08-09-2020 | 09:31

Russian breeding companies that receive germplasm transferred by Bayer as part of the FAS Russia’s ruling based on the result of the Bayer&Monsanto transaction will be fully exempt from paying royalties on the sale of varieties and hybrids bred using the transferred genetic material, except in cases where it is used directly as a hybrid parent

As a result of negotiations among Bayer, the FAS Russia and the HSE Technology Transfer Center (TCTC), it was reached an agreement to further simplify the terms of technology transfer in the breeding sector. Bayer has decided to refuse to receive royalties based on the results of commercialization of breeding achievements that will be bred by Russian experts who receive Bayer germplasm, except for cases when it is used directly as a hybrid parent. This decision applies to all Russian germplasm recipients who have been selected or will be selected by TTC as recipients and who will use the genetic material transferred by Bayer in the breeding process to create new varieties. Recipients will be exempt from paying royalties for using Bayer germplasm to create new varieties of wheat and soy. Recipients will also be able to use the genetic material for free if it is involved in the breeding process to create a parent line for corn and rapeseed. Royalties will not be charged regardless of the specific weight of germplasm in the bred varieties and hybrids. There is only one way to pay royalties: in hybrid maize and rapeseed crops, if Bayer's genetic material is used directly as a hybrid "parent" for a new maize-rapeseed hybrid.

At the same time, all the benefits provided by the FAS Russia’s regulation for the payment of royalties (a 25% discount from the amount of royalties applied in market conditions) are preserved in case of using the transferred germplasm as the parent line in the production of a hybrid.

In accordance with this decision, the license agreements that were previously concluded among Bayer and selected Russian breeding companies will be amended accordingly. Three recipients have already signed license agreements: “Agroplazma”, “Selection” and “Astra”. The Astra has already received the appropriate import permits and the delivery of germplasm will be carried out in the near future.

“The reached agreements will significantly simplify the process of transferring germplasm to Russian breeders and remove all risks associated with the identification of transmitted germplasm in newly created varieties and hybrids by recipients of germplasm. Also, in my opinion, new conditions may open up an opportunity to participate in the technological transfer of state breeding centers. Initially, we also considered royalties as an additional incentive for Bayer to work more effectively with recipients, but the position of Russian breeders is key for us. In conditions when the need to pay royalties becomes a significant reason for making a decision to participate in the transfer, I consider Bayer's concession to refuse royalties to be the right decision,” Pavel Zaborshchikov, Deputy Head of the FAS Russia said.

"The reached decision is the result of a consistent and constructive dialogue with the FAS Russia and all participants of the technology transfer. The decision not to charge a fee for the use of Bayer's intellectual property is our contribution to stimulate the achievement of new heights in Russian breeding and the realization of goal of effective technology transfer. The proposed approach is special for international practice in the field of transfer of intellectual property rights and assumes more favorable conditions for technology recipients. Technology transfer recipient companies will be able to conduct their breeding activities based on simplified requirements from Bayer, including the payment of royalties, since the agreement it is expected to be paid only when using Bayer germplasm as a hybrid parent for hybrid crops: corn and rapeseed, " - Natalia Smolyarenko, Head of the Crop Science division, Bayer in the Russian Federation and the CIS countries.

Alexey Ivanov, Director of the HSE-Skolkovo Institute for Law and Development, research Director of the TTC, explains: “From the very beginning the licensing conditions for the transfer of germplasm were very favorable for recipients: the percentage of royalties was set at a level well below the market one, and the payment obligations came only after the new Russian variety was put on the market. However, in the course of communication with our breeders, we encountered a certain cultural barrier. World experience with intellectual property in breeding has not received such distribution, as in other industries, which is confirmed by the data prepared by the TTC and the HSE-Skolkovo Institute for Law and Development scientific report "the Selection 2.0". The Institute of intellectual property rights does not work well in the breeding industry. We were looking for compromise solutions for structuring licensing relationships between Bayer and recipients that would be consistent with international practices and would be comfortable for Russian breeders. But at the current level of development of the Russian breeding market, it became clear that only a radical solution can be found and worked. We welcome this unprecedented step by Bayer, which is clearly in the interests of Russian breeders in the current situation."

The transfer of germplasm in the first direction of Bayer techtransfer will take place within the next few months. The second direction of the transfer includes the transfer of molecular means of selection of crops such as corn, soy, rapeseed, wheat, tomato, cucumber and cabbage with up-to-date protocols of use. TTC has already selected the applicants and they are awaiting approval by the Supervisory Board. Currently, applications are being accepted in the third direction of techtransfer – to obtain a digital database of historical agronomic data.

It should be reminded that the FAS Russia has approved a deal for the purchase of Monsanto by Bayer, issuing an order containing Bayer's obligations aimed at developing competition in the agricultural technology sector. According to the instructions of the FAS Russia, in particular, in the field of breeding, Bayer is obliged to ensure the transfer of molecular means of selection and germplasm necessary for the production of highly productive new varieties and hybrids of agricultural crops that have the specified properties; provide training to recipients in applied breeding technologies and finance creation of the newest research and training center for plant biotechnologies in Russia. In accordance with the instructions of the FAS Russia, a HSE Technology Transfer Center was established whose function is also to monitor the implementation of the order of the FAS Russia.

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