Monsanto’s Bt.

Cotton Patent, Indian

Courts and Public Policy
Ghayur Alam
B. Com. (Hons.), LL. B., LL. M., & Ph. D. in Law
Professor in Business Laws & IPR Chair
Dean, Under-Graduate Studies
The National Law Institute University, Bhopal
Republic of India
www.nliu.ac.in
ghayuralam@nliu.ac.in
 Structure of Presentation

1. Whether an invented Nucleic Acid Sequence (NAS) after being inserted into a seed or plant cell becomes
part of the seed or plant cell?

Analysis of Monsanto Technology LLC v. Nuziveedu Seeds Ltd.

• Judgment of the Single Judge of Delhi High Court (March 28, 2017) – Prima facie “No,”
hence patent is prima facie valid

• Judgment of the Division Bench of Delhi High Court (April 11, 2018) – Yes, not patentable

• Judgment of the Supreme Court of India (January 08, 2019) – No Answer but upheld the
decision of the Single Judge and remanded the matter for trial to the Single Judge. Declared
the decision of DB without jurisdiction

2. Whether the statutory exclusion of plants, seeds or any part thereof and essentially biological process from
the category of patentable subject matter is in the public interest in general and in the interest of farmers in
particular particularly when agro-biotechnology has the power to feed a billion plus mouth in India?

3. Whether the Government of India should revoke Monsanto patent in the interest of Indian farmers under
Section 66 of the Patents Act, 1970 citing a very high rate of suicide amongst farmers cultivating Bt. Cotton?

4. Conclusion
 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. - Single Judge

Brief Facts

• Plaintiffs obtained a patent (dated Nov. 24, 1999) on 24 methods for transforming plants to express bacillus
thuringiensis (Bt.) Delta-endotoxins and 03 claims on NAS. They have also registered BOLLGARD and
BOLLGARD II as their trademarks for seeds containing the invented NAS

• Under a non-exclusive and non-transferrable sub-licence agreement Defendants have received from the
Plaintiffs 50 grams (50 seeds), i.e., @ Rs, 1, 00, 000/- per seed of BOLLAGARD II Transgenic Bt. Cotton
Seeds in consideration of an upfront payment of INR 50, 00, 000/- subject to payment of trait value and other
terms and conditions of the agreement. The Defendants were entitled to develop GM Hybrid Cotton Seeds,
subject to the terms and conditions of the license, to commercially exploit the same as under:

• Defendants sowed seeds of their proprietary cotton varieties alongside the Transgenic Bt. Cotton seed.
The Transgenic Bt. Cotton seed and the Defendants’ varieties seed yielded different plants,
which were cross-pollinated at the flowering stage.

• The cotton fruits from Defendants' cotton varieties had cotton seeds which were carrying the Bt. Trait

• Those Bt. Cotton Varieties were used for developing the proprietary hybrid (“Bt. Cotton Hybr
ids”). Defendants conducted extensive agronomic evaluation trials of newly developed Bt. Cotton
Hybrids to ascertain their utility to the farmers. Defendants obtained the approval of the GEAC under the
Environment (Protection) Act, 1986 for the commercial release of each new Bt. Cotton Hybrid which
were considered satisfactory after internal evaluation, and thereafter produced in mass scale and
distributed to the farmers
 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. - Single Judge

Brief Facts (Contd.)

• The sub-licence agreement can be terminated, inter alia, for non-payment of trait value. The parties
continued adhering to the terms and conditions of the agreement including payment of the trait value as
per the stipulations of the agreement. In the meantime, the Government of India and several State
Governments issued notifications on the price control of the cotton seeds fixing the maximum sale price
(MSP), trait value and seed value. Compliance to Notifications was made obligatory on the licensor and
licensee

• The Defendant wrote to the Plaintiff to abide by the notifications and accept the payment of trait value as
notified by the Governments. Plaintiff refused and terminated the agreement. Trait value fixed by the
Governments was substantially lesser than the trait value stipulated in the agreement. Government of
India estimated that the Indian seed companies paid Monsanto approximately INR 1, 600/- Crore (INR
16 billion) more in excess of the actual trait value fixed by the various State Governments

• Plaintiff filed applications seeking injunction and suit for infringement of patent, trademarks or passing
off against the Defendant before Delhi High Court. Defendant filed written statement and counter claim
challenging the validity of patent. Parties did not agree to summary judgment. Matter was taken up only
for interim relief by the Single Judge
 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. (Contd.)
Observation of the Single Judge

• Prima facie the amendment of 2005 repealed Section 5 from the statute book altogether,
the conclusion to be drawn from such legislative changes naturally being that the embargo
on grant of patents to “products” of biological or microbiological processes thereby stood
removed

