Some time back we posted an item on the Plumpy’nut case. This is a fascinating case for our community; it’s at the intersection of a debate involving patent rights, development economics and the public interest. It is a real roller-coaster of a case and, if nothing else, serves as a stark warning to those who aren’t paying close attention to their IP strategy.
As yet, we still don’t have all the pieces of the puzzle, –but we discussed the case during our recent NPI meeting in Washington and were also given a presentation by the law firm who are representing the NGOs in the Mama Cares v. Nutriset case, (Fulbright & Jaworski).
Based on the information we have seen and heard some of the issues involved are:
Patent rights
The plaintiff, Mama Cares[1], says that the claims awarded in the Nutriset patent (US patent 6346284) are overly broad and effectively prevent the manufacture and distribution of any peanut-based RUTF,(ready-to-use therapeutic food).
A key element in the case, however, rests on a single element in the claim relating to the osmolarity[2] index. Mama Cares claims that Plumpy’nut product , as produced by Nutriset licensees, itself does not meet this requirement (and neither does their own self-produced products) and therefore this constitutes a case of “false marking” of the Plumpy’nut product. The Fulbright presentation indicates that Mama Cares is seeking:
“Court determination of non-infringement (osmolarity), alternative determination of patent invalidity (inadequate patent disclosure, prior art) and false marking”.
What is of particular interest is that Mama Cares – before investing in production – is effectively seeking court confirmation that if it does produce its own version of the RUTF it would not be infringing the claims of the Nutriset patent (i.e. there would be no basis for litigation against them for infringement) . The case schedule is estimated to run into 2013 (including possible appeals scenarios).
Supply and demand
There are reports that Nutriset’s licensees are not able to meet demand. (There is debate on this, depending on what constitutes demand[3][4]) Back in 2007 Médecins Sans Frontières (MSF) said:
“If today’s UN recommendation of treating severe acute malnutrition with therapeutic RUF is to be realised, there is a need for 258,000 tons of product. Production capacity in 2007 is estimated to be less than 19,000 tons, with orders placed projected to be for only 8,500 tons. Therefore only 3% of severely malnourished children are likely to have access to treatment this year. This enormous production gap does not even take into consideration the requirements for a potential extension of RUF use for moderately malnourished children or as a supplement to populations of vulnerable children”
Can local capacity in Africa meet any increases in demand? This is important because it has been suggested spare processing capacity (and raw materials) in the USA might be available at a reduced rate or “pro bono” to produce enough material to meet demand in developing countries… For example, the Peanut Association website, communicates their commitment to the development of peanut based RUTF and they have their own “Peanut Butter for the Hungry” initiative.
One blog (Celsias) quoted Nutriset on this subject:
“The problem with U.S. production, says Nutriset, is that funding for humanitarian food and nutritional supplement suppliers requires that almost all the aid money be spent on American-grown surplus crops. This means that third world peanut farmers would get short shrift in a global marketplace, further increasing poverty in those countries at highest risk of childhood malnutrition”
The African peanut import/export figures we looked at don’t enable any hard and fast verification of supply of peanuts that could be used in the manufacture. According FAOSTAT the top African exporters of shelled groundnuts for 2007 are Malawi (10th largest exporter in the world), Gambia (11th), South Africa (14th), Tanzania (17th), Egypt (18th), Mozambique (19th) and Mali (20th) whilst the top 3 African importers of shelled groundnuts for 2007 are South Africa, Gambia and Nigeria. The source of the information was again FAOSTAT.
Of course there are other factors to consider when assessing potential supply of product, e.g. disease that can make it difficult to understand what the availability of good raw materials might be.
At first glance it would seem that local capacity to provide the key raw material is sizeable. In fact, interestingly, looking at stats from “World Geography of the Peanut” in terms of peanut production area (1000ha) the top 5 in 2001 were: India, China, Nigeria, Sudan and Senegal.
Capacity building v. trade policy
The Nutriset strategy to license manufacturing to African owned businesses is a desirable goal, as it builds local capacity, encourages the growth of African-owned businesses and supports the idea of “Africans feeding Africa”. But we do not know enough about the specifics of these licensing agreements to comment further. An unverified release from Hilina Foods, Nutriset’s Ethiopian licensee, states that:
“After rigorous audit of the new out lay and set up a…memorandum was signed by both parties in September 2007 to make Hilina Food Processing Center a franchisee of Nutriset Company with a holding of 51% and 49% by Hilina Food Processing Center and Nutriset respectively.”
