Sustainable food progress may close global regulatory gap

Innovation in the sustainable food sector is forging ahead at a remarkable pace. Our current food sources account for nearly one-third of global GHG emissions while consumers are increasingly better educated about where their food comes from and demand greater transparency.

The desire for sustainability is leading to an embracing of many scientific disciplines in food development. New innovative biotech approaches such as genetic engineering, synthetic biology, cell culture and computational biology are all being employed for the greater good of the planet. The use of these types of technical approaches is also leading to a growing importance of patent rights in the food sector, both in terms of companies protecting their own developments but also with respect to navigating competitor’s rights. Traditionally, the fast-moving nature of products has contributed to the food and drink sector relying more on trade secrets and trademark protection than on patent protection. However, the move towards technology platforms for food production mean that patent protection is potentially extremely valuable and companies operating in the sector recognise that.

Commercializing innovative products will always bring challenges as new frontiers are negotiated in terms of regulation, consumer acceptance and pricing. The sustainable food sector is, in many instances, forging entirely new paths and differences in consumer preferences and government approaches have led to the sector developing at different speeds in different jurisdictions.

The U.S. market is more advanced, but as the sector develops in Europe and Asia, there are an increasing amount of global opportunities for U.S. companies. Furthermore, U.S. companies with more advanced product development can help close the global gap by seeking regulatory approval for their products in these territories and pushing the authorities to make the frameworks fit-for-purpose. In the U.S., the USDA – and the FDA – are wrestling with how to regulate and oversee cell-based meat, poultry and seafood. At least 20 U.S. companies are developing cell-based products and while none are yet commercially available, producers claim that could change in the next year or so. In March 2019 the USDA and FDA signed a memorandum of understanding (MOU) to develop a joint regulatory regime for cell-based products. The MOU sees the FDA taking the lead on cell collection, development, production andoverseeing premarket consultations. The FSIS will regulate the production and labelling of cell-based meat and poultry products, but the FDA will retain overall authority.

Challenges are likely, such as the US Cattlemen’s Association in February 2018 calling on the agency to bar cell-based products from using the common terms “beef” or “meat.” However, a ban on the use of common or standardized meat terms on non-misleading cell-based meat labels is arguably unconstitutional, as are labelling restrictions that are more extensive than necessary. Similar arguments will arise in the EU – but by then the U.S. may already have started putting its early experience to use.

Diverging approaches to food regulation

Approaches to food regulation in the U.S. and Europe have traditionally been at odds. In some respects the U.S. Food and Drug Administration is stricter, and in other circumstances more flexible. And as is often the case with regulatory policies, there are strong opinions regarding the right or wrong thing to do.

In the United Kingdom, chlorinated chicken has been a cause for controversy in recent years, used as an example of how the U.S. approach to food regulation is less desirable than the EU’s. This is despite the fact that the European Food Safety Authority (EFSA) has itself confirmed that there is “no safety concern” associated with chlorination of poultry.

Broadly, the U.S. tends take a more open approach. On the one hand, this has occasionally led to concerns being raised regarding possible health or ecological implications. But it has also allowed companies in the U.S. to more readily take advantage of technological advances, which in turn may have both health and ecological benefits.

Opportunities provided by gene editing

The diverging regulatory approaches are particularly distinct in relation to genetic engineering, where the U.S. has taken a more flexible approach. In contrast, European consumers and regulatory authorities have historically been extremely opposed to any form of genetic modification.

In 2018, the EU’s highest court held that organisms obtained by mutagenesis are genetically modified organisms, which has meant that products produced by gene-editing techniques, such as CRISPR/Cas9, must undergo the same stringent health and environmental review and labelling requirements as transgenic organisms. In contrast, the U.S. recently revised regulations issued by the USDA that exempt a product from oversight under several circumstances, provided a plant is modified in a manner that could otherwise be achieved through conventional breeding. This allows companies in the U.S. greater freedom to harness the huge potential of gene editing.

Recently, a group of 132 research institutions and associations in the EU released a statement saying the EU needs to change its rules to meet the new sustainability ambitions. The European Sustainable Agriculture through Genome Editing network (EU-SAGE) says agriculture and food production must become more sustainable to deal with a growing global population, a changing climate and environmental degradation. It argues that new crop varieties need to be developed through modern technologies such as ‘precision breeding’ (genome editing). This method would allow farmers to reduce their dependency on pesticides and fertilisers. However, the scientists claim this innovation has been halted in Europe due to the 2018 European Court of Justice ruling. EU-SAGE is therefore asking the European Council, European Parliament, and the European Commission to reconsider their “stance” to reflect the latest scientific evidence on genome editing, noting that the EU’s current rules are “completely out of line” with regulations in the U.S. and other parts of the world.

