Millennium Post

Trial after error

Supreme Court’s decision to resend Monsanto’s cotton case to the trial court will ensure judicial scrutiny of all aspects of the patent

Agrochemical and biotech giant Monsanto's genetically modified cotton seed business is out of trouble in India, but only for the time being.

On January 8, the Supreme Court set aside the April 2018 Delhi high court decision that invalidated Monsanto's patent on Bt cotton seeds. It ordered a single judge trial court bench to hear the case and check the validity of the patent. The case concerns two Bt cotton seed varieties – Bollgard and Bollgard II – that are genetically modified to resist the bollworm pest. No date for the hearing has been set and the case could drag on for at least a couple of more years.

At the crux of the dispute is a 2004 agreement between Monsanto, then a company based in the Netherlands and now owned by Germany's Bayer, and Nuziveedu Seeds Ltd, a Hyderabad-based agriculture firm. As per the contract, valid for 10 years, Nuziveedu, made a one-time payment of Rs 50 lakh to Monsanto to develop genetically modified hybrid cotton seeds using the company's patented Bt cotton donor seeds. Nuziveedu was also supposed to pay a "trait" fee to Monsanto on the sale of its own seeds once it developed them. This trait fee was set high at Rs 1,200 per 450 g seed packet. It hiked the market price of the seeds and state governments started bringing in price control regimes. Andhra Pradesh was the first to set the trait fee at Rs 150 in 2006-07, followed by Maharashtra and Gujarat. This non-uniformity in seed rates across states made the Union government step in. Invoking the Essential Commodities Act, 1955, the Union Ministry of Agriculture and Farmers' Welfare set the trait fee at Rs 49 and the retail price for a 450 g seed packet at Rs 740 in March 2015.

In October 2015, eight Indian seed companies, Nuziveedu being the biggest of them, that were in agreement with Monsanto, requested Monsanto to accept payments as per the price fixed by the government. But Monsanto terminated the agreement with Nuziveedu (which had been renewed in 2014) and filed a civil suit in the Delhi high court the same month against the company and its two subsidiaries – Prabhat Agri Biotech and Pravardhan Seeds – saying that Nuziveedu was infringing on its patent by using its technology. "How can a company pay a higher trait fee when the government has reduced the price," N Murali Krishna, company secretary and head, corporate legal, Nuziveedu, told Down To Earth. Monsanto also filed an injunction plea to stop Nuziveedu from using the Monsanto trademark until the case was decided. Nuziveedu refuted the claim, saying it has developed its own varieties that are different in characteristics, and that it has applied for intellectual property protection under the Protection of Plant Varieties and Farmers' Rights Act, 2001.

The high court passed two separate orders in the matter. The first order, passed by justice R K Gauba in March 2017, termed the cancellation of Nuziveedu's licence by Monsanto as illegal, asked Nuziveedu to pay all fees as per the prevalent law, and stated that both the parties must abide by the agreement. Nuziveedu also argued against Monsanto's patent, but justice Gauba did not rule on patent validity or infringement, saying the matter requires more evidence and put it for further hearing. Monsanto and Nuziveedu appealed to the division bench and in April 2018, the bench, headed by justice S Ravindra Bhat ruled that Monsanto's patent was invalid under Section 3(j) of the Patents Act, 1970, which bars patents on "plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals".

This order has now been overturned by the Supreme Court. The apex court also observed that the high court division bench "ought to have confined itself to the examination of the validity of the order of the injunction" and it "ought not to have examined the counter claim itself usurping the jurisdiction of the Single Judge to decide unpatentability…" The judgement restores the order passed by justice Gauba, which means that the case will now again be heard by the single judge.

But why did the division bench get into the issue of patent validity when the single judge bench had listed it for hearing. "Because both Monsanto and Nuziveedu agreed to it," explains Prashant Reddy T of Vidhi Centre for Legal Policy, a Delhi-based advisory group. "I was surprised at Monsanto's decision to waive its right to trial in such a complicated case and wonder if the division bench misunderstood the scope of Monsanto's consent to waive trial," Reddy adds. "Monsanto was confident that it would win. That is the reason they agreed to it," claims Tarakeshwar Dhurjati, vice-president (sales and marketing, strategy and business coordination), Nuziveedu.

The technology debate

At the centre of the patent suit is the nucleic acid sequence (NAS) created and patented by Monsanto from the Cry2Ab gene of Bacillus thuringiensis (Bt) bacteria found in the soil. The nucleic acid is an organic compound found in all life forms and NAS is a succession of letters to indicate the order of nucleotides forming alleles (a variant of a given gene) within a DNA or RNA molecule. When this NAS is inserted into a cotton plant cell, the plant develops resistance to the bollworm pest. Monsanto claims that NAS is a human construct and is not found naturally in plants; hence it can be patented. It also claims that the process of insertion of the gene is a biotech invention which too can be patented. Nuziveedu counters by saying that it did not infringe on Monsanto's patent because it sowed its own proprietary cotton seeds alongside Bt variety and these yielded different plants which were pollinated at the flowering stage. This is a biological process unlike the genetic engineering method used by Monsanto.

The Supreme Court has not gone into any of these issues but they will be discussed at the trial level. "The case will decide the fate of 6 million Indian farmers who grow cotton and impact the lives of over 50 million in the cotton business," says Atul Anjan of All India Kisan Sabha, a petitioner in this case.

(The views expressed are strictly personal)

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