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Supreme Court setting aside the order of the Division Bench results in Monsanto’s patent still being valid
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In a judgement passed by the Supreme Court of India on January 08, 2019, an order of the Division Bench of the Delhi High Court was set aside. Earlier, the Division Bench’s order had held a key patent of Monsanto invalid. The patent is key to Monsanto’s Bollgard II Bt cotton business vertical. The Supreme Court primarily set aside the Bench’s order because the patent was held invalid in the absence of a trial, and the Supreme Court bought into the argument of Monsanto that it had not waived its rights for a trial in the matter of validity of its patent. Therefore, it is important to note that Supreme Court did not scrutinize the patent in question to declare the patent valid. The question of validity of the patent is likely to be dealt with in a trial court, and eventually the Supreme Court, given the stakes.
The suits concerning the current patent, and its eventual outcome will be extremely important to the biotechnology industry, and more specifically to agro-biotech industry. The decision on validity of the patent will have a major impact on what is considered patent eligible subject matter in the biotech industry. The decision may also hugely impact claim drafting and IP strategy that may be adopted to protect subject matter comparable to the one claimed in the patent.
The patent includes two sets of claims, 1-24 and 25-27. The first set of claims, 1-24, cover a method of producing a transgenic plant, whereas the second set covers a product, viz., a nucleic acid sequence. The independent method claim 1 includes the step of incorporating a Nucleic Acid Sequence (NAS) into the genome of a plant. The independent product claim 25 on the other hand claims the NAS. The method claim targets those companies, which prepare donor seeds that have NAS, and such companies are fewer in number. The claims which are relatively of substantial commercial value are the product claims 25-27. The product claims target those companies who prepare hybrid seeds, which are derived from a process involving the donor seeds comprising the claimed NAS. The hybrid seeds will include the NAS, and therefore read on the product claim.
While the validity of the process claim may be questioned, the parties who are up against Monsanto are more interested in invalidating the product claims. We will discuss later on in the article about the far-reaching impact of the product claims in question. The independent product claim 25 is reproduced below.
25. 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 first part of the claim, appearing before the expression “wherein”, includes elements of the product (NAS), and the second part of the claim recites the consequence of its use.
The validity of the patent is challenged based on the provisions of § 3(j) of The Patents Act, 1970 (“Act”), which excludes patenting of plants and animals in whole or in part, seeds, varieties, species, and essentially biological processes for production or propagation of plants and animals. However, said section allows patenting of microorganisms.
The argument used to challenge the validity is that NAS by itself are inert and inanimate, and its only use is when the NAS is incorporated into a plant genome to form a seed or a plant, and seeds and plants are excluded subject matter.
We agree with the contention that NAS by itself are inert and inanimate, and its only use is when the NAS is incorporated into a plant genome to form a seed or a plant. However, we are not convinced that the Act, as it stands, allows for patent to be rejected or invalidated based on such contention.
In the above referred contention, it appears that it is not the subject matter of the claim, which is scrutinized to check whether it falls within the scope of excluded subject matter. Instead, the industrial application (which is not necessarily the subject matter of the claim) of the subject matter of the claim is scrutinized to check whether it falls within the scope of excluded subject matter. In our view, the subject matter and not the industrial application (when not considered part of the claim) of the subject matter, should be scrutinized to reject or invalidate a claim based on provisional of excluded subject matter.
We propose to use a few analogies to demonstrate the faults in the argument that a claimed subject matter should be classified as being within the scope of excluded subject matter if its only use or industrial application falls within the scope of excluded subject matter. In the first analogy, consider a tool that is developed for performing surgery. In this case the tool by itself is inert and inanimate, and its only use is in a surgical process, which is excluded subject matter under § 3(i). In another analogy, consider a pharmaceutical product that is developed to fight cancer. In this case again, the product by itself is inert and inanimate, and its only use is in a medical process (consumption of the drug as per a prescribed dosage), which is also excluded subject matter under § 3(i). Going by the argument based on “use”, both the surgical tool and the pharmaceutical product should be considered to fall within the scope of excluded subject matter. Therefore, if a patent is held invalid on the basis of “use”, there would be practically a blanket ban on patenting of pharmaceutical products, which is clearly not the legislative intent, given the amendments made to the Act in the past to comply with TRIPS.
