Restoring Patent Rights – Bt Cotton(GS 3,UPSC,IAS Mains)

Why in news?

Recently, the Supreme Court has restored US-based Monsanto Technology’s patent on technology used in Bt Cotton seeds.

Why is the matter in court?

  • The case relates to a dispute between Monsanto and Nuziveedu Seeds Ltd over the technology.
  • A 10-year sub-licence agreement was made between the two companies in 2004.
  • Under that, Nuziveedu could develop “Genetically Modified Hybrid Cotton Planting Seeds” with the help of Monsanto technology and commercially exploit it.
  • In return, Nuziveedu had to pay licence fee/trait value.
  • Monsanto terminated the agreement in 2015, with disputes having arisen over these payments amid a price control regime introduced by the government.
  • Monsanto filed a civil suit in Delhi High Court, claiming that Nuziveedu Seeds was infringing on its patent by using its technology.
  • It also filed an application for injunction to restrain Nuziveedu from using the Monsanto trademark during the pendency of the civil suit.
  • Nuziveedu filed a counter-claim against Monsanto’s patent claim in the High court.

What has Monsanto’s argument been in this case?

  • In the present suit, there are two sets of patent claims — claims 1-24 relating to processes, and claims 25-27 relating to the chemical product NAS (Nucleic Acid Sequence).
  • Monsanto has claimed that NAS is a man-made DNA construct and not part of a plant existing in nature.
  • The DNA construct is inserted into a plant “which confers the trait of insect tolerance”.
  • When it is inserted into the cell of the plant at a particular location, it results in the production of a fusion protein.
  • Monsanto’s argument is that the production of the fusion protein is critical for the technology to be effected and it is only its technology that allows a cotton plant to produce it.
  • Thus, the product is protected by claims 25-27 of the patented inventions.

What has Nuvizeedu’s argument been in this case?

  • Nuziveedu focused on Section 3 (j) of the Patent Act, 1970, which served as the main ground for the revocation of the mentioned Patent.
  • It contended that, under Section 3(j) – Plants and animals, other than microorganisms, including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals are not inventions.
  • Thus, claim 25 of the Patent relates to ‘nucleic acid sequence’, is equated in terms of “a plant cell, a seed, a transgenic plant or a plant variety”.
  • Hence it is not considered as inventions and cannot be granted a patent in India.
  • Further, Nuziveedu contended that Bt. Trait in Cotton Hybrid varietal plants is an essential biological process.
  • Cross-bred plants and animals are not patentable because they are better regarded as discoveries which happens naturally and therefore, it’s just a discovery which has taken place in a laboratory.
  • It has also argued that its rights are protected under the Protection of Plant Varieties and Farmers’ Rights Act, 2001.

What happens now?

  • The Delhi High had passed two separate orders in this case.
  • The First order ruled that during the pendency of the case, both parties would have to abide by obligations under their agreement.
  • Also, Nuziveedu Seeds should pay licence fees in accordance with the regulatory requirement.
  • In the second order, the high court ruled that Monsanto’s patent claim was invalidated under Section 3(j) of the Patents Act.
  • However, the Supreme Court recently overturned this judgement saying that Monsanto can claim patents on its genetically modified (GM) cotton seeds.
  • Thus, the SC ruling restores the first order of the High court and hence the same bench of the HC will now hear the matter of patentability on this case.

The Supreme Court on earlier this month,  restored Monsanto Co.’s patent claim on genetically modified (GM) Bt cotton.
  • How does the case evolve?

    • Mahyco Monsanto Biotech (India) (MMB) is a joint venture between Monsanto and India’s Maharashtra Hybrid Seeds Co (Mahyco).
    • It has sub-licensed Bt cotton technology to various domestic seed companies since 2002.
    • Italso sells GM cotton seeds under license to more than 40 Indian seed companies, which in turn sell product to retailers.
    • India has approved Monsanto’s GM cotton seed trait in 2003.
    • This has helped in transforming the country into the world’s top producer and second-largest exporter of the fibre.
    • Monsanto’s GM cotton seed technology dominates 90% of India’s cotton acreage.
    • The problem started when MMB terminated its contract with Nuziveedu Seeds Ltd (NSL) in 2015 after a royalty payment dispute.
    • A case filed in 2015 by MMB against NSL and its subsidiaries for selling Bt cotton seeds using its patented technology, despite termination of a licence agreement in November 2015.
    • The Delhi High Court on May 2018held that plant varieties and seeds cannot be patented under Indian law by companies such as Monsanto.
    • Also, royalties on GM technology would be decided by a specialized agency of the agriculture ministry.  
    • This has made Monsanto unable to claim patents on GM cotton seeds.
    • The Supreme Court recently overturned this judgement saying that Monsantocan claim patents on its genetically modified (GM) cotton seeds.

    What will be the consequence?

    • Bollgard technology is about a genetic sequence from a microorganism called Bacillus thuringiensis(Bt).
    • This sequence, when modified and inserted into plant cell, produces a toxin that repels pests like bollworm.
    • Any attack on the ability of Monsanto to earn royalty from its IP would have resulted in Monsanto not introducing newer technologies in India.
    • This is critical as bollworms would, over time, become resistant to the current strain of the pest-repellent toxin, and would require further innovation.
    • With the ruling, the patent held by Monsanto over its Bollgard-II Bt cotton seed technology will be enforceable in India for now.
    • The outcome is positive for foreign agricultural companies which have been concerned that they could lose patents on GM crops in India.
    • Also, most international companies which have stopped releasing new technology in the Indian market due to the uncertainty over patent rule would re-think their strategies.
    • Access to advanced technology in cotton production was important to help Indian farmers to compete with rivals overseas.
    • Thus, the verdict validates that patents are integral to innovation.
    • However, SC has left the validity of Monstanto to claim royalty on Bt cotton to be finally decided by the Delhi high court.

    What is the other related case?

    • In Divya Pharmacy vs Union of India and Ors, the High Court of Uttarakhand passed an order against Divya Pharmacy that makes ayurvedic medicines and nutraceutical products.
    • Various companies manufacturing ayurveda-based cosmetics have been operating unregulated.
    • In that case, the High Court gave a purposive interpretation to the provisions of the Biological Diversity Act, 2002.
    • It adjudicated that an Indian entity also has to comply with the demand raised by a state biodiversity board towards fair and equitable benefit sharing (FEBS).
    • The High Court observed that indigenous and local communities, who either grow “biological resources” or have traditional knowledge of these resources, are the beneficiaries under the Biological Diversity Act.
    • Thus, in return for their parting with this traditional knowledge, they are liable to receive certain benefits as FEBS.
    • Hence, the above judgement has given impetus to the efforts of the National Biodiversity Authority as well as state biodiversity boards in a particular direction, which were struggling to implement provisions of the Act.

    What are the takeaways?

    • In one scenario, the Supreme Court has upheld the intellectual property rights of an MNC in the Monsanto case.
    • On the other case, the High Court of Uttarakhand upheld the liability of another MNC, Divya Pharmacy, to share the benefits it was deriving from exploitation of local biological resources.
    • Thus, it is critical to adopt a balanced approach, when there emerges a question of rights of corporations versus the rights of the populace.

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