India: Monsanto Technology LLC And Ors Vs. Nuziveedu Seeds Ltd. And Ors

Last Updated: 17 May 2018
Article by Pratistha Sinha

Monsanto Technology LLC, one of the world's leading seed company, was smacked by the decision upheld by the Division bench of Delhi High Court in an appeal that was preferred by them against the order of Delhi High Court single bench.

The dispute initially arose over license and royalty of Patented seed technology–BOLLGARD II, between Monsanto and Nuziveedu seeds Company in 2015 (which has earlier been discussed here), which stretched to a major debate over the legality of Patent No. 214436 consisting of Bt. Technology that was granted to Monsanto.

The disputed Patent No. 214436 is titled as "METHODS FOR TRANSFORMING PLANTS TO EXPRESS BACILLUS THURINGIENSIS DELTAENDOTOXINS" which was questioned on claims 25-27 that contains biotechnological invention containing the infusion of Bt gene into the cotton genome. This Bt. bacterium eradicates pests afflicting the cotton plant.

Nuziveedu's Claim

Nuziveedu filed a counter claim under section 64, relying on various grounds such as absence of novelty1, absence of obviousness2, complete specification not revealing any "invention"3,deficiency in complete specifications4 and claim5, false suggestions or representations6, non-compliance of the requirements of Section 87,non-disclosure of source or geographical origin8and the invention claimed in the complete specification being not useful9. Apart from the above grounds, Nuziveedu focused on Section 3 (j) of the Patent Act, 1970, which served as the main ground for the revocation of the mentioned Patent.

Arguments

1. Interpretation of Section 3(j) of Patent Act,1970 vis-a-vis Patent No. 214436

Nuziveedu contended that Section 3(j) clearly explains as to what are not an 'inventions', i.e. "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." Thus, Nuziveedu asserted that claim 25 of the Patent relates to 'nucleic acid sequence', application of which is only in terms of "a plant cell, a seed, a transgenic plant "or a plant variety". Thus, the specification does not provide any industrial application. Since, a plant or seed, which has such a nucleic acid sequence containing the Cry2Ab gene, cannot be granted a patent in India as this (claim 25) falls squarely within Section 3(j) of the Act." Further, Nuziveedu contended that Bt. Trait in Cotton Hybrid varietal plants is an essential biological process, and did not regard cross-bred plants and animals as patentable because they are better regarded as ―discoveries10 which happens naturally and therefore, its just a discovery which has taken place in a laboratory.

Monsanto interpreted the term 'Plant' under section 3(j) as a "living organism" and further averred that exclusion would apply to biological entities, per se and not to inventions, which properly fit the description of "micro-organisms" that are excluded specifically from the mischief of the provision. It explained that "DNA" is the "substance responsible for all the processes within a living organism" and a 'gene' is merely a code which is used for production of a protein in a living organism, thus it is not a living thing. Therefore, the subject matter of the patent (Claim Nos. 25-27) are manmade DNA sequences comprising the CryAb gene which confers insect resistance to plants, when incorporated into the plant's genome. They emphasized that no part of the DNA sequence is a living organism and thus DNA cannot be called as "part" of a plant as well, because it is not like an organ of an animal or the physical attribute of a plant, like flower, fruit, etc. This is a method of creating transgenic varieties and micro-organisms that are new and inventive transgenes and therefore, very much a Patentable subject matter under the Patents Act.

2. Applicability of Plant Variety Act

Since 'Micro-organism' has not been defined by Plant Variety Act, Nuziveedu provided a Cambridge Dictionary definition of 'Micro-organism' as "A living thing that on its own is too small to be seen without a microscope, such as bacteria, germs, viruses. Thus, negated Monsanto's contention that their Patent claim is inanimate and Patentable. Nuziveedu, emphasized on the history of India's ratification to the TRIPS Agreement, as consequences to which Plant Variety Act was enacted with the objective to protect plant varieties and, the rights of the breeders and also to encourage the development of new varieties of plants. Nuziveedu contended that since the questioned Patent comes under the definition of micro-scopic living entity and a part of plant variety , thus it should rather be protected by under the Plant Variety Act instead of Patent Act.

