Module II: The Fundamentals of Bioprospecting Negotiations
Constructing a Contractual Agreement for Benefit Sharing

Workshop faculty concluded this section by stressing some important general principles about bioprospecting and the art of negotiating a successful agreement.

• It is extremely important to identify the costs of participating in the bioprospecting agreement as early and accurately as possible, for the protection of both parties. Understanding the real costs is the only way to negotiate a fair and reasonable up-front fee, and if the costs greatly exceed expectations, the entire project can collapse. The budget can extend for several years and include such varied components as materials collection, transportation, taxonomy, information systems, extraction equipment, bioassays, communications, administration, subcontracting, and so forth.
  
  
• There is usually a trade-off between up-front payment amount and the royalty rate, i.e., the higher the up-front payment, the lower the royalty rate, and vice-versa. Up-front payments represent greater certainty and rewards in the near term, whereas the only certainty about royalty payments is that they will not appear for a long time, if ever. On the other hand, if a successful drug is developed from the biological materials, royalties have the potential to dwarf an up-front fee. Therefore the balance between royalties and up-front fees is a function of present needs, long-term perspective, and tolerance of risk.
  
  
• Find out as much as you can in advance about the company with which you will be negotiating. You must understand the company’s particular strengths and weaknesses before you can know what benefits to request.
  
  
• It is important to develop a close, positive working relationship with the company. Not only will the agreement function better with a greater level of trust and mutual interest, but unanticipated opportunities and benefits may also arise. In the case of Yellowstone National Park and Diversa, beneficial information sharing occurred that was well outside the scope of the agreement, simply because the parties were on good terms and were able occasionally to help each other out. Were the relationship more adversarial, such "side" benefits would not likely have materialized.
  
  
• Beware of anyone who claims to be an expert in bioprospecting—there is no such thing! There is not yet enough experience in the world for anyone to make this claim; everyone is still learning and finding their way in this field.
  
  
• It is advisable for a country to begin its bioprospecting experience with a pilot project that has a focus on demonstrating some benefits early on in the process. In other words, do not focus on royalties, as these will not appear for some time, but rather on technology transfer, up-front payments, conservation, and so forth. The important point is to show the benefit and future potential of such agreements to the communities, as a useful tool in improving the quality of life.
  
  
• There should be some clear in-country or even regional understanding about the desired objectives of pursuing bioprospecting agreements before the process of dealing with foreign interests is engaged.
  
  
• Most importantly: If you take absolutely no action at all, you will receive absolutely nothing in return; this is the only complete certainty. And the longer you delay action, the less you will receive in return. Faculty advised the group: "You only need three things: vision, leadership, and a lot of hard work."