Royalty Distribution from Varieties Protected by PVP
The intent of this document is to outline the distribution of the royalty share generated by commercialization of cereal varieties in manner that is consistent with the WSU faculty manual. According to the 2019-20 WSU Faculty Manual “seventy percent (70%) of the net royalty income will be distributed to the CAHNRS Office of Research (COR) for enhancement of seed propagated variety programs in consultation with the breeders that generated the income for this category.” The remaining 30% of the net royalties are equally divided between the WSU OC, the COR and the breeders/inventors. In cases where royalties from varieties are awarded to WSU, but no WSU faculty are designated as breeders/inventors, the 10% of the net royalties that normally go to the breeder/inventor will be added to the royalty stream distributed for enhancement of the variety program, making this income stream 80% of the WSU net royalties. The purpose of royalties, in general, is to enhance and strengthen programs that have created technology and to provide foundational support for intermediate and longer-term goals that increase the competitiveness of our products and ability to leverage support from the university and external sources.
Guidance on breeding with existing WSU protected cultivars
As WSU continues to release and license novel cereal grain varieties that generate royalty income, WSU breeders have the opportunity to breed new varieties using existing WSU varieties as a background breeding material. For background material protected under the Plant Variety Protection Act and as a matter of policy, WSU encourages all its breeders to share in the collaborative plant breeding effort. As such, the following is meant is to formulate a policy wherein an initial WSU variety is used to develop an ‘essentially derived variety” (EDV) by WSU breeders, where said policy is consistent with US plant variety protection laws under the Plant Variety Protection Act and Plant Breeder Rights 1 under UPOV.
An essentially derived variety is any variety that meets these three conditions:
- is predominately derived from an initial variety (UPOV Art. 14(5)(b)(i),
- is clearly distinguishable from the initial variety (UPOV Art. 14(5)(b)(ii)); and
- the initial variety is protected by the PVP law and/or by the Plant Patent Act (35 U.S.C. Ch. 15) as appropriate and the initial variety has term protection remaining
Usually, conditions 1 and 2 are satisfied when a breeder crosses with an initial variety more than once. It is assumed that any resulting variety will be an EDV. A line derived from a single cross with the initial variety and strong selection for its genotype can also result in an EDV variety. In the event there is a dispute as to whether a variety in question is an EDV, and the dispute cannot be resolved with the assistance of the CAHNRS office of Research (COR), the Section §IV G. 5 of the 2017-2018 Faculty Manual, or the Faculty Manual in effect at the time the dispute arises whichever is later, shall govern the dispute resolution.
Agreed upon Invention Disclosure Governs Royalty Distribution
In the event a WSU variety (initial variety) is protected under the Plant Variety Protection Act (or the Plant Patent Act, as appropriate) and the initial variety is used to generate an EDV by another WSU breeder and from a program other than the one that developed the initial variety, WSU expects the breeder of the WSU initial variety and the breeder of the WSU EDV to come to an agreement as to the distribution of royalties for the EDV before the EDV is released. This agreement would be manifested in an Invention Disclosure Form (“IDF”) indicating the initial variety breeder and agreed upon royalty attributed to royalties collected for the EDV. The initial variety breeder shall receive the agreed upon royalty so long as the EDV receives a royalty in accordance with §IV G.8 of the 2017-2018 Washington State University Faculty Manual or the Faculty Manual in effect at the time the royalty distribution occurs, whichever is later.
Absent Agreement on Invention Disclosure
Absent an agreement between the initial variety breeder and EDV breeder on an Invention Disclosure form at the time a given royalty distribution is to occur, any net royalties subject to distribution to the EDV “breeder” group will be distributed as follows:
- 50% will be distributed to the identified initial variety breeder from the “plant breeder(s)/contributor(s)” portion of net income, so long as the initial variety has IP protection remaining at the time of the royalty distribution date. 2
- Remaining 50% will be distributed among the breeders/contributors in accordance with the royalty split identified on the IDF for the EDV. In the absence of a specified split among the individuals named on the IDF, the remaining 50% will be distributed equally among the individuals named on the IDF.