However, Monsanto rebutted the contentions of Nuziveedu by averring that the patented 'trait' or DNA is beyond the scope of the expression "plant variety" as defined as 'plant variety' with a commentary note which comprehensibly excludes 'such a plant or part(s) of the plant could be used to propagate the variety) , a trait (e.g. disease resistance, flower color), a chemical or other substance (e.g. oil, DNA), a plant breeding technology (e.g. tissue culture)" by International Convention for the Protection of New Varieties of Plants (UPOV Convention 1991). Further, Monsanto elaborately mentioned the history of the Patent amendments in order to explain that through various amendments of the concerned Act in 2002 and 2005, and on observing section 3(j) and section 2(1) (j) read with the objects and reasons of the amendments:

  1. "some of the salient features of the Bill are as under :

    1. ...
    2. to modify section 3 of the present Act to include exclusions permitted by TRIPS Agreement and also subject matters like discovery of any living or non-living substances occurring in nature in the list of exclusions which in general do not constitute patentable invention."

So it is very clear that the patentee is entitled to Patent protection for the invention resulting from innovations and skill and the subject claims being products or processes of biotechnology. They also observed that when the patented invention is injected into the cotton seeds which provides a hybrid variety, then that hybrid variety can be protected under Plant Variety Act and the invention will be protected under Patent Act.

3. Trade Mark Violation and Sub-Licensing issue:-

Monsanto alleged that termination of Sub- Licensing was perfectly legal as Nuziveedu failed to provide the required trait value to Monsanto for using their technology. As a matter of right, they could injunct Nuziveedu from using their Patented technology and abbreviation of their trademarks BG I and BG II. Further, once the agreement has been terminated it cannot be restored and the parties cannot be directed to perform the obligations contained therein as per Section 14(1) of the Specific Relief Act, 1963.11

However, Nuziveedu claimed that by virtue of seeds included under the Essential commodity Act, 1955, the Central Government is empowered to fix the trait value of the seeds, exceeding which, one cannot terminate the agreement on the grounds of non-payment of licensee fee. Nuziveedu rebutted the reliance taken by Monsanto under section 42 of specific Relief Act, by asserting that it cannot be bound by those obligations (trait fees) fixed by Monsanto, to which only the Central Government is empowered to fix. Thus, relief under the mentioned provision apropos the present case negated. Furthermore, based on this contention questioned the validity of such termination of sub-licensing agreement, terming it as an arbitrary action taken by Monsanto.

In addition to this, Nuziveedu also averred that such technology is only capable to be protected under Plant Variety Act, which Monsanto neglected, thereby avoiding the provision of Benefit sharing12 arrangements with the seed companies who developed new Bt. Cotton plant varieties expressing Bt trait (subject Patented).

However, in order to rebut the above-stated contentions, Monsanto referred to the judgment of Percy Schmeiser case13, where "purposive construction‟ was applied to the similar facts and it was held that Monsanto's gene patent was infringed by "use", when an unauthorized person developed and commercialized seeds containing the patented gene, since the gene was present throughout the seed, conferring the advantageous trait to the plant and this amounted to taking advantage of the technical contribution of the patentee. Similarly, Nuziveedu has also taken full advantage of the functionality of insect tolerance arising solely from the use of the patented DNA sequences in their cotton hybrid, thereby infringing their subject Patent. Thus, Nuziveedu is infringing Monsanto's Patent, as it is using their invention to bring out the ultimate product.

