The Delhi High Court in its decision on 11 April 2018 ruled that Monsanto, the American seed giant building its monopoly on agriculture across the world, cannot assert patent rights over Bt cotton in India. The case presents an interesting and complex situation, and a dilemma between utilitarianism and capitalism.
Bt cotton is a genetically modified plant cotton variety which expresses pest resistant traits—the plant containing Bt trait produces an enzyme which is resistant to attacks from the pink bollworm.
The controversy began in 2008 when Monsanto was granted Indian patent number 214436 titled “Method for Transforming Plants to Express Bacillus Thuringiensis Delta-Endotoxins.” Multiple objections had been raised by the Indian Patent Office from the date of the Patent Cooperation Treaty (PCT) application submitted by Monsanto in 2001.
Various Indian seed companies, including Nuziveedu, entered into sub-license agreements with Monsanto in 2015, wherein they were granted the right to produce seeds using “Monsanto technology” for a commercial purpose. Monsanto terminated these agreements within a year in light of issues regarding value of trait fee to be paid. Subsequently, it filed a suit for infringement against Nuziveedu and other Indian seed companies claiming unauthorised use of its technology in the production of Bt cotton seeds by the Indian companies. Nuziveedu filed a counter claim for revocation of Monsanto’s patent, contending that the patent was against section 3(j) of the Indian Patents Act, which provides that “plants and animals in whole or any part thereof other than microorganisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals” are excluded subject matter and cannot be patented.
A division bench of the Delhi High Court dismissed Monsanto’s suit to the extent that it sought enforcement of the subject patent. It held that “Monsanto’s patent falls within the exclusion spelt out by section 3(j) of the Patents Act; the subject patent and the claims covered by it are consequently held to be unpatentable. Nuziveedu’s counter claim is, therefore, entitled to succeed and is consequently allowed.” The court further held that Monsanto can apply for registration under the Plant Varieties Act and claim a benefit-share under the same.
The court relied extensively on European jurisprudence to hold that the exclusion of transgenic plants and seeds propagated after hybridisation from patentability under section 3(j) is in line with India’s obligations under Trade-Related Aspects of Intellectual Property Rights (TRIPS) and congruent to article 53(b) of the European Patents Convention, which provides for exceptions to patentability. It drew the conclusion that transgenic plants which express Bt trait produced as a result of hybridisation (which is an “essentially biological process”), are excluded from patentability by virtue of section 3(j). Consequently, Monsanto cannot assert patent rights over the gene that has thus been integrated into the generations of transgenic plants through such essentially biological processes.
This decision has been a welcome relief for farmers and Indian seed companies. Firstly, Monsanto can no longer assert monopoly rights over seeds and claim high trait value on the same. Secondly, as farmers will no longer have to pay increased costs as demanded by Monsanto, they can reduce their debt which is a major socioeconomic concern, especially with increased farmer suicides in India’s agrarian society. Lastly, the high court ruling, by directing Monsanto to register under the Plant Varieties Act, also ensures that protection guaranteed to farmers and researchers under the act is maintained. This signals the adoption of a socialist approach of ensuring the greatest good of the greatest numbers, given that over 50% of India’s economy is still agrarian in nature (Madhusudan 2015).
Impact on Indebtedness and Farmer Suicides
Monsanto’s patent over Bt cotton had led to high pricing of the genetically modified (GM) crop, which consequently resulted in an increased burden on farmers. Further, one of the promises of GM technology (as being promoted by the government) was that the technology would help in the conservation and protection of the environment by way of minimising dependence on chemical herbicides and pesticides. However, as was observed by the Rajya Sabha in its 301st Committee Report, the use of insecticides for sucking pests, on the contrary, increased steeply both in value and quantity, as sucking pests replaced the pink bollworm, when Bt cotton grew from 12% of the total cotton area in 2012 to 95% of total cotton area in 2015. With such a phenomenal increase in area under Bt cotton cultivation, farmers were forced to pay almost triple the price of regular seeds for Bt cotton seeds, increasing indebtedness and reliance on high yield, especially as Monsanto refused to collect trait value as fixed by various state government (and subsequently even central government) cotton price control orders.
This increase in indebtedness led to an increase in farmer suicides, in light of failure of crop yield (Gruère et al 2008). As discussed by Gruère et al, the causes of indebtedness include changes in cropping patterns caused due to the development of plant resistance to pesticides and hence increased spending on pesticides, a shift in the agrarian economy from low-cost food crops to high-cost cash crops, a lack of access to institutional credit facilities, and a general shift of focus of government policy away from agriculture. Since the introduction of Bt cotton into the Indian agricultural economy, Monsanto has already collected over Rs 5000 crores from farmers in the form of trait fee under license agreements. While farmer indebtedness has been a phenomenon plaguing Indian society since before the introduction of Bt cotton, the potential role of Bt cotton varieties in the increase in farmer suicides in particular years in certain states, especially during the peak of its introduction in 2004, is observed by Gruère et al (2008).
The evidence collected by various academicians shows that Bt cotton was not always effective in Maharashtra and Andhra Pradesh, India’s leading cotton producers. This could be due to several reasons including the high price of seeds, and the use of inadequate seeds or varieties. While institutional factors could have possibly played a role, the extent to which they affected farmers cannot be predicted especially in an economy where debt reliance has been largely on non-institutional channels.
Justices Ravindra Bhat and Yogesh Khanna, by recognising Monsanto’s contribution to Indian agriculture, tried to strike a balance between public interest and individual proprietary interest. If Monsanto registers its varieties under India’s sui generis system of protection of plant varieties (the Plant Varieties Act), it can claim benefit share for use of its varieties, as is currently claimed by all other Indian seed companies. Allowing Monsanto’s patent would have led to harmful consequences of imposing additional burden on the already-strained Indian farmer who is the ultimate payer of royalty charged under license agreements. Further, the protection of Monsanto’s variety under the Plant Varieties Act also ensures that the burden of payment of trait fees does not fall upon the farmer, who is protected from infringement under the Act. This is a right unique to and especially required in developing economies such as India. The judgment therefore ensures that India remains true to its fundamental constitutional identity, while still maintaining a market which welcomes foreign technology, pursuant to its economic policies. Monsanto’s appeal before the Supreme Court is currently pending and is to be heard in July 2018.