Tue 3 May 2016
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The United Kingdom will hold a referendum on continued membership of the European Union on June 23rd. All registered voters in the UK will get a vote and the outcome will be decided by simple majority. (Are you registered to vote? The deadline for registration is June 7th).
There are many arguments being put forward for leaving or remaining and it is for individual voters to make their own decision. However, we feel it is important to outline what we foresee as the likely implications of Brexit for plant breeders, both British and from other countries, and for growers, retailers, landscapers and gardeners. We should emphasize that it is difficult to be certain about what might happen after a possible Brexit. The Brexit campaign has not been able to say for definite what the policies of a post-Brexit government might be. Further, it is not clear what the negotiating position of the EU would be in such circumstances. However, whilst the issues laid out below are slightly conjectural, we believe that the situations that we propose are plausible and likely.
In the first instance, it is important to realise that very few applications for Plant Variety Rights (PVR) now use the national PVR legislation of Member States. To prove this point, there has not been an application for a UK Plant Variety Right for an ornamental plant (except a few roses) since before 2012, and even then there were only a few each year compared to many thousands of applications for EU Plant Variety Rights.
Instead, breeders use the European Union Plant Variety Right administered by the Community Plant Variety Office (CPVO), which is an agency of the European Union. This provides a single Plant Variety Right that covers all 28 member nations of the EU. The main advantages of this are:
- one set of forms/administration instead of separate forms/administration for each Member State
- one set of fees
- one DUS technical examination
- uniformly legally enforceable across all 28 member nations – including any new nations that join in future (e.g. existing rights were automatically extended to cover Croatia when that nation joined the EU in 2013, without any additional cost to rights holders)
It is important to note that, whilst applications for EU Plant Variety Rights from plant breeders outside the EU are welcomed, they must be placed through an agent domiciled within the territory of the European Union. However, the geographical scope in terms of enforceability of the EU PVR is limited to the territory of the Member States. Ever since EU PVRs were introduced in the 1990s, their scope has never been extended to any nation that was not a member of the EU. It is, therefore, reasonable to assume that if the United Kingdom were to leave the European Union, EU PVRs would no longer be enforceable in the United Kingdom.
This leaves two problems.
EXISTING EU PVRs
The first problem is: what happens to all of the EU PVRs that have already been granted if the UK leaves the EU? Nearly 42,000 applications had been granted by the end of 2015, although not all of those continue to be valid – nearly 24,000 were in force at the end of 2015.
There are two possibilities. The UK and the EU could negotiate so that EU law regarding this intellectual property right would continue to apply in the UK. This would have drawbacks – not least, that the UK would be subject to a law over which it had no control and no power if the law was changed – there would be no seat at the EU negotiating table if the UK left. Given that the Brexit campaign is opposed to anything which gives the EU power over legislation in the UK, this outcome seems unlikely. Further, the EU PVR law has never been applied to any country outside the EU since it first came into force more than twenty years ago, so it seems unlikely that the EU would agree to such a solution.
Alternatively, the UK could give a special exception to the requirement of UK PVR for novelty for a transitional period (say, one year) so that holders of existing EU PVRs could apply for UK rights, perhaps limited in duration to match the remaining duration of the EU PVR. Naturally, there would be the normal fees involved for an application. The current UK fees levied by the UK Plant Variety Rights Office (PVRO) are £741 admin fee for the application itself, plus a fee for taking over a DUS examination report from another agency (in this case, the CPVO) which is the Sterling equivalent of the other agency’s fee. The CPVO charges EUR 20 for a certified copy of a report of no more than ten pages (which would be enough for most reports), which equates to £15.75 at today’s exchange rate. This means that every protected variety that the breeder wished to continue to protect in the UK would cost nearly £760 to protect – fees over and above those that were anticipated and in addition to the normal CPVO fees required for continuing protection in the rest of the EU. For varieties with only a few years left to run of their protection, this simply would not be worth doing – the breeder would lose the opportunity to derive an income from that variety in the UK for the remainder of the protection period. The PVRO works on a “user pays” basis and would not likely to be subsidized by general taxation, so any reduction to these fees seems unlikely.
This idea would work effectively (if expensively) for varieties where the application process for EU PVR is complete. For varieties where the application process has begun, but DUS examination has either not commenced or not completed and no DUS examination report is available, then it is reasonable to assume that the PVRO will require a DUS examination, as is required by the existing legislation. This attracts a much higher fee and is discussed further in the next section.
The second problem arising from Brexit is: what are the implications for new varieties for which applications for PVR have yet to be made? The UK is a major market for ornamental plants, so it seems likely that breeders would still wish to have effective protection on both sides of the English Channel (and both sides of the north/south border in Ireland).
Again, the UK and EU could negotiate a situation whereby EU PVRs would continue to be valid in the UK. But, as outlined above, this seems extremely unlikely.
So, working on the reasonable assumption that two parallel systems for PVR would exist, one for the UK and one for the remainder of the EU, breeders would be faced with substantially increased costs. A comparison would be as follows, using applicable fees that are in force today:
EU PVR for a Petunia variety:
- application fee: EUR 450
- DUS examination fee: EUR 1570
- TOTAL: EUR 2020 which is equal to £1590 at today’s exchange rate
UK PVR for the same Petunia variety:
- admin fee: £741
- DUS examination fee: £1480
- TOTAL: £2221
Of course, the EU system also has an annual fee which must be paid after the PVR is granted. This is currently EUR 250 per annum, which equals £197.
So, PVR protection for the UK only would cost the same as protection for the whole of the EU, including the EU annual fee for the first three years. The UK PVR offers protection in a market of 64 million people. The EU PVR offers protection in a market of 510 million people (including the UK). You can draw your own conclusions about the cost-effectiveness of these systems.
In order to protect a new variety in both the UK and the remainder of the EU after Brexit, breeders will find that PVR costs would become roughly twice what they are now. (That does not include the extra administration that would be required. Furthermore, UK breeders would need to employ a procedural representative based within the EU to file their applications on their behalf – we currently charge £550 for that service, per application).
IMPLICATIONS FOR BREEDERS, GROWERS, RETAILERS, GARDENERS
You can easily see that Brexit will place a major cost burden on plant breeders. There will be three consequences of that and these consequences will have an impact on plant breeders regardless of nationality as well as on parts of horticulture which seem well removed from direct plant breeding activity.
Firstly, some breeders, especially those working on a small scale, will simply decide that it is no longer worth the effort and may scale back or stop their plant breeding activities. This could cost jobs.
Secondly, all breeders will consider whether it is financially viable to introduce so many new varieties. This will reduce choice and stifle innovation in new plants.
Thirdly, all breeders will look to pass the increased cost on in the form of increased royalties. This will increase costs for all growers and, ultimately, for retailers and gardeners. Plants will be more expensive.
There are many good reasons to vote Remain on June 23rd – the wider economy, social cohesion, freedom of movement of goods and people. There are also good horticultural reasons – a robust and effective plant health system, access to suppliers and markets on the Continent.
But for plant breeders and innovators, we think that the argument is simple. Brexit can only make business more difficult and more expensive.
Therefore, we are recommending to our customers that they VOTE REMAIN ON JUNE 23rd and we ask that all of our customers and friends encourage their contacts to do the same.