With respect to the, Trademark violation by Nuziveedu, it is claimed by the alleged party that they did not intend to use the mark on their product and have just used the abbreviations of Monsanto's Trade mark, only with the intention of indicating the source which has been used in manufacturing the product, which is legitimate as being a descriptive mark under section 35 of the Trade marks Act, 1999. Moreover, infringement of Trade mark can occur only if a registered mark is used as 'Trademark' and not otherwise.14

The Delhi High Court Decision

The division bench of Delhi High Court analyzed contentions of both the parties, it upheld Nuziveedu's Contention and observed that protection under Plant Variety Act and Patent Act are not complimentary but are exclusive of each other and Monsanto Patent protection was incorrect as it should have been protected under the Plants Variety Act, looking at the nature of invention.

On account of the above reasons and by observing that Monsanto had failed to disclose the details as well as source of its invention as per section 10(4) of the Act and the Court held that the subject patent falls comes under the ambit of Section 3 (j) of the Patents Act i.e. the said inventions are not patentable. Therefore, Counter claim filed by Nuziveedu is consequently allowed. The Court further gives Monsanto, an opportunity to restore its right in there subject Patent, by allowing them to seek for registration of the same within three month from the date of this judgment, i.e. 11.07.208.

With regard to Trade mark infringement, the Court observed that the defendants do not have any malafide intention to use the Plaintiff's marks "BOLLGARD" or "BOLLGARD-II", rather, Nuziveedu is only using the abbreviation of the name which is permitted under section 2 (o) of Trademarks Act.

Further, the Court directed Monsanto to continue with its obligations under the sub-license agreements and allowed "the suit to proceed with respect to the claim for damages and other reliefs", in the light of the sub-license termination notices issued by Monsanto. The Court also provided a period of three months to Monsanto to seek protection of their subject Patent

Analysis

The whole case revolved around the very major issue, that is whether the Patent No. 214436 has been erroneously granted Patent under the Indian Patent Laws. The Court Observed an important aspect of Intellectual Property Laws, that Patent Act are not complimentary but are exclusive of Plant Variety Act and thus, Monsanto Patent protection was incorrect as it should have been protected under the Plants Variety Act, going by a literal interpretation of provisions of both the statutes.

However, such kind of practice and the current position of law as laid down by Justice Mr. Justice S. Ravindra Bhat and Mr. justice Yogesh Khanna, may create a future barrier for entrance of new technologies in the Agricultural Industries as the major incentive for the technology developers have been sacked and also now that the technology developers have lost the right to fix the license price to the Central Government. I feel that with an advanced inventions along with growing technology and need of such development, the statute must be flexible enough to imbibe the new changes and pave way for such technological developers subject to public policy and can be regulated by the Central Government with respect to the kind of invention taking place as well as 'benefit sharing aspect and license fee', hence taking care of farmer's right as well. Therefore, the subject Patent may be validated and the outcome product after being processed by the Patented invention can be protected under Plant Variety Act. Thereby, avoiding the overlap of IP laws and rightfully protecting each party's right.

Monsanto, being the world's biggest agricultural company also may prefer a special Leave Petition for the above placed decision. Let's wait and watch what's in store for the company and Nuziveedu has been lucky so far having the laws of the land by its side. If Monsanto appeals against the judgment, which is more probable to happen then The question on 3(j) would definitely arise as to its need, intention and validity in the contemporary world having advanced technological inventions, ideas and its needs.

Footnotes

1 Section 64 (1)(e), The Patents Act, 1970

2 Section 64 (1)(f), The Patents Act, 1970

3 Section 64 (1)(d), The Patents Act, 1970

4 Section 64 (1)(h),The Patents Act, 1970

5 Section 64 (1)(i), The Patents Act, 1970

6 Section 64 (1)(j), The Patents Act, 1970

7 Section 64 (1)(m), The Patents Act, 1970

8 Section 64 (1)(b), The Patents Act, 1970

9 Section 64 (1)(g), The Patents Act, 1970

10 Harvard College v Canada (Commissioner of Patents),[ 2002] 4 SCR 45

11Indian Oil Corporation Ltd. v. Amritsar Gas Services and Ors., (1991) 1 SCC 533

12 Section 26, Plant Variety Act

13Percy Schmeiser v Monsanto 2004 1 SCR 902

14 Section 29, Trade Marks Act,1999

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