A Division Bench [DB] of Delhi High Court [DHC] on April 11, 2018 invalidated a patent granted to Monsanto Technology LLC for its invention related to the gene sequence responsible for the Bt [Bacillus thuringiensis] trait that eradicate pests afflicting cotton plants.
As per the Court, the gene sequence has been held to be a part of the seed, and hence un-patentable in terms of Section 3(j) of the Patents [Amendment] Act, 2005 that excludes higher life forms, like plants, animals, and their parts and essential biological processes from the realm of patentability.
The DB has held that Section 3(j) prohibits grant of patents to Bt trait-induced varieties as they are parts of “seed”. The Court has held that the trait, by itself has no intrinsic worth; it is meant to be implanted or introgressed [process of introduction of genes from the gene pool of one species into that of another during hybridization] and later hybridized into a variety to be further hybridized through back-crossing and cross breeding with other existing varieties to produce seeds that are ultimately used.
The Court further held that the future propagation of the transgenic plants [after introgression and hybridization] and the subsequent transfer of the Bt. trait in such plants and consequently, the transgenic seeds, will be a process of nature, and no step of human intervention can impede such transfer of the sequence.
The subject claims of Monsanto are restricted to a gene sequence that was innovatively constructed through human intervention in a laboratory set-up. This is included in donor Bt. cotton seeds that is licensed to seed companies for further introgression and hybridization. Yet, the Court pronounced the processes [read: gene sequence responsible for Bt trait] as a natural occurrence completely disregarding the role of human intervention.
The judgment declaring the patent invalid is the outcome of a mis-interpretation perhaps caused by lack of scientific and technical expertise that led to the Court ‘considering a gene sequence invented through human intervention to be a part of a seed/plant’ thereby attracting the prohibition under Section 3(j).
Ever since Bt cotton was introduced in India in 2002, Monsanto has faced regulatory hurdles and fought legal battles over the trait fee payments by seed companies for using its technology. While, the former sought reasonable amount [necessary to recuperate investment in research and development to develop and commercialize the technology and follow up expenses on ‘stewardship’], the latter insisted on lesser rates driven by the sole consideration of lowering cost of seed and in turn, increasing profit.
In 2010, some states [e.g. Maharashtra] – citing overarching need to make seeds available to the farmers at reasonable prices – fixed the maximum retail prices [MRP] of cotton seeds, which included the trait values as a component. However, Monsanto insisted that seed companies pay the trait values as determined by it. The latter agreed to pay but challenged the decision.
In June 2015, the Nagpur Bench of the Bombay High Court [BHC] upheld the right and, therefore, the action of the government of Maharashtra in fixing the MRP of seeds, including the trait value. Subsequently, in July 2015, emboldened by the order of BHC, seed companies refused to pay a higher trait value. This prompted Monsanto to drag them to court.
Meanwhile, the union agriculture ministry – faced with states fixing different price in their respective jurisdictions – issued in December 2015, a Cotton Seed Price Control Order [CSPCO] under which it fixed the price of cotton seed sales all over the country at a ‘uniform’ level and max trait fee [royalty] payable to Monsanto.
On May 18, 2016, the ministry issued another order making it mandatory for Monsanto to license technology to any seed company that approaches it. If license is not given within 30 days, it is ‘deemed to have been given’. It also capped royalty at 10% of MRP for first 5 years to be reduced by 10% from 6th year. It prescribed a 10-year life ‘uniformly’ for every GM [genetically modified] trait. This meant no royalty payment from 11th year on.
Following protests, though May, 2016 order was withdrawn, but the December, 2015 order is intact. Under it, the MRP of a packet of Bollgard II seed [450 grams] was cut from Rs 930/- [including Rs 163/- for trait fee] to Rs 800/- [Rs 42/- as trait fee]. Of Rs 130/- cut in price, Rs 121/- was in trait fee alone. In March, 2018, the price was further reduced to Rs 740/- which includes trait value of Rs 39/-.
The trait fee of Rs 39/- per packet is a mere 5% of the MRP of seed which incorporates Bollgard II. This makes a mockery of the pricing power of a patent held by the innovator. Even so, patents granted to the biotech traits under the Patents [Amendment] Act, 2005 have little value as seed being the only carrier of biotech traits, these are overridden by protection of transgenic variety under the Plant Variety Protection & Farmers Rights Act [PVPFRA], 2002 – a sui generis system.
Now, the DHC pronouncement that Bt trait-induced varieties cannot be patented under Section 3(j) of the Patents Act, 2005 [unless the order is reversed by the Supreme Court] is the proverbial ‘last nail in the coffin’ for Monsanto. No wonder, seed companies have made submission to agriculture ministry to dispense with the trait fee which is already reduced to a pittance Rs 39/- per packet.
The order will have wide-ranging, negative implications for biotech-based innovation across many sectors within India. If, patents are not respected and the innovator/company does not get an opportunity for recovering investment in research and development of the product and its commercialization, why would it bring its innovations to India and set up R&D facilities here?
The actions of state governments, union agriculture ministry and now the order of Delhi High Court in case of Monsanto are completely out of sync with the intent of NDA – government to give a push to Agri-Biotech by promoting R&D and commercialization of GM crops. Modi should step in to stem the tide before it gets too late.