Costa Rica has extensive experience with negotiating biodiversity prospecting agreements. The main lessons learnt in Costa Rica with regard to negotiating contracts or agreements on access and benefit sharing probably are applicable to other regions. Moreover, they may also be applicable to the protection of indigenous knowledge and traditional medicine. These main lessons are:

• It is essential to have a well-defined institutional policy with regard to the requirements and criteria to be included in bioprospecting agreements. It is important to have options as well as a set of minimum requirements. For instance, in Costa Rica, those options are: technology transfer and training, a royalty rate, an upfront payment, support for conservation etc. In the past, INBio⁴¹ has rejected several offers to enter into bioprospecting agreements because the companies concerned did not offer appropriate compensation. Moreover, access is limited in terms of number of samples and time.

⁴¹ INBio is the National Biodiversity Institute of Costa Rica, see box 16. When negotiating agreements, INBio tries to include all those options, but uses a flexible approach.

• It is necessary to develop a good understanding of the operation and evolution of markets for biological resources and to be aware of developments in this market. This is critical because when negotiating contracts, market intelligence increases bargaining power. For instance, recently, INBio began to use milestone payments in addition to royalty payments. Milestone payments are very interesting, since they allow for reception of compensation before a final product reaches the market. If any specific material that has been provided reaches a pre-defined 'milestone', for instance when it enters pre-clinical or clinical trials, a payment is received; the details depend on the agreement and on the envisaged use (pharmaceutical, agricultural etc.) of the material provided. Thereafter, when the final product reaches the market, royalties are being paid. But when dealing with milestone payments, it is important to be aware about rates for milestone payments, otherwise one may demand unrealistically high milestone payments or accept very low milestone payments.

• It is essential to have -or to develop- the institutional capacity for carrying out complex negotiations; especially legal, scientific and business expertise are required, because the terms of these agreements and contracts are often challenging and complex. They involve not only intellectual property rights and confidentiality clauses, but also relate to environmental law, commercial law, international environmental law, international commercial law etc. For example, it is very important that contracts contain clear scientific and legal definitions, because depending on these definitions, one may or may not receive royalties in future. So it is important to define 'products', 'samples', 'extracts', 'chemical entities' and other key words; this requires legal and scientific expertise. Moreover, business expertise is needed, because compensation will be determined according to market rules and market behavior.

• Mastering of basic contract specifications, such as IPR, warranty, the determination and calculation of royalty rates, is crucial. In contracts, the calculation of royalty rates tends to be very complicated, and involves negotiations on how to define net sales and gross sales, the method of calculation etc. Conditions for (or prohibition of) the transfer of materials to third parties is another important issue to consider, as are ownership of IPR, joint research, confidentiality, dispute resolution, etc.

• National scientific capacity may increase the value of the biological resources and strengthen the country's position in the negotiations, resulting in higher potential benefits, for example higher royalty rates. Equally, traditional knowledge adds value to biological resources; one should be aware of this, since it increases the bargaining power and thus offers possibilities for negotiating a better deal.

• Creativity is important when negotiating conditions for compensation and benefit sharing. Over the past years, INBio has been able to develop different kinds of compensation, not only royalties, training and upfront payments but also other types. E.g. in a case where genetic resources were provided for research with ornamental plants, one of the conditions in the agreement was a fee in case the company holds an exhibition.

• Proactive approaches for concluding bioprospecting agreements, based on predefined institutional policies and identified needs, enhance the opportunity for new and innovative agreements. Bioprospecting is a difficult area; therefore countries or institutions need to develop a proactive approach to companies and institutions and should not to wait passively to be contacted; this is important, because a proactive attitude allows countries to act according to their own strategies and their own interests.

• Coordination with other national and international institutions working in the area of biodiversity and R&D, and an understanding of the national needs for technology transfer is important, in order to negotiate compensation aimed at capacity building at the national level.

• Political support, an appropriate legal framework and legal certainty -for example, specifying who is entitled to grant permits- are other crucial issues; they create a positive environment for success. Many problems encountered in bioprospecting agreements all over the world are related to the absence of a legal framework, the lack of legal certainty and the lack of political support.

• The development of broader national policies, such as national biodiversity inventories, information management systems, investments in science and technology, well-defined protected areas or well-defined land tenure rights can facilitate bioprospecting. In other words, bioprospecting should not be isolated from other important components of the national development strategy. One of the reasons why Costa Rica has been very successful in attracting such agreements is because it has the relevant, broader policies in place.