Nagoya Protocol in Practice: Access and Benefit-Sharing for EU Biotech

The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (ABS) represents a fundamental shift in how biological material is accessed, researched, and commercialized. For the European biotechnology sector, it is not merely an environmental treaty; it is a complex regulatory ecosystem that intertwines international law, EU legislation, and national administrative procedures. Its impact extends from early-stage academic discovery to late-stage product commercialization, affecting supply chains, intellectual property strategies, and cross-border collaborations. Understanding its practical implications requires moving beyond the text of the agreement to the operational realities of compliance, risk management, and due diligence that now define the bio-economy.

At its core, the Protocol operationalizes the principle of sovereign rights over genetic resources. This concept, enshrined in the Convention on Biological Diversity (CBD), asserts that states have the inherent right to regulate access to their natural wealth. The Nagoya Protocol provides the mechanism to enforce these rights, creating a legal gateway through which researchers and developers must pass to utilize genetic resources found within a country’s jurisdiction. For the EU biotech industry, which relies heavily on global sourcing for everything from microbial strains to plant compounds, this transforms the sourcing process from a logistical challenge into a legal one. The era of freely collecting biological samples during expeditions or sourcing them from global repositories without explicit permission and agreed terms is over.

The European Implementation Framework: From Nagoya to EUMS

The European Union has transposed its obligations under the Nagoya Protocol through a dual legislative structure: Regulation (EU) No 511/2014 (the “EU Regulation”) and the subsequent Implementing Regulation (EU) 2018/1866. This framework applies to all entities under the jurisdiction of an EU Member State. It is crucial to recognize that this is not a harmonized system in the sense that all administrative procedures are identical across the bloc; rather, it sets a mandatory floor for compliance, while Member States retain significant discretion in how they organize their national oversight.

The EU Regulation (511/2014): The Core Obligations

The EU Regulation establishes the due diligence system. It is the central pillar of the European approach. The regulation mandates that users (any natural or legal person utilizing genetic resources or associated traditional knowledge) must exercise due diligence to ensure that the genetic resources they access have been accessed in accordance with the Access and Benefit-Sharing (ABS) requirements of the country providing them.

This obligation is not abstract. It manifests in three distinct phases:

1. Due Diligence at Access: Before utilizing the resource, the user must seek and obtain the Prior Informed Consent (PIC) of the provider country and negotiate Mutually Agreed Terms (MAT).
2. Due Diligence in the Supply Chain: Users must exercise due diligence when transferring genetic resources to other users, ensuring that the information regarding compliance is passed along.
3. Due Diligence in Commercialization: When commercializing a product resulting from the utilization of genetic resources, users must monitor the implementation of the benefit-sharing agreements.

The regulation also introduces the concept of “internationally recognized user compliance measures.” These are measures taken by an international organization or third country that are deemed equivalent to the EU’s due diligence system. If such measures are recognized, users complying with them are deemed to comply with the EU Regulation. This is a critical provision for global companies operating in jurisdictions with mature ABS frameworks.

National Competent Authorities and Checkpoints

While the EU Regulation sets the rules, the implementation is largely handled at the national level. Each Member State designates a **Competent Authority** responsible for administering the ABS framework within its territory. This authority is the primary point of contact for users seeking information on compliance and is responsible for checks and monitoring.

Furthermore, Member States must designate **Checkpoints**. These are specific points in the product development or supply chain process where compliance information is collected. The most significant checkpoint for the biotech sector is the patent application process. When a user applies for a patent in an EU Member State for an invention based on genetic resources, the checkpoint (usually the patent office) requires a declaration confirming that the requirements of the Nagoya Protocol have been met. This links the protection of intellectual property directly to regulatory compliance with ABS rules.

Operationalizing ABS in Biotech R&D

For a biotech company or research institution, the practical application of the Nagoya Protocol affects the entire R&D lifecycle. It is not a hurdle to be cleared only at the end of the process; it is a foundational element of project design.

Early-Stage Discovery and Material Transfer Agreements

In the initial phases of research, scientists often rely on samples obtained from botanical gardens, microbial culture collections, or other research institutions. Under the Nagoya framework, the provenance of these materials is critical. A research institution in Europe cannot simply accept a sample from a partner in a provider country without verifying the existence of a PIC and MAT. This requires updating Material Transfer Agreements (MTAs) to include specific ABS clauses.

A standard MTA must now explicitly state:

• The source of the material and the country of origin.
• Confirmation that PIC was obtained.
• Reference to the MAT conditions, including any restrictions on use or benefit-sharing obligations.
• Information on any potential derivatives or components that might be utilized.

Without these elements, the receiving institution in the EU risks acquiring “tainted” material, which can trigger the due diligence obligations immediately and potentially expose the institution to legal and reputational risk.

