Who moved my seed? Decoding the Monsanto dispute

[dropcap]F[/dropcap]EW weeks back, the Supreme Court ruled in the dispute between the international seed giant Monsanto and Indian Agrochemical Company Nuziveedu Seeds. While the observers of patent law and agro-chemicals were expecting a game changer, the Supreme Court directed that the validity of Monsanto's patent would have to be examined by the High Court after due trial.

Monsanto Technology LLC, a US company, had filed a petition before the High Court of Delhi claiming that Nuziveedu Seeds and its subsidiaries were infringing Monsanto's patent no. 214436 (granted in 2008) related to (simplicity put) recombinant DNA resulting in plants becoming resistant to bollworms.

The dispute stems from a royalty based licensing agreement between Monsanto and Nuziveedu. The license allowed Nuziveedu to develop Genetically Modified Hybrid Cotton Plant Seeds using the patented Monsanto technology. On termination of the agreement, Nuziveedu was to cease selling the GM Hybrid Cotton Planting Seed and destroy all GM seeds in its possession.

In 2015, Nuziveedu claimed that it would pay a royalty as per the then Cotton Seeds (Control) Order, 2015 and not as decided under the license. Monsanto refused to accept a lesser royalty under the license. By December, 2015, Monsanto terminated the license citing breach of contract following Nuziveedu's failure to make payments. Monsanto claimed that as a result of termination of the contract, Nuziveedu was to cease distribution of genetically modified Hybrid Cotton Planting Seed.

In 2016, Monsanto approached the Delhi High Court seeking injunction against the continued market and sale of the hybrid cotton seeds containing Monsanto Technology by Nuziveedu.

Nuziveedu in defence challenged the validity of Monsanto's patent and argued that Nuziveedu' s activities were protected under the Protection of Plant Varieties and Farmers Rights Act, 2001. It further denied its liability to pay the alleged dues under the license citing the Cotton Seed (Control) Order, 2015.

Monsanto thereafter made an application for interim injunction. Nuziveedu's argument that Monsanto's patent ran foul of the Plant Varieties Act was not accepted by the Single Judge. The Single Judge found that license agreement was terminated by Monsanto arbitrarily and the same would continue to operate. Given the finding of subsistence of the licence, the Single Judge noted that Nuziveedu's claim of invalidity of patent could not be entertained. The Single Judge directed that the license agreement would continue with modified terms of royalty.

Monsanto appealed to the Division Bench of the Delhi High Court challenging the nature of the injunctive relief granted vis-à-vis the license agreement between Monsanto and Nuziveedu Seeds. Nuziveedu appealed to the Division Bench on ground of rejection of its challenge to the patent by the Single Judge.  The Division Bench dealt with the question of applicability of the Plant Variety Act and what is not an invention per Section 3(j) of the Patents Act, 1970. Section 3(j) of the Patents Act excludes from patenting, "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." The Division Bench noted that Monsanto's patent matter fell under Section 3(j) of the Patents Act and was therefore not patentable. However, Monsanto was also allowed by the Division Bench to apply under the Plant Variety Protection Act within three months of the judgment.

Monsanto filed an appeal before the Supreme Court. The Court opined that given the nature of prayer sought by Monsanto, the Division Bench should have only adjudicated on the correctness of the injunction granted by the Single Judge. It further noted that the Division Bench usurped the jurisdiction of the Single Judge in adjudicating Nuziveedu's challenge to the Monsanto's patent.

The Supreme Court noted that revocation petitions of patents cannot follow from a summary proceeding that lacks proper examination of exhibits and examination of expert witnesses. The Court directed that the issues of whether the subject matter of Monsanto's patent can be considered as a plant or a part of the plant are to be decided during the final hearing of the suit, viz. after production of documents and examination of parties/experts. The Court has therefore has restored the order of the Single Judge.

So for now, Monsanto's patent continues to be valid. Whether Monsanto's patent is invalid per Section 3(j) of the Patents Act or whether it will fall under the Plants Variety Protection Act, continues to be moot.

Priyam Lizmary Cherian is a legal officer at the Lawyers Collective.