• This court agrees with the submissions of the plaintiffs that Section 3(j) of the Patents Act
cannot be interpreted without taking into account the effect of changes to Section 2(1)(j)
and repeal of Section 5 so as to deprive the patentee of due reward of human skill and
ingenuity resulting in human intervention and innovations over and above what occurs in
nature. It is admitted case of the defendants that claim nos. 25 to 27 under the suit patent
involve laboratory processes and are not naturally occurring substances which only are to
be excluded from the purview of what is an invention by virtue of the provision contained
in Section 3(j). These claims being products or processes of biotechnology, thus seem to
have been rightly entertained by the Indian Patent office

• There is, prima facie, substance in the arguments of the plaintiffs that the expression “plant
grouping” cannot be equated with a single plant

• The argument of denial of “use” of the plaintiffs’ patented technology does not come
across as valid in the face of admission that the cotton varieties or hybrids developed by
them do exhibit the Bt. Trait
 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. (Contd.)
Observation of the Single Judge

• The Cotton Seeds Price (Control) Order promulgated by the Central Government provide not only the
“law” but also reflect the “public policy” of the State and, thus, the “consideration” of the agreement
between the parties in order to be lawful, within the meaning of Section 23 of the Contract Act must
be in accord with such law and public policy and not be opposed or in derogation thereof.

• Plaintiffs were duty bound to consider the request of the defendants for modification of the terms as to
the rate of trait fee payable

• Since the plaintiffs did not adhere to their obligation under the contract, the demand of payment under
the contract terms being not lawful, it apparently being higher than the trait fee permitted by the law
in force, the defendants could not have been found to be in default or to have breached their
obligations. As a sequitur, the termination of the sub-license agreements by the defendants appears
prima facie to be illegal and arbitrary

• So long as the sub-license agreements continue to be in force, or do not come to an end, by efflux of
time, or upon being lawfully terminated, the defendants cannot be injuncted against the use of the suit
patent or the trademarks, such right of the defendants to continued use of suit patent or trademarks not
being unconditional

• It is not necessary for any comment to be made at this stage of the proceedings on the contentions of
the parties as to the permissibility or otherwise of the use of the abbreviations “BG” and “BG-II” by
the defendants as trademarks.
 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. (Contd.)
Observation of the Single Judge

• Parties shall remain bound by their respective contractual obligations and shall be entitled
to all the contractual rights except as to the trait value payable thereunder

• Defendants shall be liable to tender, and pay, the trait fee to the plaintiffs, for the use of the
suit patent and trademarks, at such rates as are in accord with the prevalent local laws,
as in force or revised from time to time and upon being suitably notified, be obliged to
execute necessary documents so as to render the contract(s) in accord with the “GM
Technology (GM Trait) Licensing Agreement” as prescribed under the “Licensing and
Formats for GM Technology Agreement Guidelines, 2016”, notified by the Government of
India

• The Single Judge did not decide (because he was dealing with injunction application only)
the substantive question of law: Whether an invented NAS after being inserted into a seed
or plant becomes part of the plant or seed? but held that the Plaintiff’s patent was prima
facie valid. The question can only be decided after hearing on merit, formal proof
particularly expert opinion which in complicated matters like patent may be crucial
 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. (Contd.)
Division Bench

• Plaintiff’s appeal against the Order of the Single Judge as to continuance of the sub-licence
agreement was dismissed by the DB

• Defendant’s appeal against the Order of Single Judge holding the patent prima facie valid
was admitted, patent was found to be invalid hence revoked and no case of trademark
infringement or passing off was found

• DB noted that the parties have agreed that the main issue concerning the legality of patent
on a construction of S. 3 (j) can be finally decided on the basis of material on record (28
volumes of documents)

• DB formulated the question of law as: Whether the process described in

process described in Monsanto’s nucleotide sequence in its Claims 25-27 – which
were granted patent, resulting in isolation of the Cry2Ab gene, its synthesization and
insertion into the plant cell, resulting in donor transgenic seeds and plants fall within the
exceptions covered under Section 3(j) of the Patents Act?

• DB answered this question in the affirmative.

 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. (Contd.)
Observation of the Division Bench

• The Repeal of S. 5 meant that process or products, that otherwise meet the test of patentability are
nevertheless as a matter of public policy, ineligible for patent protection by virtue of S. 3 (j)

• NAS is not microorganism

• Monsanto has not deposited the microorganism with the IDA in terms of Article 7 of the Budapest Treaty
and S. 10 (4) of the Patents Act

• Insertion of NAS in plant cell is essentially biological process, hence hit by S. 3 (j)

• NAS once inserted in the seed becomes part of the seed, for no technology exists to isolate or separate it
from the seed once it is inserted therein

• The plant variety being a transgenic variety containing invented NAS are protectable under PPVFR Act,
2001

• PPVFR Act has an overriding effect by virtue of S. 92

• Patent protection and plant variety protection are not complimentary but exclusive

• Monsanto is at liberty to apply for plant variety protection

 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. (Contd.)
Observation of the Division Bench

• The absence of a patent results in the lack of property in the use of CryAb2 and the
consequent lack of control by Monsanto about its use by others, like Nuziveedu, who might
have acquired it under agreement, lawfully, developed their varieties or breeds and sold it to
the farming community. The grant of injunction is rendered untenable in these
circumstances.