Advances in cultured meat

Meat grown using cell culture technologies is a key focus for sustainable food production. Regulatory approval has not yet been granted in any country, but it is only a matter of time. In a recent announcement, KFC revealed that it intends to sell 3D-printed nuggets made from chicken cells and plants later this year in Russia, where the regulatory process is expected to be less demanding than the FDA/USDA.

Although there are several U.S. companies also active in this area, innovation is thriving elsewhere too. Higher Steaks, the UK-based cell-based meat company, recently produced prototypes of bacon strips and pork belly which has never been demonstrated before, and without the use of bovine serum.

Patent landscape

Many companies operating in this sector have relatively sophisticated IP strategies, and make obtaining patent protection a priority. This is more challenging for up-and-coming startup founders, who must balance the cost of pursuing patent protection in a number of territories and overcome regulatory hurdles.

The higher levels of activity in the U.S. have inevitably translated into a more advanced U.S. patent landscape relative to other jurisdictions at this stage, but as activity levels increase across other jurisdictions that is levelling out.

U.S. companies, such as Memphis Meats, Modern Meadow, Impossible Foods and Just, have been responsible for a significant proportion of the patenting activity in this area, pursuing protection in a number of jurisdictions. One such patent was recently granted by the USPTO to Fork&Goode, a Modern Meadow spin-off, the relatively broad scope of which has sparked interest within the industry. Patent applications filed by these companies and others in this area before the European Patent Office (EPO) are, on the whole, still in examination.

One of the few EPO granted patents, directed to Impossible Foods’ meat substitute comprising a heme-containing protein, is currently under opposition, having been opposed anonymously, although presumably by an interested competitor. We are also seeing third party interventions in Europe during examination in attempts to prevent grant of patent applications. One such example is a Perfect Day application to recombinant milk proteins, where the U.S. based Real Vegan Cheese organisation has filed third party observations arguing that the subject matter of the application is not patentable because it is not novel. Contentious proceedings will of course only increase as the space becomes busier.

Consumer preferences are changing in Europe

There is an increasing sense of urgency surrounding the need to develop sustainable food sources, and this is causing a gradual shift in approach in Europe. The EU published its Farm to Fork (F2F) strategy this summer, which is at the heart of the organisation’s Green Deal, and it emphasises the role that science is playing in the development of sustainable food systems.

However, the USDA has criticised the EU F2F strategy for undermining future trade and productivity. It recently argued that “The Farm to Fork and Biodiversity strategies will be extremely trade-prohibitive and jeopardise agricultural output”. The F2F strategy includes targets to reduce harmful pesticides by 50%, revise EU agrochemical legislation and limit unsustainable agri-food products on the EU market. These policies could eventually see farmers from other parts of the world adapt their practices to ensure they meet the EU’s new sustainability standards – if they want their produce to appear on the bloc’s single market.

Despite this, these changes have the potential to force US farmers to adjust how they operate because of the EU’s precautionary approach to sustainability, such as regarding the use of certain pesticides, genetically-modified organisms and new plant breeding techniques (when scientific evidence is not conclusive). In the U.S. this may seem like protectionism, however the EU and U.S. often take opposite views on sustainability,with U.S. policymakers finding that such a precautionary approach limits the introduction of a large range of products despite lacking any clear risks.

The future: global opportunities

It is an extremely exciting time for the sector as companies work out a path to market for completely new types of products, and a rapidly growing market size encourages even more innovation. We expect to see a gradual softening and adaptation of the regulatory position in the U.K. at least and possibly in the EU too, as pressure grows to further explore the opportunities in sustainable food production that are arising from scientific progress.

This will further enable U.S. companies to expand globally and the European sector will increasingly align with that of the U.S. This is already beginning to happen, and companies from all regions are building IP portfolios to protect their positions.

This also means that we are likely to see a rise in contentious proceedings in the future as more products are placed on the market and companies have increased motivation and means to enforce their IP rights. It is therefore certainly a critical space to watch from a legal perspective.

This article was first published by Law360.