Moves in the right direction? SC upheld the IPR of an MNC

By: and |
New Delhi | Published: January 10, 2019 12:46:05 AM

While the Supreme Court upheld the IPR of an MNC, the Uttarakhand HC upheld the liability of another MNC to share the benefits it was deriving from exploitation of local biological resources

Monsanto Technology LLC, Monsanto patent, Bt technology, Patents Act, Nuziveedu Seeds Ltd, supreme courtMahyco Monsanto Biotech, a JV of Monsanto and Maharashtra Hybrid Seeds, has sub-licensed Bt cotton technology to various domestic seed companies since 2002.

In the past three weeks, courts have adjudicated upon matters that greatly impact farmers and indigenous communities. However, no farmer or a member of an indigenous community was either a claimant or a respondent. In April 2018, the High Court of Delhi, in Nuziveedu Seeds Ltd and Ors vs Monsanto Technology LLC and Ors, declared Monsanto’s patent for Bt technology as invalid because Section 3(j) of Patents Act, 1970, prohibits the grant of patents for plants, plant varieties or seeds or any part thereof. The patent in question was of Bollgard technology that can be credited with rising cotton production in India. This technology is about a genetic sequence from a microorganism called Bacillus thuringiensis (Bt), which, when modified and inserted into plant cell, produces a toxin that repels pests like bollworm. Mahyco Monsanto Biotech, a JV of Monsanto and Maharashtra Hybrid Seeds, has sub-licensed Bt cotton technology to various domestic seed companies since 2002. These companies would introduce Bollgard technologies into their own variety of seeds and sell to farmers.

Also read| BT cotton issue: Supreme court restores Monsanto patent, for now

The Supreme Court, on January 8, struck down this order. While in a strictly legal sense the Supreme Court was adjudicating upon a question of law, the practical implications are far-reaching for the textiles sector. The gravity is evident from the fact that as per the report of DIPP on Textiles and Apparel Sector, the textiles sector accounts for 10% of India’s manufacturing production, 5% of GDP, and 13% of exports earnings. Textiles and apparel is the second-largest employment provider in the country, employing 51 million people directly and 68 million people indirectly in 2015-16. Any attack on the ability of Monsanto to earn royalty from its IP would have resulted in Monsanto not introducing newer technologies in India. This is critical as bollworms would, over time, become resistant to the current strain of the pest-repellent toxin, and would require further innovation.

Also, earlier last year, in Divya Pharmacy vs Union of India and Ors, the High Court of Uttarakhand at Nainital passed an order against Divya Pharmacy that makes ayurvedic medicines and nutraceutical products. The pharmacy was founded by Swami Ramdev and Acharya Balkrishna, according to the averments of the writ petition. The High Court gave a purposive (not literal) interpretation to the provisions of the Biological Diversity Act, 2002. While doing so, it adjudicated that an Indian entity also has to comply with the demand raised by a state biodiversity board towards fair and equitable benefit sharing (FEBS). While the term FEBS has not been clearly defined, the High Court observed that indigenous and local communities, who either grow “biological resources” or have traditional knowledge of these resources, are the beneficiaries under the Biological Diversity Act. In return for their parting with this traditional knowledge, certain benefits accrue to them as FEBS, and this is what FEBS is actually all about.

In passing the above judgment, the High Court has given impetus to the efforts of the National Biodiversity Authority as well as state biodiversity boards in a particular direction, which were struggling to implement provisions of the Act. Various companies manufacturing ayurveda-based cosmetics have been operating unregulated. It will be interesting to note what reactive efforts do the biodiversity boards across various states take in light of the judgment.

What is interesting in these judgments is that while the Supreme Court upheld the IPR of an MNC, the High Court of Uttarakhand upheld the liability of another MNC to share the benefits it was deriving from exploitation of local biological resources. It is critical that a balanced approach is adopted when there emerges a question of rights of corporations versus the rights of the populace. While inadequate protection to IP developed by corporates will disincentivise innovation, giving them a free run may lead to exploitation of consumers and gradual privatisation of natural resources.

Shankar is partner, Jindel is principal associate, J Sagar Associates. Views are personal

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