• This is a public interest element that the court cannot be blind to. In the ultimate event of
Nuziveedu failing in its counter claim, the harm that might befall Monsanto during the
pendent lite period is compensable, monetarily. In these circumstances, the Court is of
opinion that pending trial of the suit, the directions of the learned single judge do not call for
interference.

• The subject 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
 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. (Contd.)
Observation of the Supreme Court

• The counter claim for revocation of the patent as unpatentable, was neither argued nor adjudicated by
the learned Single Judge

• The issue for existence of patent, patent exclusion under S. 3 (j) was a heavily mixed question of law
and facts requiring formal proof and expert evidence to b considered at the hearing of the suit

• Process claims were not in issue, yet the DB held them to be bad

• Plaintiffs have never and could not have consented to summary judgement. The consent was given
only to decide whether patent was infringed so as to allow or disallow the relief of interim injunction

• Whether the nucleic acid sequence trait once inserted could be removed from that variety or not and
whether the patented DNA sequence was a plant or a part of a plant etc. are again all matters which
were required to be considered at the final hearing of the suit

• The Division Bench ought to have confined itself to examination of the validity of the order of
injunction granted by the learned Single Judge only. But we are not inclined to remand the matter for
that purpose to the Division Bench as we are satisfied in the facts and circumstances of the case that
the nature of the injunctive relief granted by the Single Judge was in order and merits no interference
during the pendency of the suit
 Monsanto Technology LLC v. Nuziveedu Seeds Ltd. (Contd.)
Observation of the Supreme Court

• The Appellants argued that NAS is a microorganism hence not excluded by S. 3 (j), hence patent has
been validly granted. Being a microorganism, it cannot be protected under PPVFR Act. Single plant
cannot be variety, hence protection under PPVFR Act

• The Respondents argued that NAS being part of the seed or of the plant is excluded by S. 3 (j),
expression of Bt. Genes in the seed is an essentially biological process, hence the alleged invention
neither involves an inventive step nor is capable of industrial application, applicant has neither
deposited the biological material with IDA nor has obtained the approval of NBA. Arguendo, the
Appellants have not sold the NAS in vial nor the Respondents are making NAS in a laboratory,
hence there cannot be any infringement. Further, the invention can be protected under PPVFR Act

• We have considered the respective submissions made on behalf of the parties. Though very
elaborate submissions have been made with regard to facts and the technical processes involved in
the patent in question, the provisions of the Act, the PPVFR Act and a large volume of case laws for
construction of patents, the obligations under WTO, GATT, TRIPS, leading to the Patents
Amendment Act, 2002 on 25.06.2002, in view of nature of the order proposed to be passed, we do
not consider it necessary to deal with the same at this stage, and leave open all questions of facts and
law to be urged for consideration in appropriate proceedings.
Whether the statutory exclusion of plants, seeds or any part thereof and essentially biological process from
the category of patentable subject matter is in the public interest in general and of farmers in particular
particularly when agro-biotechnology has the power to feed a billion plus mouth in India?

• The optional exclusion by TRIPs shows the concerns of the Members as to the patentability of seeds and
plants. Such concerns seem to be based on public interest – Article 27. 3 (b) of TRIPs

• Members of TRIPs shall protect plant varieties either by patents or by an effective sui generis system or by any
combination thereof. – Article 27. 3 (b) of TRIPs. India has enacted PPVFR Act in 2001

• India being a developing country is having concerns about patenting of plants and seeds. The main concern is
that poor Indian farmers cannot afford the high prices of patented seeds and plants

• Positions and experiences of countries vary on this point, e.g., in US the farmers successfully lobbied, arguing
that agriculture cannot be discriminated against industry, with the Congress for the enactment of Plant Patent
Act, 1930 for protection of asexually (grafting and sporting etc.) reproduced plants. In US there are four types
of intellectual property rights are available in case of plants: (i) Plant Patent Act, 1930 for asexually
reproduced plant, (ii) The Plant Variety Protection Act, 1970 – in compliance to UPOV, (iii) The Patent Act,
1952 subject to fulfillment of the requirement of the Act, and (iv) Utility Patent as per the holding of J. E. M.
Ag Supply Inc. v. Pioneer Hi-Bred International Inc., 534 U. S. 124 (2001)

• Biotechnology is pregnant with lot of opportunities but is also fraught with unprecedented and unknown risks

