India: New Twist To The Seed Price Battle

Last Updated: 13 February 2019
Article by Essenese Obhan and Charul Yadav

The procedures for the fixation of trait value or seed price of registered plant varieties must only be done as per the plant variety protection law, and based on the agreement between the right holder and the concerned party, according to a new Notice issued by the plant variety regulator (see).

The Notice is unique because this is the first time that an IP regulator has formally issued a legal instrument stating that any price control of protected items must be in accordance with the relevant IP legislation.

Critically, the Notice on Plant Breeders' Rights, issued by the Protection of Plant Variety and Farmers Right ('PPVFR') Authority (the 'Authority') on 23 January 2019, recognises that the rights of breeders conferred under the Act cannot be abrogated in any manner known to law. This Notice strikes at the root of an ongoing dispute between Indian seed companies and the multinational giant, Monsanto, where the Indian companies had obtained registrations for their varieties but complain that their rights as registered breeders were being abrogated by an alleged patent holder.

The Notice requires that section 28 of the PPVFR Act, 2001 (the 'Act') be strictly followed in matters of price fixation for plant varieties registered with the Authority. (Section 28 confers on registered breeders the exclusive rights to produce, sell, market, distribute, import or export of registered plant variety.) While the Notice appears to be aimed at breeders of registered varieties and their licensees, it remains to be seen how this will affect the use of just a single trait from a registered variety.

The Notice seeks to streamline the overlap that the PPFVR Act has with the laws dealing with the regulation of seeds and traits. Through the Notice, all public and private authorities that implement the Seed Act, 1966 (the 'Seed Act') (in matters related to seed price fixation), and the Essential Commodities Act, 1955, (in matters related to trait value fixation), must revise their procedures with regard to the varieties registered under the PPVFR Act, 2001 (the 'Act'). The procedures for fixing prices of seed and trait varieties not registered with the PPVFR Authority remain unaffected.

The Notice confirms the obligations of a registered breeder under Rule 36A of the PPVFR Rules 2003. Under this, a registered breeder must provide quality seeds or propagating material of a registered variety to farmers in time for planting, in accordance with their requirement and at a reasonable market price. If the registered breeder fails to do so, an affected party may apply for compulsory licensing to the Chairperson of the PPVFR Authority, under Section 8(2)(e) of the Act and Rule 21(5) of the PPVFR Rules.

Impact on Monsanto's price fixation battle

The control of seed prices and trait value has been a topic of heated debate in India, especially in the ongoing dispute between Monsanto and Indian seed companies. The introduction of Bt-cotton in India some years ago led to a surge in the price of cotton seeds in the country. Between 2004 and 2015, multiple state governments in India, in order to protect farmers' interests, and to regulate the prices of Bt-cotton hybrids seeds, passed various laws and issued notifications and orders regarding fixation of the maximum sale price of such seeds, including the trait value. However, Monsanto did not accept the trait value fixed by price notifications, arguing that since they owned the Bt technology, only they were entitled to fix the trait value.

It is relevant to note that a large percentage of the Bt-cotton seeds currently on sale in India are of registered cotton varieties. The Notice brings such seeds out of the ambit of price control by other laws. This Notice is also likely to impact the secondary question of the effectiveness of seed price and trait value control with regard to the access of good quality seeds by farmers.

In the present case, the PPVFR Act protects IP rights for registered plant varieties. The Act not only confers exclusive rights on registered breeders, but also ensures that public needs are adequately met. Towards this, the Act permits compulsory licensing if a registered breeder does not fulfil public needs. In view of this, the Authority is arguably the proper forum for fixing seed prices and trait value, if the need arises. Following this Notice, the challenge for the PPVFR Authority will be to monitor price control. There is also a possibility of a surge in applications for compulsory licensing in India, as a consequence of this Notice. Peripherally, the Notice may even encourage innovation and development of seeds as envisioned under the National IP Rights Policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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