their trade policies. The WTO believes that the restructuring will lead to a development of more modern economies.

There has been a restructuring of the General Agreement on Tariffs and Trade (GATT) into the WTO. This resulted in agreements on trade-related aspects of intellectual property rights (TRIPS) made during the Uruguay Round. TRIPS, the forum for dispute, created a trend towards a legal framework for intellectual property rights. It also forced countries to honor the northern/Western interpretation of patent rights (Shiva: 147). According to Shiva, "the northern countries argued that when southern farmer's attempted to retain free use of their own seeds, developed by them over thousands of years, it was a form of piracy, but the pirate's hat clearly belongs on the other head" (Shiva: 147).

One of the major parties involved is obviously the Indian government who has signed onto the TRIPS agreement. India's laws still do not allow patents on agricultural and pharmaceutical products. Another party involved is the business community (like W.R. Grace) that needs intellectual property rights to encourage development in foreign countries because it gives more incentive to the business owners that their property or "inventions" will be protected. They believe that the result of researching and development in foreign countries can lead to a greater public good because of the new discoveries of medicines and other innovations that will result.

Another forum for dispute surrounding the neem tree is the Convention on Biological Diversity (CBD) that took place in 1992 at the United Nations Conference on Environment and Development. Article 15 of the convention states bio-assets are the property of the sovereign states in which they are from. In other words, they are not the property of the world at large. India's claim is that what the Western world is calling discoveries is actually an indigenous method that they have been suing for years. They say that it is a bio-asset that is protected under Article 15 of the convention. While CBD emphasizes the rights of sovereign nations over biological resources, such as the neem tree, it still calls for the acceptance of intellectual property rights. What this means is the CBD calls for governments, such as India, to provide the proper patents or other forms of protection on the life forms and include pharmaceutical products.

Another WTO dispute that relates to the TRIPS agreement is a case that involves India, as well. This case is regarding Basmati rice. India feels that because the United States has granted a patent for Basmati rice, that it is violating the TRIPS agreement. They say that Basmati rice is exclusively associated with India and Pakistan. They want the United States to take away their patent on the rice because they felt it is an indigenous product of their country. India's problem with the neem tree is similar to the Basmati case because they have realized the importance for creating laws that conserve bio-assets and control piracy. They feel that protecting their assets through patents may protect them from other companies like Rice Tec that took advantage of the nonexistent Indian laws.

Indian farmers want to protect their cultural heritage. It seems the best way to do it is to change their philosophical attitude that natural resources should not be patented in order to protect and preserve India's biodiversity and also to conform to international laws and agreements like the TRIPS agreement. According to Shiva, there has been a new alliance of farmers and scientists to formulate an alternative form of intellectual property rights - what they term collective intellectual property rights (CIPR's) (Shiva: 157). It allows people to have the right to benefit commercially from traditional knowledge. In other words, the farmers want to solve their disputes at the local level or village organizations rather than through GATT panels.

III. Geographic Clusters

IV. Trade Clusters

The trade measures that are most relevant to the neem tree case are intellectual property and patents. United States patents on neem tree products are seen as forms of "biopiracy" by the country of India, the Green Party and the European Patent Office. There are three main issues surrounding the patenting of local products used for medicinal or agricultural purposes by the United States. First, the farmers will no longer be able to use these products without paying royalties to the company that has a patent on it. Secondly, consumers will be deprived of cheap medicines and agricultural products. Last, local communities should receive a share of the profits because the companies learned the value of the species from local knowledge. (Source: Trade and Development Center: A joint Venture of the World Bank and the World Trade Organization www.itd.org/isues/india6.htm)

Since 1985, over a dozen of the U.S. patents by the United States and Japanese firms are for the neem-based solutions and emulsions. There are a total of four patents are owned by W.R. Grace. Three patents are owned by another U.S. company, the Native Plant Institute. Two others are owned by the Japanese company, Terumo Corporation (source: Vanadan Shiva's article "Piracy by Patent: The Case of the Neem Tree" in The Case Against the Global Economy ). Remember that these patents are used for the process of making the emulsion from the neem tree, not on the neem tree itself. The US Company had in fact created a new invention from the neem extraction process. The local population, however, has been extracting the substances from the seeds for years, too, using a more traditional method of "smashing the seeds" and "scooping the emulsion."