• The crops containing Bt. Genes sown in one field pollinate the crops sown in the fields of other farmers
without their consent. The crop of other farmers, without their consent, acquires the traits of genetically
modified plants

• The problem of hunger in India is not because of less production but because of lack of storage facility,
distribution and management of produce
Whether the statutory exclusion of plants. . . billion plus mouth in India? (Contd.)
• It is a well known fact that the presence of Bt. Genes in the plant cells does not increase yield. It only becomes
a resident in the seed and kills bollworms from within the seed lessening the need of insecticide and pesticide
against bollworms. But Bt. Genes is not effective against all pests and insects, necessarily, therefore, farmers
are compelled to use other insecticides and pesticides. Studies also show that certain Bt. Genes are resistant to
certain insecticides and pesticides

• Invention in all the fields of technology, including agro-biotechnology, must be encouraged. Genetic
modification of seeds, however, has uncontrolled and uncontrollable effects. Once the genetic structure of the
seed and plants is changed, it has the potential to alter the genetic structure of other plants by pollination. Such
genetic modifications in food crops may alter the genetic structure of humans

• Scientists must be encouraged to do every type of research and every type of invention. However, inventions
relating to agriculture must be treated with greater caution for food is a matter of to be or not to be

• IP should not remain the only method of reward. The options of prizes, honors, social security, family
pensions, free housing, free and best education to the kids of the inventors must be increasingly used

• Farmers’ interest must be given due attention. Howsoever technologically advanced we may become, we need
food to exist and live. The interest of the producer of food is in the interest of everyone

• More than two third of Indians are still dependent on agriculture with small land holdings. Most of the farmers
are illiterate and are very poor. India has already enacted PPVFR in 2001 which talks of breeder’s right,
farmers’ right and researchers right. However, India has neither the conditions nor the need to allow patenting
of seeds and plants
Whether the Government of India should revoke Monsanto patent in the interest of Indian farmers under
Section 66 of the Patents Act, 1970 citing a very high rate of suicide amongst farmers cultivating Bt. Cotton?

• Many NGOs are lobbying to invoke Section 66 of the Patents Act, 1970 which reads as under:

Revocation of patent in public interest.—Where the Central Government is of opinion that a

patent or the mode in which it is exercised is mischievous to the State or generally prejudicial to
the public, it may, after giving the patentee an opportunity to be heard, make a declaration to that
effect in the Official Gazette and thereupon the patent shall be deemed to be revoked.

• In any case Monsanto’s patent will be dead on November 03, 2019 within five months

• Although there is no direct evidence showing cultivation of Bt. Cotton and farmer’s suicide in India,
yet some studies by NGOs show that cultivation of Bt. Cotton crop is a if not the cause of farmers’
suicide in India

• Crop failure including the crop of Bt. Cotton is generally due to poverty, inadequate irrigation and
adverse environmental conditions

• Bt. Cotton roots are very short, require continuous irrigation. Inadequate availability of water is the
main reason of failure of Bt. Cotton crop

• Indian authorities charged with the responsibility of appraising and approving genetically modified
crops are more to blame than Monsanto for the farmers’ suicide
 Conclusion
• All the three Courts are of the opinion that Monsanto was wrong in terminating the agreement for the trait
value stipulated in the agreement has become unlawful consideration

• Single Judge was clearly wrong in holding prima facie that the patent was valid. It is not res integra that the
whole Statute must be read word by word, Section by Section, Clause by Clause to arrive at the statutory
meaning. What is explicitly excluded cannot be introuced through the back door by judicial interpretation

• The Division Bench was clearly wrong in deciding the lis which was not before it. The appeal was on a
limited ground of whether or not to grant an interim injunction. Had the Division Bench, without deciding
the substantive question of law, held that prima facie the patent was invalid as the subject matter is explicitly
excluded, perhaps the Supreme Court would have upheld the decision of the Division Bench and reversed
the decision of the Single Judge

• The Supreme Court knew that the patent is going to end on November 03, 2019, within a few months, it
should have instead of remanding the matter to the Single Judge could have decided the substantive question
of law: whether an invented NAS inserted into a plant cell becomes part of the plant or not. But the SC
chose to miss the opportunity. It is most likely that this question of law will receive conflicting answers from
various High Courts in India

• The provisions of S. 3 (j) of the Patents Act are in consonance with the provisions of TRIPs. These
provisions are in public interest in general and those of the farmers in particular. Moreover, in compliance
with the provisions of TRIPs, India has enacted PPVFR Act, 2001 which makes provisions regarding
breeder’s right, farmers’ right and researcher’s rightPublic Policy must trump private commercial right

• If provisions of S. 66 are invoked, it will not serve any meaningful purpose in the instant case for the life of
patent will come to an end on November 03, 2019 but it will definitely send a strong message against such
patents
ghayuralam@nliu.ac.in