Screening and Verification: The ABS Clearing-House

The ABS Clearing-House is the central online platform established by the Nagoya Protocol to facilitate the sharing of information. It is the primary tool for due diligence. Users are expected to check the Clearing-House for information on the ABS measures of the provider country.

However, the reality is that the Clearing-House is not yet fully populated with detailed information for all provider countries. This creates a practical challenge. If the Clearing-House lacks specific information, the user must obtain the necessary information directly from the provider country’s Competent National Authority. This requires proactive engagement, often involving local legal counsel or specialized consultants in the provider country. It is a shift from a purely scientific collaboration to a cross-border legal negotiation.

Commercialization and Benefit-Sharing

The ultimate goal of the Nagoya Protocol is the fair and equitable sharing of benefits. This is where the “Benefit-Sharing” component of ABS comes into play. Benefits can be monetary (e.g., royalties, upfront payments, license fees) or non-monetary (e.g., technology transfer, capacity building, joint publications).

For biotech companies, the negotiation of MAT is a critical business activity. It is essential to understand that benefit-sharing obligations are not necessarily triggered by the mere existence of a patent. They are typically triggered by the commercialization of a product that incorporates or is derived from the genetic resource. The MAT should clearly define the triggers for benefit-sharing payments. For example, a company might agree to pay a percentage of net sales of a final product that contains a specific active ingredient derived from the resource. However, if the research leads to a platform technology that does not directly incorporate the resource, the benefit-sharing obligations may be limited to non-monetary benefits or may not apply at all, depending on the specific wording of the MAT.

It is a common misconception that benefit-sharing is a tax or a levy. It is a contractual obligation derived from the agreement between the user and the provider country.

Companies must integrate these obligations into their financial models and intellectual property strategies. Failure to do so can lead to disputes with provider countries, potential invalidation of patents, or loss of market access in certain jurisdictions.

Comparative Analysis: National Divergences in the EU

While the EU Regulation provides a harmonized framework, the practical experience of a biotech firm can differ significantly depending on its location within the Union. Member States have transposed the regulation and established their administrative structures in different ways.

Germany: The Centralized Approach

Germany has established a relatively centralized system. The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) is the Competent Authority, and the German Patent and Trade Mark Office (DPMA) serves as a key checkpoint. The German approach emphasizes rigorous documentation and strict adherence to the due diligence system. For German biotech firms, the focus is on maintaining impeccable records of material provenance. The DPMA’s practice is to require the ABS declaration at the patent application stage, and non-compliance can halt the patenting process.

France: Integration with Research Funding

France has integrated ABS compliance into its national research funding ecosystem. The National Research Agency (ANR) requires ABS compliance as a condition for funding. This means that French public research organizations and biotech startups seeking public funding must demonstrate their ABS compliance plans from the outset of a project. This creates a strong incentive for early-stage compliance but also adds a layer of administrative burden for grant applicants.

The Netherlands: A Focus on Enforcement

The Netherlands has taken a pragmatic approach, focusing on enforcement and checks. The Dutch Competent Authority (Ministry of Agriculture, Nature and Food Quality) has been active in conducting checks on users. For Dutch companies, this means that having a compliance system on paper is not enough; it must be operational and effective. The risk of being subject to a compliance check is real, and the consequences of non-compliance can include administrative fines.

These examples illustrate that a pan-European biotech company must navigate a patchwork of national administrative practices. A compliance strategy that works in one Member State may not be sufficient in another, particularly regarding the interaction with national funding bodies and patent offices.

Practical Due Diligence Checklist for Research Partnerships

To navigate this complex landscape, biotech entities must implement a robust due diligence process when entering into research partnerships or sourcing materials. The following checklist provides a structured approach to assessing and mitigating ABS-related risks.

Phase 1: Pre-Engagement Assessment

Before signing any agreement or accepting any material, conduct a thorough assessment of the proposed collaboration.

• Identify the Provider Country: Determine the country of origin of the genetic resource. This is not always the country where the material is currently located (e.g., a seed bank in Europe may hold material originating from a specific provider country). The obligations of the provider country apply.
• Check the ABS Clearing-House: Visit the ABS Clearing-House to determine if the provider country has established ABS measures. Look for the Competent National Authority (CNA) contact information and any existing MAT templates or standard requirements.
• Assess the Provider’s Legal Capacity: Is the entity offering the material (e.g., a university, a local community group, a commercial supplier) legally authorized to do so under the national legislation of the provider country? Verify their status as a legitimate “provider.”
• Determine the Scope of Intended Use: Clearly define the intended use of the genetic resource in the research project. Be aware that any deviation from the agreed scope may constitute a breach of the MAT. This includes potential future commercial applications.

Phase 2: Negotiation and Agreement

This phase involves the legal and contractual work necessary to secure access and define benefit-sharing.

