Monsanto Vs Nuziveedu Patent dispute: Brief Analysis of Judgement

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The recent advancements in the field of plant biotechnology has promoted multifold growth of agro-biotech industry. The recent research in the plant genomics has resulted in producing sustainable varieties of plants and crops. The increase in the number of patents stands as a witness for the paradigm shift in the field of plant biotechnology.

However, enforceability of these patent rights remains a challenge. The increase in the number of patent infringement litigations in the agro-biotech industry in the recent times, is an indication of said challenge. A brief analysis of patent litigation between agro-biotech based companies, Monsanto and Nuziveedu Seeds is presented below.

Background of the case

Monsanto is an American multinational agrochemical and agricultural biotechnology corporation, whereas Nuziveedu Seeds is an Indian agribusiness company, known to be among the largest hybrid seed companies in the country. Monsanto had licensed its patent IN214436 relating to Bt. Cotton technology to different Indian companies including Nuziveedu Seeds, for which a lifetime fee of Rs. 50 lakh was charged along with a recurring ‘trait value’ as compensation. The Indian companies utilized said patented technology to produce cotton seeds that are resistant to boll-worm attacks.

The Indian companies demanded Monsanto to reduce the trait fee as the State Governments were passing new price control orders to fix the trait fees. Monsanto refused to reduce the trait fees. Consequently, the Indian companies stopped paying royalties to Monsanto since October 2015. Subsequently, Monsanto sent a notice to Nuziveedu in November 2015 regarding the termination of their sub-license. Nuziveedu and few other Indian companies approached Competition Commission of India (CCI) against Monsanto and alleged Monsanto of anti-competitive practices including “the abuse of dominant position” and “anti-competition agreements”.

Monsanto terminated its contract and initiated arbitration proceedings for the recovery of the due amount of Rs. 400 crores from the Indian companies. Additionally, a lawsuit was initiated by Monsanto before Delhi High Court against Nuziveedu Seed Ltd., Prabhat Agri Biotech Ltd. and Pravardhan Seeds Pvt. Ltd, seeking an injunction for patent and trademark infringement.  

As a response to the infringement allegations, the defendants filed a counter-claim for the revocation of the plaintiff’s patent. The defendant urged to revoke the patent as per the provisions of Section 8, Section 10(4) and argued that the patent is invalid, as it falls within the scope of Section 3(j) and 3(h) of Patents Act.

Decision by Single Judge of the Delhi High Court

The Single Judge of the Delhi High Court reinstated the sub-licence that was terminated by Monsanto. It allowed Nuziveedu Seeds and other Indian companies to continue using the patented technology till the suit is disposed, wherein, the trait fee must be paid in accordance with the government set rates. The Single Judge also rejected the arguments of the defendant about the validity of the patent.

Appeal to Division Bench of Delhi High Court

Both the parties appealed to the Division Bench of Delhi High Court against the order of Single Judge. Monsanto challenged the decision of the Single Judge to re-instate the licence terminated by them. The defendants challenged the rejection of their arguments about the validity of plaintiff’s patent.

 Decision by Division Bench of the Delhi High Court

The Division Bench concluded that the subject patent falls under the provisions of Section 3(j) of the Patent Act and held that the claims of the patent are unpatentable. The Division Bench upheld the order of Single Judge regarding the trait fee payable by the Indian companies to Monsanto. The court gave a time period of three months to Monsanto to seek protection for its invention under “The Protection of Plant Variety and Farmers Right Act, 2001”. 

Analysis on the Judgement

The order of the Division Bench to invalidate the patent under Section 3(j) is not convincing in our view. The court appears to have arrived at the judgement without adequate claim construction and expert witness.  The claim construction is the primary requirement in deciding the validity of a patent, which in the present case, appears to have been inadequate. The misinterpretation of Section 3(j) to invalidate the patent is a major setback to innovation in the field of plant biotechnology.

According to Section 3(j), following inventions are not patentable:

“(j) plants and animals in whole or any part thereof other than micro organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals”

According to Section 3(j), plants and animals per se or any part thereof are not patentable. Moreover, ‘essentially biological processes’ to produce plants and animals are also not patentable. Though the definition of ‘essentially biological processes’ was not defined in the Patents Act, Rule 26(5) of the EPC states that “a process for the production of plants or animals is essentially biological if it consists entirely of natural phenomenon such as crossing or selection”.

In the present case, the court made an observation that:

“The conclusion that the court draws therefore, is that transgenic plants with the integrated Bt. Trait, produced by hybridization (that qualifies as an “essentially biological process” as concluded above) are excluded from patentability within the purview of section 3(j), and Monsanto cannot assert patent rights over the gene that has thus been integrated into the generations of transgenic plants.”

It is to be observed that, Monsanto got a patent for the introgression of specific Bt. bacteria genes into the cotton genome with human intervention. This cannot be considered as an essentially biological processes. So, the court’s observations in considering the claims of the Monsanto’s patent as essentially biological processes appears to be inappropriate.

Monsanto had alleged infringement of Claim 25 of the patent; claim 25 is recited below:

“A nucleic acid sequence comprising a promoter operably linked to a first polynucleotide sequence encoding a plastid transit peptide, which is linked in frame to a second polynucleotide sequence encoding a Cry2Ab Bacillus thuringiensis 8-endotoxin protein, wherein expression of said nucleic acid sequence by a plant cell produces a fusion protein comprising an amino-terminal plastid transit peptide covalently linked to said 5- endotoxin protein, and wherein said fusion protein functions to localize said 5-endotoxin protein to a subcellular organelle or compartment.” 

The claim deals with the extraction of a specific nucleic acid sequence from Bacillus thuringiensis (Bt bacterium) and inserted into a plant cell.  The modified nucleic acid sequence produces toxins that are resistant to boll-worm attacks.

Better claim construction and expert witness would have helped the court to prevent the misinterpretation of Section 3(j).

Monsanto has appealed before the Supreme Court and challenged the decision of Division Bench. We wish the apex court pronounces a judgement with reasoning, such that companies can continue to innovate and seek protection within the framework of the Patents Act and international obligations, which India has agreed to by way of TRIPS, and the like.

We hope this article was a useful read. 

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Best regards – Team InvnTree   

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License

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