Having made arguments in favour of upholding the validity of the patent, we now look at the challenge upholding the validity of the patent. At the outset, in our view, we believe that the patent is valid based on the provisions of the Act, since the subject matter as claimed doesn’t fall within the scope of excluded subject matter. It is important to note that it is the NAS that is claimed, and not the seed. Assuming that the claimed NAS is patent eligible, consider the potential infringers. Primarily, the hybrid seed companies who produce and sell seeds that include the claimed NAS are potential infringers, and so are farmers who use such seeds. Therefore, at present the farmers are at the mercy of the patent owner, who has gone against the hybrid seed sellers (companies) and not the users (farmers). While it is certain that no company will make the mistake of filing patent suit against farmers in India, given how politically sensitive such an action would be, there is noting in the Act that stops the patent owner from going against farmers.
Now the question is whether there is legislative intent expressed in the Act to shield farmers from patent suits. In our view, § 3(j) indirectly expresses the legislative intent to shield farmers from patent suits, to the extent the legislature could envisage patent threats to farmers. However, in our opinion, the protection offered by the language used in § 3(j) is inadequate. The exposure of farmers to patent suits is well known by examples in foreign countries, and the legislature should make amendments to the Act at least now, instead of assuming that patent suits are unlikely to be filed against farmers in India.
The amendment to shield farmers could be made by altering the language of § 3(j). However, we believe that such an amendment could lead to more complications. Instead, the Act may be amended, say by adding a clause to § 47, to exclude certain acts by farmers from being considered patent infringement. The reason why we propose to add a clause to exclude farmers, rather than amend the language of § 3(j), is because, we believe that it is still the legislative intent to encourage inventions of the nature claimed in the patent. Such an encouragement is possible only when hybrid seed companies, like the ones Monsanto is going after, are still within the ambit of patent infringement. An amendment to § 3(j) may exclude both the hybrid seed companies and the farmers from patent infringement, whereas it may be legislative intent to only shield farmers.
Another concern in holding the patent valid is the impact on the price of such seed. A valid patent means, the seed companies will have to pay licencing fee to the patent owner, and it is eventually the farmer who pays for it all. However, while the Act has provisions to impact pricing, invalidation of the patent is certainly not the answer to pricing concerns. The government is and continues to regulate trait value to be paid to patent owner, and we believe is the right approach to tackle pricing concerns.
In conclusion, we believe that the subject matter as claimed doesn’t fall within the scope of excluded subject matter, and hence the validity of the patent should be upheld. The seeds produced by seed companies, and therefore the seed companies, should be within the ambit of patent infringement. Further, The Patents Act, 1970 should be amended to introduce a clause to shied certain acts of framers from patent infringement. Additionally, price control of certain farm inputs should be carried out by calibrating trait value, as is being done currently.
We hope this article was a useful read.
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Best regards – Team InvnTree
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Monsanto Vs Nuziveedu Patent dispute: Brief Analysis of Judgement
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.
Please feel free check our services page to find out if we can cater to your requirements. You can also contact us to explore the option of working together.
Best regards – Team InvnTree
This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License
Monsanto Challenges High Court Judgement Adversely Affecting Patentability in the Field of Agricultural Biotechnology
The Delhi High Court on April 11, 2018 pronounced its judgement in a litigation between Nuziveedu and Monsanto. The judgement held one of Monsanto’s important patents invalid. The patent was critical to Monsanto for protecting its business interest in their hugely successful Bt cotton seed variety Bollgard II.
The patent was held invalid under Section 3(j) of the Patents Act. Section 3(j) disallows patenting of “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.” The Court held that the subject matter covered by the patent is “essentially biological process”, and therefore not patentable.
In the general sense, the patent in question claimed a selected sequence of a specific bacteria placed at a specific location in the plant genome, to produce a specific type of fusion protein. In practice, the resulting fusion protein would adversely affect pest(s) that are common to cotton plants.
The judgement is specifically important because it was common practice of the agro-biotech industry to protect key genetic material by claiming the same in a manner similar to the approach explained above, to work around the provisions of Section 3(j). Especially, the strategy enabled patent applicants in similar situations to argue that the claims are not directed at protecting plants and animals in whole or any part thereof, including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals. Instead, the claims are directed at micro-organisms, which is not a subject matter barred from patenting. However, given the present judgement, the above discussed strategy, and in most cases the only available strategy, will not work anymore in securing patent protection for “inventions” of similar nature in the agro-biotech industry.
Monsanto has appealed to India’s Supreme Court against the ruling by the Delhi High Court. The agro-biotech industry and patent professionals will be closely watching this space given the far-reaching consequences of the outcome.
We hope this article was a useful read.
Please feel free check our services page to find out if we can cater to your requirements. You can also contact us to explore the option of working together.
Best regards – Team InvnTree
This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License