Ex: In accordance with the 2019-2020 Faculty Manual, if there is $10,000 of net income to be distributed for a seed propagated crop, wherein (1) the variety is an EDV, (2) the initial variety has PVP term remaining, and (3) there is no agreement on royalty distribution with the initial variety breeder, the initial variety breeder shall receive $500 (50%) of the $1000 distributed to the EDV plant breeder(s)/contributor(s) portion of the royalties.
Guidance on royalty sharing between breeding programs
Developing cereal varieties is both a long-term and highly collaborative endeavor. When varieties are developed through a collaboration between two or more programs, WSU expects the breeders to come to an agreement as to the distribution of royalties before the variety is released. This agreement would be manifested in an Invention Disclosure Form (“IDF”).
Since the variety development process sometimes transcends the careers of individuals involved, germplasm under development changes hands. When new PIs are selected to assume leadership of an existing plant breeding program that person inherits germplasm at all stages of development. It is ethical and required to recognize the intellectual contributions of the former plant breeder when varieties are ultimately released. At the time a line advances to the release stage it is essential to formally acknowledge the intellectual contributions of all parties contributing to its development. While early generation lines were created by one PI, once this PI leaves a program these lines undergo further evaluation and screening by the successor. Lines that are further along in a program at the time of leadership change represent more investment on the part of the former PI and other former members of the team and less on the part of the successors. During times of program leadership and staff change, acknowledgment of contribution at the time of germplasm release can get very complex and should be discussed openly and frequently among all relevant PIs. This acknowledgment and balance of intellectual contributions does not lend itself entirely to a formulaic approach. However, given the need for clarity in this area, some guidelines can be made based on the intellectual investment of individuals into the germplasm.
Advancement of breeding material derived from crosses proceeds through early generations where genotypes from each plant are segregating, but the extent of segregation decreases each generation. Early generation material may be advanced under intense molecular or phenotypic selection at the individual plant level or advanced in bulk. Once the material becomes relatively homozygous, lines can be established from the seed of individual plants. This is typically performed at the F4 to F6 stage of inbreeding, allowing the resulting families to be assayed as lines instead of individual plants. Selecting between lines is often first conducted in short rows (aka head rows). Once material is planted as head rows from seed derived from individual plants, some selection is generally applied before harvest, thus indicating some level of intellectual investment. Seed from selected head rows are generally sufficiently homogeneous to establish what are considered lines, and these lines may be further evaluated as head rows but are typically used to plant one, or possibly more, plots. Evaluating lines grown in plots provides more reliable field performance data on quantitative traits and sufficient seed for better end-use quality analysis. Analysis of performance in plots also provides sufficient seed for analysis in replicated plots, typically in multiple locations, which marks another step in the evaluation process. Favorite lines that have been assayed for performance in multiple locations for two or more years in a breeding program are ultimately
entered into variety trials that are conducted by independent groups like the WSU Cereal Variety Testing program.
When breeding material is transferred from one breeding program to another, credit for inventorship should reflect the effort of the different programs. Thus, when material from the initiating program is transferred to the receiving program at an early stage of development, like before lines are established, the receiving program that selects a variety from the material should get most of the credit. Lines that have entered variety testing programs before the breeding program is transferred to a successor, clearly have most of the intellectual investment from the former breeder. Once a breeding line has been evaluated in replicated plots, it could be considered to have roughly equal contributions from the original and successor breeding programs if it becomes a released variety. This, however, could be influenced by the amount of effort to create the specific line; for example, if considerable effort was invested to introduce a novel trait.
Royalty uses by the CAHNRS Office of Research
The specific goals for cereal royalties are to provide sustaining support for the WSU cereal breeding programs and allied programs that contribute to cultivar development, and to update and build modern infrastructure and other capacity that will foster the creation of market-competitive varieties. The guiding tenets for the distribution of funds would be:
- Support the breeding programs that produced the variety(ies) that generated royalties.
