In a setback to Mahyco Monsanto Biotech (MMB), a division bench of the Delhi High Court has held that it cannot patent its genetically-modified (GM) Bollgard I and Bollgard II technologies and the Plant Breeders’ Rights Act will apply.
The order will have a chilling effect on the agribiotechnology industry, which has already shrunk its research activity in India and has refrained from introducing new GM traits because of uncertainty about whether and when they would be approved for use by farmers, and restrictions on pricing freedom imposed by the agriculture ministry.
The Hyderabad-based Nuziveedu Seeds, the erstwhile franchisee of MMB for its GM bollworm-resistant Bt cotton technology, was jubilant. “This will set the right tone for the seed industry. We hope the Indian law will be implemented in the right spirit,” Murali Krishna, the company secretary and legal head of Nuziveedu Seeds said.
“This is a landmark judgement … which will bring cheer to millions of Indian farmers,” said Kalyan Goswami, executive director of the National Seed Association of India, whose president M Prabhakar Rao is also the chairman and managing director of Nuziveedu Seeds. “They can’t be exploited any further by technology developers by charging exorbitantly high trait value through claiming false patent rights,” Goswami added.
Last month, the agriculture ministry had reduced the trait fees payable for Bollgard II by Rs 10 to Rs 39 per pack of 450gm.
An MMB spokesman said he would be able to comment only after receiving and studying the court order.
The earlier ruling of Justice RK Gauba, pronounced on March 28 last year, had gone in favour of Monsanto Technology on the patents issue. But he had struck down the termination of Nuziveedu Seeds’ licence for non-payment of trait fee dues. Nuziveedu had contended that it was liable to pay fees as determined by the government in its price control orders, and not those fixed by MMB in its licensing agreement. MMB had appealed because it believed that a patent which does not have pricing freedom was a truncated right.
Krishna said MMB had sought a stay for three weeks while it moved the Supreme Court, but the court declined. It has given MMB three months to apply to the Protection of Plant Varieties and Farmers’ Rights Authority (PPVFRA) for “benefit sharing” in place of royalty.
In transgenic varieties like Bt cotton, the gene which produces the bollworm-killing toxic protein in Bt cotton plants is obtained from a soil bacterium. But the natural isolate cannot be straight away inserted into the cotton genome. It has to be modified for the plant to accept it. It has components attached so that the production of the toxic protein is switched on and off at particular points in the life-cycle of the cotton plant. This gene construct when inserted can lodge anywhere in the plant genome. There are hundreds of possibilities. The production of the toxin, its potency, the crop yield, its quality and other properties of the plant can be affected by the location of the insertions. Each of these insertions is called an “event.” The event chosen after screening, for patenting, would be the one that gives the best set of desired results.
Justice Gauba had averred that GM traits involve “laboratory processes and are not naturally-occurring substances.” They are man-made and, therefore, could be protected under the Patents Act. These protections were inserted through an amendment to the Patents Act in 2002 so that patentees were not deprived of the reward for innovations based on skill and ingenuity and “above what occurs in nature.”
But the division bench of Justices S Ravindra Bhat and Yogesh Khanna was not impressed with this line of argument. It observed that while gene constructs, being artificial, can be protected under the Patents Act, once they become part of a plant or seed, the patent gets extinguished and the PPVFR Act will apply. Justice Gauba had held that a trait is not a variety and hence the PPVFR Act cannot apply.
The PPVFR Act confers rights on farmers and communities to plant material they have conserved and improved over generations, so that they can benefit from the effort of the plant material used commercially. It allows researchers one-time use of a protected trait. Commercial seed developers might use this right to backcross the patented traits into their varieties. Nuziveedu’s founder Rao has been saying that the PPVFRA can ask such companies to deposit a part of their sales realisations into the National Gene Fund which it administers, from which it can give a share to the trait developer as a “benefit.”
The denial of patents to MMB will allow seed companies to put the insect-resistant Bt trait in varieties whose seed farmers can save and sow in the next season. This was not allowed under MMB’s licensing agreement. Its franchisees can only produce and sell hybrids, whose seeds lose their potency when sown.
Additional Solicitor General Tushar Mehta has been of the opinion that the PPVFR Act should apply to plant traits. Last May, he had made written submissions on behalf of the government in the same matter. He said that GM traits, if protected under the Indian Patents Act (IPA), could threaten the country’s food security. He asserted that Monsanto and its licensees having “got used to making huge profit at the cost of farmers … appear to be building up a case law under the IPA so as to excessively profit even in the future through monopoly,” defeating the “intent of the government to regulate cottonseed under the PPVFR enactment.” He wanted widely-used traits like Monsanto’s to be “Standard Essential Patents (SEPs) which everyone has a right of access but not for free and has to pay as decided by the regulator.” He had submitted that “PPVFR Act is a complete code balancing the interests of all stakeholders like breeders, trait developers and farmers.”
Mehta had said that GM traits like insect resistance or methods of inserting them into plants can be patented. But once they are implanted, they become part of the plant and hence cannot be patented under the IPA. Moreover, since the implanted genetic traits are passed on to subsequent generations through biological processes, they fall within the ambit of exclusions under the Patents Act, an interpretation which the division bench has adopted.
The agribiotechnology industry had reacted angrily when the agriculture ministry has issued a notification in May 2016 under the Essential Commodities Act to virtually deprive MMB of its patent on Bt cotton technology. Its price control order of that year had also drawn adverse reactions. In August 2016, Mahyco had withdrawn its application before the Genetic Engineering Appraisal Committee (GEAC) for approval of herbicide-tolerant Bt cotton, fearing that seed companies would invoke the PPVFR Act and deprive it of its rights under the Patents Act. The Delhi High Court order will undermine whatever confidence is left in agribiotechnology investors.