• Prior Informed Consent (PIC): Ensure that the provider has obtained PIC from the relevant Competent National Authority. Request a copy of the PIC documentation. Do not rely solely on the partner’s verbal assurance.
• Mutually Agreed Terms (MAT): Negotiate a MAT that is compliant with the provider country’s legislation. The MAT should be a written agreement and must include:
  • A clear description of the genetic resource.
  • The scope of use (research, development, commercialization).
  • Conditions for third-party transfer.
  • Benefit-sharing arrangements (monetary and non-monetary).
  • Terms for the use of derivatives and associated traditional knowledge.
  • Dispute resolution mechanisms.
• Intellectual Property Rights (IPR) Strategy: Discuss IPR upfront. The MAT should address how any resulting patents or other IPR will be managed and how benefit-sharing will be linked to commercialization. Ensure that the MAT does not inadvertently restrict your ability to patent an invention in Europe, while respecting the provider’s rights.
• Compliance with EU Law: The MAT must be compatible with the EU’s due diligence requirements. This means it must facilitate the passing on of information through the supply chain and enable monitoring of benefit-sharing implementation.

Phase 3: Ongoing Compliance and Monitoring

ABS compliance does not end once the material is in the lab. It is a continuous obligation.

• Documentation and Record-Keeping: Maintain a comprehensive ABS file for each genetic resource. This file should contain all relevant documentation: PIC, MAT, proof of origin, transfer documents, and records of benefit-sharing payments or actions. This is the first thing a Competent Authority will ask for during a check.
• Information Transfer: When transferring the genetic resource or derivatives to a third party (e.g., a contract research organization, a manufacturing partner), ensure that the recipient is made aware of the ABS conditions. This can be achieved through updated MTAs that reference the original MAT.
• Commercialization Monitoring: If the project moves towards commercialization, establish a mechanism to track sales or other commercial triggers defined in the MAT. This may require integration with the company’s ERP or financial systems.
• Patent Checkpoint Compliance: When preparing a patent application for an invention based on the genetic resource, ensure that the required ABS declaration is completed accurately. This declaration is a legal statement and must be backed by the documentation in the ABS file.

Emerging Challenges and Future Outlook

The ABS landscape is not static. Several developments are shaping the future of how the Nagoya Protocol will be applied in the European biotech sector.

Digital Sequence Information (DSI)

Perhaps the most significant and contentious issue is the treatment of **Digital Sequence Information (DSI)**. The Nagoya Protocol applies to “genetic resources,” but it does not explicitly mention genetic sequence data stored in digital databases. Many argue that DSI is a derivative of the genetic resource and should be subject to ABS obligations. Others argue that treating sequence data as a physical resource would stifle open science and bioinformatics.

Provider countries, particularly those in the Global South, are increasingly asserting that they have sovereign rights over DSI derived from their genetic resources. This is leading to a complex international negotiation, often referred to as the “DSI process” under the CBD. For EU biotech companies, this is a critical area to watch. If DSI becomes subject to ABS rules, it could fundamentally change how genomic data is sourced, shared, and used in drug discovery and synthetic biology. Companies relying on public databases like GenBank or ENA may need to reassess their compliance strategies if those databases begin to incorporate ABS management for sequences.

The Role of the EU Regulation on Deforestation-free Products

While not directly an ABS regulation, the new EU Regulation on deforestation-free products (EUDR) highlights a broader trend: the increasing demand for supply chain due diligence. The EUDR requires companies placing cattle, cocoa, coffee, oil palm, soya, and wood on the EU market to prove that these commodities have not led to deforestation. This requires geolocation tracking and verification of legality. This approach of “importer responsibility” is conceptually similar to the ABS due diligence system. We can expect to see increased convergence in due diligence requirements across different EU regulatory domains. Biotech companies using these commodities as feedstocks for fermentation or other processes will need to navigate both ABS and EUDR obligations simultaneously.

Enforcement and Cross-Border Cooperation

As the ABS framework matures, enforcement is expected to increase. The EU Regulation allows for administrative penalties for non-compliance. More importantly, provider countries are becoming more sophisticated in monitoring the use of their resources. We are likely to see more cases where provider countries challenge the legality of patents or commercial products in foreign courts based on ABS non-compliance. The EU’s commitment to “compliance measures” and international cooperation aims to prevent this, but the risk remains. Companies must view ABS not just as a regulatory checkbox, but as a core element of their international relations and legal risk management strategy.

The integration of the Nagoya Protocol into the daily operations of the European biotech sector represents a maturation of the global bio-economy. It moves the sector from a “wild west” approach to biological resources to a structured, rights-based system. For the prepared and diligent organization, this system provides legal certainty and a framework for equitable partnerships. For the unprepared, it presents significant legal, financial, and reputational risks. The key to success lies in understanding that ABS is not an isolated environmental issue but an integral part of the legal and commercial fabric of modern biotechnology.