- Support additional needs that enhance the cereal breeding programs at WSU.
- Support allied programs that contribute to cereal breeding so as to ensure leadership in producing varieties for the PNW.
- Support equipment purchase and other capital needs of the cereal breeding programs.
- Royalty funds should enhance, rather than replace, funds provided by the grain industry.
The resources required to develop and evaluate cereal varieties are substantial and complex, and represent significant intellectual investments on the part of the breeders and breeding teams, as well as financial investments in personnel, equipment, infrastructure, and operating made directly through core and capacity funding from WSU (WA State) and USDA-ARS (U.S. government), through state and federal competitive grant programs, and by commodity groups and private donors.
A Committee [Grains Royalty Advisory Committee (GRAC)] will be established to guide allocation of the royalty funds. The GRAC will consist of the cereal breeders (currently winter wheat, spring wheat and spring barley) that generate royalty income, the COR director, Chair of the Crop and Soil Sciences Department, and a designee of the Washington Grain Commission. The Chair is the COR director. The GRAC will be responsible for recommending allocations to appropriate programs as outlined below. The GRAC will then make allocation recommendations annually to the COR director for approval.
Resources are needed for the maintenance and/or replacement of facilities and equipment at both farms and plant growth facilities, plant growth facility user fees and land fees, staff salary support, breeding program equipment, and research necessary to support variety development. Therefore, once the PGF bond is retired and the COR reimbursed for payment shortfall, the 70% net royalty income distributed to the COR for enhancement of seed propagated variety development programs will be allocated in the proportion listed below and the GRAC will make recommendations to the COR Director on details for implementation:
- No less than 40% will be distributed to the breeding program(s) in proportion to the income generated by the PI in that program(s) according to the invention disclosure distribution of effort for the “inventor”.
- Up to 20% to support the Washington Grains Plant Growth Facility for maintenance, equipment, and operations. This distribution is to be used to supplant the PGF fees collected for the same purposes from variety development programs, and contribute to reserve funds for maintenance and equipment. If variety royalties do not generate adequate income to meet greenhouse fees, individual breeding programs will be proportionally responsible for user fee payment.
- Up to 20% will be distributed to the Department of Crop and Soil Sciences (CSS), or whatever entity administers the seed-propagated variety research farms, for research farm operations, maintenance and equipment in consultation with the breeders and farm management advisory committee(s). This distribution is also to be used to supplant the land-use fees collected for the same purposes from variety development programs, and contribute to reserve funds for operations, maintenance and equipment.
- Up to 20% will be distributed annually on a competitive basis to programs that support breeding programs including pathology, entomology, bioinformatics, quality improvement and trait discovery and incorporation into elite breeding material.
- The proportional allocations may be changed through a recommendation from GRAC to the COR Director.
The CAHNRS Office of Research will prepare and distribute a royalty income summary and distribution reports to the Dean and the GRAC. The report shall be distributed twice a year, following the spring and fall audit and royalty collection processes. The report will include a summary of royalty allocations and the fall report will include a report of expenditures made from the allocations.
- The person who bred, or discovered and developed, a variety,
- The person who is the employer of the aforementioned person or who has commissioned the latter’s work, where the laws of the relevant Contracting Party so provide, or
- The successor in title of the first or second of the aforementioned
This is applicable to WSU employees working with material that WSU has IP rights to; all WSU employees are obligated to assign rights to their Intellectual Property to the Washington State University as a condition of their employment. (See §IV.F. of 2017-2018 Faculty Manual)
2 The Office Commercialization collects royalties from January 1 to May 31 and from June 1 to December 31. For ease of administration, when the initial variety IP term expires, the initial breeder shall be entitled to all royalties collected during said term.
Ex: If an initial variety PVPO term expires on January 1, 2018, the initial variety breeder shall receive royalties collected from January 1, 2018 to May 31, 2018. The initial variety breeder will not receive royalties collected from June 1, 2018 onward.