The neem is not the only living organism that has become a subject of "patent" debate. There are scientists and farmers around the world that are trying to gain rights to protect their organisms. For example the Africa Soapberry has properties for insecticidal soap, fish intoxicant and a spermicidal contraceptive that African have used for a very long time. In 1964, though, things changed due to Dr. Akililu Lemma's report to the Tropical Products Institute in Britain that it killed water snails (which are used to fight the disease, bilharzia).. At the time of his report, he was stunned to find out that the Institute placed a patent on the extraction process without consulting or crediting him (Shiva:157).

Examples of Neem Tree Products (from Neemsa website www.neemsa.co.za)

Neem Facial Moisturiser	Neem Hand & Body Lotion	Neem Moisturizing Cream
Neem Organic Shampoo	Neem Organic Conditioner	Neem Eye Gel
Neem Toothpaste	Neem Lip Balm	Neem Soaps
Dragon Repellent Candle	Leaf Extract	Tree Extract
Seed Oil	Plant Spray	Horse Wash
Pet Flea Powder	Head Lice Attack Packs	Neem Incense Sticks
Bath Fizz Bombs	Powdered Neem Leaf	Pure Powdered Neem Tree
Neem Tea	Nail Nourisher	Neem Leaf Capsules

U.S. Companies patents: The patents granted to W.R. Grace for extraction and storage processes are the most controversial.

V. Environment Clusters

Name: Neem tree (Azadirachta indica) Type: Tropical Evergreen related to the mahogany

VI. Other Factors

The controversy over the patents on the neem tree relates to environment and culture most importantly because the properties and utilities of the tree have been known to Indians for millennia in both the Muslim and Hindu traditions. In Sanskrit it is known as the "curer of all ailments" and in the Muslim tradition it is known as the 'blessed tree.' Neem trees are everywhere in India. The extraction of the seed oil and emulsions is not difficult, the process has been used for ages in India (Third World Network: http://www.twnside.org.sg/title/pir-ch.htm). The village neem tree is a symbol of Indian indigenous knowledge. It has also become a symbol of resistance against corporations that are trying to take the Indian's knowledge for their own profit.

The WTO's goal is to promote market competition throughout the world. It is not the just the neem tree, as a product, that is being affected by the patents. Culture, biodiversity, livelihoods, needs and rights are all reduced to the market The destruction of their livelihoods becomes reduced to the level of competition. Many Indians view fundamental life processes as sacred,not as commodities that should be bought and sold in the market. The idea of a disembedded economy, that Karl Polanyi discusses, is not applicable to the average poor Indian farmer. In other words, Indian farmers are not comfortable with having the economy be above society. They seek to protect themselves from the rise of the global economy and agreements, such as the TRIPS agreement, that will affect their lives for days to come. The problem with the farmers view is that due to the logic of patenting, they cannot keep resisting, instead they are going to have to join in. (http://www.thirdworldtraveler.com/Globalization/War_Against_Nature_VFTS.html.).

The issue of nationalism, in the wake of colonialism plays a vital role in the case of the neem tree. Indians do not want to lose their rights to their own indigenous resources to a Western power. They will do everything to protect their rights. They are now an independent nation, or are they? In the new global village, it is hard to say. They see American companies and the WTO dictating what they can and cannot do with the neem tree. The TRIPS agreement is essentially the globalization of western patent laws as instruments to conquest. It can be seen as a different form of colonialism. An interesting story is that the word "patents" is derived from "letter patents." According to Vandana Shiva, one of India's leading activists and founder of the Research Foundation for Science, Technology and Ecology, letter patents were the open letter granted by the European sovereigns to conquer lands or to obtain monopolies on imports. For example, Christopher Columbus used a letter patent issued by Queen Isabel and King Ferdinand, for his right to conquest the America's (Vandana Shiva: War Against Nature and the People of the South).

Mander, Jerry, and Edward Goldsmith eds., The Case Against the Global Economy: a turn towards the local, San Francisco: Sierra Club Books, 1996.

National Research Council, Neem: A tree for solving global problems: report of an ad hoc panel of the Board of Science and Technology for International Devlopment, Washington D.C.: National Academy Press, 1992.

Shiva, Vandana, Biodiversity: Social and Ecological Perspectives, London: Zed Books, 1991.

----------------, Biopiracy: The Plunder of Nature and Knolwedge, Massacusetts: South End Press, 1997.

----------------, Ecology and the Politics of Survival: Conflicts over Natural Resources in India, in association with J. Bandyopadhyay, Japan: United Nations University Press, 1991.