Monsanto used an interesting analogy in Supreme Court to retain its patent rights over a Bt cotton variety that resists the bollworm pest.
New Delhi: A ‘patented spark plug’ is of no use unless it is fitted in an engine of the car. Once fitted inside a car, the patent still belongs to the plug alone and not the car.
Using a similar analogy, American seed-maker Monsanto Tuesday won a legal battle in the Supreme Court of India to own patents of its genetically-modified cotton seeds.
The ‘spark plug’ example helped overturn a Delhi High Court judgment that plant varieties and seeds cannot be patented under Indian law.
A Supreme Court bench, headed by Justice R.F. Nariman set aside the high court verdict, saying the patent of Monsanto’s Bollgard-II Bt cotton seed technology, a GM variant that resists the bollworm pest, is enforceable in India.
Monsanto argued that its patent is on the gene, the seed technology — Bollgard II — incorporated into the plant, like the spark plug in the car. As the component inside an automobile can be patented, if not the entire car, the technology inside the seed can be patented, if not the whole seed, it said.
What this verdict means for Monsanto?
The decision is a huge relief for Monsanto as it had lost its patent on the coveted Bt technology, and, potentially, 80 per cent of its income from licensing of Bt cotton seeds.
Monsanto can now charge royalty on its technology and is free to launch new technologies in India.
It has also regained the right to sue a third party for using its technology without permission. However, the company refrained from commenting on the verdict more than saying, “We welcome the judgment of the Honorable Supreme Court. We await a copy of the complete order and will have further comment once we study the same in detail.”
Why did the dispute arise?
In 2004, US-based Monsanto, one of the world’s largest agri-chemicals and agri-technology companies, licensed Nuziveedu Seeds Ltd (NSL), a Telangana-based seeds company, to make and sell Bt cotton seeds using its technology, in exchange for a one-time fee and periodic royalties called ‘trait value’.
Monsanto terminated the agreement with Nuziveedu in November 2015, citing non-payment of dues. NSL had subsequently petitioned the court to cancel Monsanto’s patent, and the US firm lodged counter cases for patent infringements by NSL.
What Monsanto’s win means for Indian cotton farmer
Launched in 2002, the Bt technology is known to have brought prosperity to cotton growers. It reportedly increased India’s cotton production threefold, from 130 lakh bales in 2000 to 390 lakh bales in 2016. It helped India surpass China to become the world’s largest cotton producer.
Driven by the growth in cotton output, India’s textiles industry has boomed. Its output doubled from 26 million spindles in 2000 to 52 million spindles in 2017.
“The apex court’s decision to protect the technology from infringement will give confidence to other players to invest more in research and development (R&D),” said M. Ramasami, chairman of Rasi Seeds and a founding-member of the Federation of Seed Industry of India, which has 30 seed companies as members.
“Till last year, our firm hardly invested around 3-4 per cent of revenue in R&D. However, with the latest decision, I have got the confidence that if I develop a technology, it will be protected,” he added. “From the new fiscal year, we plan to invest 7 per cent in R&D.
The Supreme Court has struck the right note by quashing the case filed by “pirates”, said experts.
“Companies who have tried to promote piracy are short-sighted,” said Ashok Gulati, agricultural economist. “The court’s decision will make farmers happy as they will have access to latest technology across the globe, which will help increase their income.
“If we are concerned about Monsanto creating a monopoly in India, we must follow the China model, where they bought seed research company Syngenta for $43 billion,” he said, adding that India had failed to invest adequately in indigenous research and development.
In India, the textiles sector is the second-largest employer after agriculture, employing an estimated 32 million workers. The textiles ministry wants to double production, and trade to $300 billion by 2025, which will require a significant increase in the yield of cotton fibre (as well as more production of synthetic fabric).
What if SC ruling had gone in favour of NSL?
The SC ruling is limited to the Monsanto’s Bt cotton patent. However, had the court denied the grant of patent based on NSL’s argument — that a seed or a plant cannot be patented — then the 107 patents already granted on agri-biotech products of Indian and foreign companies like Bayer, Syngenta, and DuPont would also have crashed.
There are more than 1,000 applications for patents on agri-biotech pending before the Indian Patent Office. These would have been dismissed, blocking the flow of high-end R&D products — Indian farmers and agriculture would have both suffered.
“It would have been a disaster if the NSL case had been upheld,” observed Gulati.