Patenting a Thousand year old product

As globalization continues to bring all the remote corners of this world closer together, there will be more “new” discoveries of ancient products. This was the case with the article in the textbook titled “W.R. Grace & Co. and the Neemix Patent”. At the core of this article, a product that has been used for centuries, neem, by Indians, Africans and Middle Eastern cultures was patented by a U.S. company in 1992. Without getting too much into the specifics, neem is used for various purposes; ranging from preventing tooth and gum disease to a potential contraceptive as a spermicide. However, it is predominately used as a natural, effective pesticide by Indian farmers for generations. Unfortunately, the problem was that the active ingredient was not stable enough to use in a product formulation. This was not a concern for Indian farmers as they prepared the pesticide as needed to treat their crops.

What W.R.Grace was able to do was to stabilize neem so it could be sold as a commercial product. According to the US Patent laws, an invention must meet 3 conditions in order to receive protection: 1) it has to be novel to a “prior art” (something different as defined by someone possessing ordinary skills in the art at time of invention), 2) invention cannot have been known or used in the US, or patented or described in a printed publication in the US or elsewhere prior to its invention; nor can the invention have been descried in print in the US or elsewhere more than a year prior to the application, 3) cannot patent a naturally occurring substance unless it has been modified in some way.

In 1995, the Foundation on Economic Trends (FET) claimed that the patent should not have been granted for many reasons; primarily, it was not novel, numerous articles were written about neem’s pesticide benefits in India (as early as 1928) and that any “modification” made by Grace was trivial. Furthermore, the reason why Indian farmers or entrepreneurs could not file patents in India was because of the “pragmatic and legal constraints against it”. Additionally, under the agreements of the World Trade Organization, India, as a member nation, would have to move to align its patent requirements with the West. Therefore, these farmers would now have to pay Grace for using something they’ve been using for generations.

Grace responded back by stating that FET’s accusations were incorrect and without merit. They acknowledged that their neem stabilization modification was “nothing Buck Rogers”, but it spent $10 MM on R&D and came up with a solution. Also, they said the patent would not prevent or limit Indian farmers from using it and that Grace did business with many Indian firms (harvesting, processing, shipping, etc) to produce this product.

What I found really interesting about this case is that this occurs often; especially when you think about all the “new” discoveries that are made from the Amazon Rain Forrest or from ancient Chinese remedies. How can companies that invest time and money in bringing these “hidden” treasures to the masses be compensated for their efforts? How do you give credit (specifically, royalties) to a Nation or a group of indigenous, remote people? How can two countries with different patent laws co-exist in ethical business transactions without claims of “copy-right violation (i.e.- Ironman on DVD)” or “piracy of their heritage”?