Monsanto wins patent battle at SC, but govt policy ensures the win means little

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Updated: January 9, 2019 3:47:19 AM

SC rejection of govt claim that patent is illegal will help all biotech firms, but govt policy keeps new seeds away.

cotton, cotton market, bloomberg, donald trump, donald trump jr, us china trade war, india cottonMonsanto has already withdrawn its latest generation of cottonseed technology from the government’s approval process. (Reuters)

Biotech major Monsanto won a big victory in the Supreme Court with the court declaring that its BT cotton patent was valid – in the Delhi High Court, the government had argued that the government-granted patent was illegal – but it is not clear what the victory will amount to. As a result of unfriendly government policy that includes a control on its pricing, Monsanto has already withdrawn its latest generation of cottonseed technology from the government’s approval process.

Ironically, illegal copies of Monsanto’s latest seeds are already flooding the market and one estimate is that they comprise 15-20% of cotton seeds being used today. The seeds, being sold by traders – and often without even proper labelling – retail at anywhere between Rs 1,200 and Rs 1,500 per packet as compared to the Rs 800 ceiling the government has put for Monsanto’s earlier generation of seeds.

In other words, while the government put a ceiling on the prices of seeds – Monsanto’s seed prices were cut from Rs 930 per bag to Rs 800 and, within this, its royalty was cut from Rs 170 to Rs 49 – farmers were more than willing to pay for seeds that offered better characteristics. Monsanto challenged the December 2015 price control order, but there has not been even one hearing of the case so far.

While Monsanto had a dispute with seeds firm Nuziveedu – that inserted Monsanto’s gene into its seeds – since mid-2015, for some reason the government decided to intervene when the matter was before a division bench of the Delhi High Court. A single judge bench of the Delhi High Court had earlier upheld Monsanto’s patent but said its termination of Nuziveedu’s contract – Nuziveedu not paying royalty to Monsanto was the subject of the dispute and the termination – was illegal.

While Monsanto challenged what the judgment said about the termination, Nuziveedu challenged the court’s upholding of the patent. This is when the additional solicitor general Tushar Mehta argued that the patent granted by the country’s patent office was illegal; his argument was that while Monsanto had a patent on the gene, once this was inserted into a plant, it became a plant and that cannot be patented. The division bench upheld this view and it is this order that the Supreme Court has rejected.

But, and here’s the rub, while the judgment will be a boon to other biotech firms, especially seedtech, who would have had to shut shop were such patents held to be illegal, it is not clear if Monsanto will benefit. The prices of its seeds and, within this, the royalty are already under government control; for good measure, the government also introduced a proposal to cap royalty rates, though this was later withdrawn.

And while Monsanto has no plans, as of now, to submit newer seeds for government approval – it withdrew its herbicide tolerant (HT) seeds from the process in August 2016 – the government has made its life difficult in other ways as well. Till recently, every seed firm like Nuziveedu required an annual No Objection Certificate (NOC) from Monsanto whose job was to ensure the right processes were being followed – this was critical if Monsanto was to be responsible for any problems with the seeds.

Under pressure from some seed companies, however, the government removed the annual NOC requirement; as a result, if these firms choose to not pay royalty, there is little a Monsanto can do except to file a civil suit which can take decades to resolve. In other words, Monsanto may have won the battle, but it continues to lose the war; as do the country’s farmers who need better quality seeds, and more so now that global warming requires both drought- and flood-resistant seeds that biotech firms are working on.

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