Agritech Thymes: EU Adopts New NGT Regulation: Key IP Takeaways for the Agritech Sector

In a landmark moment for the European agritech sector, the EU Parliament has adopted new rules governing plants developed using New Genomic Techniques (NGTs).

For developers, seed companies, and their advisers, this development provides long-awaited certainty on regulatory pathways for gene edited crops. However, the Regulation also introduces new disclosure obligations and may signal closer scrutiny of patent licensing practices.

From a strategic perspective, innovators in this sector will need to adapt their approach to IP strategy to reflect the new legislative reality, and in light of newly introduced and potentially wide-reaching powers granted by the Regulation.

Key features include:

• NGTs are divided into two categories (NGT‑1 and NGT‑2) (, each subject to different regulatory requirements.
• NGT-1 plants (which meet certain criteria on permissible genetic manipulations) are “considered equivalent to conventional plants”, and are eligible for the simpler regulatory pathways open to conventionally bred plants.
• NGT-2 plants (i.e. those which are genetically manipulated above and beyond the criteria for NGT-1)remain within the existing regulatory framework for genetically modified organisms (GMOs).
• NGT plants remain patentable, although safeguards have been introduced with the aim of ensuring affordability and fair access for farmers.

Overall, the implementation shows the EU’s commitment to innovation, competitiveness, and food security. The new framework is intended to reduce farmers’ dependence on imports and improve the competitiveness of European agriculture.

Readers may recall the significant disagreements over the last two years concerning the patenting of NGT plants and access to patented technologies by breeders. It is therefore useful to review the key provisions of the Regulation from an IP strategy and risk management perspective.

Patent Information Requirements

A party requesting NGT-1 verification is now required to submit information, to the best of its knowledge, on any patents or published patent applications containing one or more claims directed to the biological material of the NGT plant. Alternatively, it must declare the absence of such patents or published patent applications.

Notably, in the legislation as written, there is no indication that this obligation is limited to the patents or applications owned by the requester.  Nor is there any guidance as to the extent of investigation required to satisfy the “best of its knowledge” standard.

Where the requester is itself the patent holder, it must also submit a written declaration confirming whether:

• it is willing to license the protected subject matter under fair and reasonable conditions in all Member States where it is entitled to grant such a licence; and
• it is, or intends to become, a member of relevant and appropriate licensing platforms.

Importantly, the accuracy of the information provided is not verified as part of the NGT verification procedure. The information is essentially declaratory in nature. However, failure to provide the required information will render the NGT verification request inadmissible. From a strategic perspective, meeting this requirement is non-trivial, and innovators will need to carefully audit their portfolio work closely with counsel and regulators to balance risk.

The New Code of Conduct                                                                              

The Regulation also requires the Commission to establish a Code of Conduct intended “to enhance the transparency of information relating to patents on plant biological material, to facilitate breeders’ access to such material and to enhance legal certainty for breeders and farmers.”

The Code of Conduct must be prepared within 18 months of the Regulation entering into force. The Commission will invite patent owners of NGT plants, plant breeders, farmers’ organisations and representatives of voluntary licensing platforms to participate in its development.

The Commission will seek commitments from patent owners to:

• provide clear, comprehensive and publicly accessible information on patents and patent applications covering biological material incorporated in plant varieties placed on the market in the Union;
• make arrangements for licensing patents under fair and reasonable conditions, including through voluntary licensing platforms; and
• support the amicable settlement of patent disputes involving SME breeders or farmers, particularly where patented biological material is present unintentionally and in minor quantities.

It remains to be seen what this Code will contain, and to what extent it will be legally and procedurally binding. However, judging by the legislative journey of the Regulation so far, we would expect aspects of the Code to be the subject for debate, and will be following developments with interest.

Monitoring and Potential Future Intervention

The Code of Conduct will be subject to ongoing monitoring through the establishment of a patent expert group. The group’s role will be to assess whether, and to what extent, the commitments contained within the Code are being observed and whether it is successfully ensuring fair and reasonable access to patented NGT plant biological material.

If any significant barriers to access to patented NGT technologies emerge, the Commission will be required to consider appropriate action, including the possibility of further legislative measures introducing mandatory access conditions where necessary.

The patent expert group will also assist the Commission in monitoring:

• patent licensing practices relating to the breeding and marketing of patented NGT plants;
• ongoing patent application activity concerning NGT plants; and
• patent enforcement practices affecting farmers, including examples of actual disputes where available.

The overall approach seeks to maintain patent protection while introducing greater transparency and signalling increased scrutiny of access and licensing practices within the agricultural biotechnology sector.  Again, the extent to which this is achieved is to be determined.

In practice,  this is likely to change  how patent rights are licensed and exercised across the breeding and seed sectors.

In particular, companies should anticipate increased use of:

• Patent pools;
• Standardised licensing schemes;
• Trait-access platforms;
• Broader cross-licensing arrangements between breeders and biotechnology companies.

Impact on the Organic Sector

The recent Beyond GM decision of the High Court in England highlights ongoing legal uncertainty NGTs on the organic sector.

The EU has taken the position that neither NGT-1 nor NGT-2 plants may be used in organic production.  However, the technically unavoidable presence of NGT-1 plants will not, in itself, automatically breach organic rules.

Similar issues have been faced in England, where the Beyond GM judgment held that Defra acted unlawfully in introducing the Precision Breeding Organisms (PBO) Regulations without first considering whether a labelling requirement could be included.  The question of remedies remains open, as well as whether the Regulations should be quashed (in whole in in part).  For the time being, however, the Food Standards Agency has confirmed that it will continue to process PBO applications as normal.

Returning to the EU, it remains to be seen how regulators will grapple with the issue, and we expect uncertainty to remain for the organic sector until the new Regulations are tested in courts, or adapted through secondary legislature.

Looking Ahead

The adoption of the new Regulation by the EU Parliament represents a significant milestone.  From an IP perspective, the Regulation is clearly trying to strike a compromise: preserving the availability of patent protection for NGT innovations while ensuring access for breeders.  Whether that balance proves sustainable will depend largely on the effectiveness of the forthcoming Code of Conduct and the Commission’s willingness to intervene should access concerns emerge in practice.

This article was prepared by Partner & Patent Attorney Punita Shah.