Monsanto vs Nuziveedu seeds: The BT Cotton Judgment

Monsanto Company is an agrochemical and agricultural biotechnology corporation acquired by Bayer Corporation that conducts research on genetically modified seeds and agricultural crops. Monsanto was one of the first companies to venture into agro-biotech and modify plants and seeds at a genetic level. It focuses on biotechnological advancement of key agricultural crops such as wheat, corn, soybeans and cotton. Monsanto owns a large number of patents related to plant biotechnology and genetically modifies food (GMO’s).

Mahyco Monsanto Biotech Pvt Ltd (India), the Indian joint venture of Monsanto has been licensing its BT products to various seed companies in India. Monsanto entered into a licensing agreement with Nuziveedu Seeds and its subsidiaries Prabhat Agri Biotech and Pravardhan Seeds on 21/2/2004. Monsanto licensed its patent IN214436 relating to BT cotton for an initial period of 10 years. A recurring trait-value compensation along with lifetime fee of Rs. 50 Lacs was charged by the Company. These patented seeds were resistant to boll-worm attacks and thus produced higher yield.

Monsanto was asked to reduce the trait-value fee by Indian Companies as new policies for price control were being passed by various State Governments of India. The Indian Companies stopped paying royalties when Monsanto refused to reduce the fee. Monsanto filed an application for injunction on 14/11/15 for trademark infringement and violation of registered patentin view of termination of licensing agreement and also initiated arbitration proceedings for recovery of amount of Rs. 400 Crores from the companies. The defendants claimed for revocation of patent under section 64of Indian Patents Act, 1970 as it was allegedly in violation of section 3(j) of the said Act in respect of plants and seeds that contained DNA sequences and argued that the patent is invalid. They also contended that their rights were protected under the Protection of Plant Varieties and Farmers’ Rights Act, 2001.

Decision by the Single Judge
The Single judge decision by the Delhi High Court stated that the licence was terminated by Monsanto and patent protection cannot be enforced till the suit was disposed and rejected all the claims for invalidity and rejection of patent. Indian Companies were allowed to use the patented technology and during the pendency of the suit, the trait value compensation is to be paid by the Nuziveedu seeds as fixed by the Government Policies.

Decision of Division Bench of High Court
Both the parties appealed before the Division bench of Delhi High Court against the decision. Monsanto challenged the single judge decision for re-instating the agreement. Nuziveedu challenged the order for the rejection of claims regarding validity of patent. Division bench of Delhi High Court considered that the subject matter was unpatentable according to section 3(j) of Patent Act, 1970. The decision of single judge regarding payment of trait value fee was upheld and Monsanto was given a time of three months to register and seek protection of the already patented invention under Protection of Plant Varieties and Farmers’ Rights Act, 2001.

Decision by Supreme Court
An appeal was filed in Supreme Court and the Supreme Court stated that Division bench did not confine to its adjudication by answering the question of grant of interim or permanent injunction. The Supreme Court also stated that before a patent is revoked, Section 64 of the Patents Act and the Civil Procedure Code, 1908 require consideration of the claims in a suit and the counter claims, as well as the examination of expert witnesses and inspection of documents. The court said that issues raised are technical in nature and the Division bench’s decision based on mere examination of documents without any input from experts and witness was not justified. The Supreme court stated that the decision given by single judge was satisfactoryand the case was remanded to the single judge for disposal.

Conclusion
The decision established the BT crops as important innovations that can be protected under patents and quashed all questions relating to validity of such inventions under the Patent Act. This decision will not only reassure the companies to continue the innovation and seek protection under Patents Act, 1970 but also solve issues in Patent law related to biotechnological inventions including DNA, RNA, rDNA and research in the area.

About the Author Divyanshi Arora, LLM student from Symbiosis Law School, Intern at Khurana and Khurana Advocates and IP Attorneys and can be reached at swapnils@khuranaandkhurana.com

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