We hear repeatedly that US policy can dictate that US companies provide supplies (e.g., RUTF) to fill development grants and humanitarian aid. A bit of digging around failed to come up with anything concrete to support this position. Comments in a US Federal Government Accounting Office (GAO) study “recommends” food aid be sourced locally/regionally. And, a Greenpeace report published in 2002 during the Bush administration says:
“While the Bush Administration claims that its offer of food aid to Africa is motivated by altruism, the USAID website is a little more candid. It states: “The principal beneficiary of America’s foreign assistance programs has always been the United States. Close to 80% of the USAID contracts and grants go directly to American firms. Foreign assistance programs have helped create major markets for agricultural goods, created new markets for American industrial exports and meant hundreds of thousands of jobs for Americans.”
Good v. evil
Ok, so it’s not quite as dramatic as “good v. evil” but there is certainly an element of emotional play here. From what we can see, a gap certainly exists between the philosophies held by the two sides of the debate -different ways of “doing development”, if you like. Should development take the form of capacity building along the entire supply chain, so eventually the regions that require the product become the ones that can supply it, –whilst increasing the capacity of the region overall? Restrictive IPRs are a “normal” part of business models to bring new products to market; however, in cases where a product can provide humanitarian relief, is it permissible to enforce such IPRs if the supply doesn’t meet demand? Add to this the whispers of protectionism for US peanut farmers and industry and you have a complex mix…
Overview and opinion
During the NPI week in Washington we spoke to many IP-in-development professionals about this case. The main questions people had were regarding the licensing strategy of Nutriset. We have few details on this but it seems this area is where the most room for maneuver exists. The Plumpy Nut product is one of those rare cases where one could probably use the term “wonder product”, and both the US NGOs and Nutriset claim to share a common mission. Strategic licensing terms could accommodate the goals of both sides IF everyone could go back to the negotiating table.
The suggestion that many of the blogs and news items make — that this case is about humanitarian need v. the dictates of the IPR — is, in our opinion, simplistic. It is too loaded, and in any case who would make such a decision and how would it actually be implemented? The current patent litigation could take three years to resolve, and circumstances suggest that the matter needs to be settled immediately. So, while the litigation could continue, surely this is a case where some lateral thinking is in order. A high visibility public figure (e.g. Bill Clinton) might take on the role of unofficial mediator and approach the French government, (a co-owner of the patent via IRD), to seek an immediate resolution. Based on its inability to meet demand, Nutriset might agree that, pending resolution of the patent dispute, it would not take any action against infringers, or issue humanitarian use licenses outside of their target areas? However, Nutriset has already indicated that cheap product from the USA would destroy its African licensee business model. What should be done next?
We have said this many times before – IP is just a tool, and a tool can be used or misused. We don’t believe the answer in this, or similar cases is to criticise the fact that IP protection exists for a product that has humanitarian use applications. We have to be more creative than that. IPRs can fulfill humanitarian goals if awarded according to the law (e.g., in the US novel and non-obvious and patentable subject matter) and if licensed thoughtfully.
A final comment – We think this is a great example of an IP success. A humanitarian use product has been developed that satisfies a critical need, is supporting the development of African-owned businesses, –but is only reaching a small percentage of those who could benefit. We hope the baby isn’t thrown out with the bath water whilst trying to increase this success and to produce enough for the need!
(Post written by Kay Chapman, Peter Bloch , Francesca Re Manning with input from Karine Malgrand , Guat Hong Teh, Victoria Henson-Apollonio, Fayola Phillip and the NPI)
[1] Visit
http://www.rfcexpress.com/lawsuit.asp?id=52936 for lawsuit details Mama Cares Foundation et al v. Nutriset Societe Anonym France et al
[2] In this context; see presentation from André Briend, one of the inventors, about these qualities of the product http://www.fantaproject.org/ctc/plumpynut2PPT2.pdf
[3] “Demand” can be defined in many ways. See “Copyfight” for some discussion on this http://copyfight.corante.com/archives/2010/04/16/nutriset_responds.php
[4] Some links to arguments for and against this claim: http://www.celsias.com/article/can-you-patent-life-saving-nutrition/, http://globalhealthreport.blogspot.com/2008/05/demand-for-plumpynut-outstrips-supply.html, http://aidwatchers.com/2010/04/the-plumpy%E2%80%99nut-dustup/
the CAS-IP blog 