Multilateral benefit sharing mechanism for digital sequence information
Since December 2022, and COP decision 15/9, members of the Convention on Biological Diversity (the CBD) have been negotiating a multilateral mechanism for the fair and equitable sharing of benefits arising from the use of Digital Sequence Information (DSI) on genetic resources.
This culminated in the adoption of modalities for such a multilateral mechanism, including the creation of a global fund, at the sixteenth meeting of the Conference of the Parties to the Convention on Biological Diversity on 1st November 2024 in Cali, Colombia (COP decision 16/2, referred in this article as “the COP16 Decision”).
This article summarises the key elements to the decision and raises concerns over its potential scope and impact on innovation and tech transfer.
Historical background
At the Rio Earth Summit in 1992, 150 government leaders signed the Convention on Biological Diversity, a multilateral treaty with three main goals: (i) the conservation of biological diversity; (ii) the sustainable use of the components of biological diversity; and (iii) the fair and equitable sharing of the benefits arising out of the utilisation of genetic resources. Signatories to the CBD have increased over time to 196 participant countries, with the US being the only UN member not to sign the agreement (or related supplementary agreements).
With a view to implementing the third objective of the CBD, the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity (the Nagoya Protocol) was adopted as a supplementary agreement to the CBD on 29th October 2010 and has been ratified by 142 countries.
The Nagoya Protocol intended to create greater legal certainty for both users and providers of genetic resources (and related traditional knowledge) by establishing more predictable conditions for access to genetic resources and by helping to ensure monetary and non-monetary benefit-sharing when genetic resources leave the provider country. It includes access measures and compliance obligations for users seeking to conduct R&D on non-human biological material.
What is DSI?
DSI in not defined in the CBD or in any decision stemming from the CBD, including the COP16 Decision. DNA and RNA are expected to be included in the definition, and it is expected that non-naturally occurring sequences would not be covered. What is less clear is whether other sequences (e.g., protein sequence) are included and whether annotations made subsequent to analysis of those sequences are also to be included. There is also debate over what might constitute non-naturally occurring sequences.
Why now?
The first decision relating to DSI dates back to the second COP-MOP meeting in 2016. That decision acknowledged that rapid advances on the use of DSI could compromise the objective of the Nagoya Protocol. This stemmed from a concern that users were circumventing or avoiding compliance under the Nagoya Protocol by using DSI, rather than the biological material itself. By the time of COP15 in December 2022, it was agreed to establish a multilateral solution for a benefit sharing mechanism for the use of DSI.
What monetary sharing options were considered at COP16?
Four monetary sharing options were considered (each with multiple potential modalities). All options included a levy on so-called users of DSI, payable to a global fund by:
• Option A – any users that have benefitted from DSI in their product development.
• Option B – industry sectors deemed highly reliant on directly or indirectly benefitting from DSI.
• Option C – retailers of products (and possibly services) developed or created using DSI.
• Option D – any users that actively use DSI.
What was decided at COP16?
The COP16 Decision opted for Option B. This covers DSI that is (i) made publicly available, (ii) is not already subject to a bilateral benefit sharing agreement (unless those terms allow the DSI to be made free available), and (iii) for which benefit sharing is not already provided for in another international treaty. The decision also provides an indicative list of those sectors that are deemed to benefit directly or indirectly from the use of DSI. This includes the biopharmaceutical industry, as well as providers of services, supplies, and reagents related to the sequencing and use of DSI.
The global fund, termed the ‘Cali Fund’, was launched on 25th February 2025 seeking to mobilise corporate contributions from companies that benefit directly or indirectly from DSI with a view to using contributions to support indigenous and local communities and biodiversity conservation. So far, no one has made a contribution.
By using the words “should contribute”, rather than “are encouraged to contribute”, the COP16 Decision fails to clearly reflect that monetary contributions are to be voluntary. Indicative monetary contribution rates of 1% of profits or 0.1% of revenue are provided for larger entities – the trigger being those entities exceeding two out of three thresholds on their balance sheets averaged over the preceding three years (namely, total assets of more than $20 million, sales of more than $50 million and profit of more than $5 million). Further studies are underway to determine the relevant thresholds for small, medium, and large entities and contribution rates will be confirmed at COP17 in 2026. Those entities that do no benefit from DSI (directly or indirectly) or do not meet the relevant thresholds will be exempt. In addition, entities operating public databases and conducting public research, as well as academic institutions, are not expected to make monetary contributions to the Cali Fund.
The decision also references complementary non-monetary benefit-sharing by users of DSI (e.g., capacity building for access and storage of DSI, and to support needs of indigenous peoples and local communities).
What are some of the concerns for the biopharmaceutical industry?
Whilst users of biological materials overwhelmingly support the idea of protecting biodiversity and benefit-sharing, compliance with national laws around the world seeking to implement the Nagoya Protocol is disproportionately cumbersome, with confusing, inconsistent, and uncertain regulatory frameworks. International efforts to broaden the scope of benefit-sharing principles to DSI has only served to increase uncertainty over compliance.
Fundamental aspects of the COP16 Decision are still poorly understood due to lack of clear definitions: What exactly is included in the definition of DSI? Does it exclude human DNA? Does “should contribute” amount to guidance on the expected monetary contribution rate, rather than a mandatory requirement? Will companies be issued with a compliance certificate if they make a voluntary monetary contribution, even if they do not provide an amount equivalent to the indicative rate? Will entities with business locations and subsidiaries in multiple different jurisdictions be expected to make a contribution multiple times? Arguably, all industries benefit indirectly from the use of DSI, so why target the biopharmaceutical industry when their R&D and products have a fundamental impact on improving health outcomes and quality of life and when industries more directly linked with biodiversity loss are exempt?
The uncertainty over how the COP16 Decision will be implemented and the focus on the biopharmaceutical industry to provide the bulk of the contributions to the Cali Fund raise concerns over future investment in R&D in the sector. If R&D investment is impacted, this would hinder innovation and be contrary to a fair and equitable benefit-sharing solution and, thus, contrary to a core objective of the CBD.
About the author
Dr Beatriz San Martin is intellectual property partner at Arnold & Porter. She has extensive experience in intellectual property matters with a particular focus on innovative and emerging technologies, particularly within the life sciences sector, as well as technology enabled solutions. She is sought after for her strategic input on the interplay and enforcement of intellectual property rights and trade secrets, her niche SPC experience, and her specialist knowledge of international treaties relating to genomic resources, such as the Nagoya Protocol. Her disputes practice is varied with significant and high-profile experience handling cases before the UK Courts and the Court of Justice of the European Union, coordinating cross-border European litigation and assisting in multinational arbitrations. She robustly manages and resolves disputes relating to the full spectrum of intellectual property rights, assists clients on challenging technical issues and provides strategic IP advice. Prior to pursuing a legal career, Dr San Martin was a scientist with a degree, PhD and postdoc specialising in genetics, and cellular and molecular biology. This interest and passion in science and technology has broadened during the course of her legal career through her varied work with clients and involvement in trade associations. Dr San Martin is the current secretary of the UK IPLA and highly regarded in the IP community. She is recognised by numerous ranking bodies and organisations, including Chambers and The Legal 500.
