India: Supreme Court sets aside order in Monsanto case
The new year brought new hopes for Monsanto with the Supreme Court setting aside a Division Bench order of the Delhi High Court dated April 11 2018 which held the Monsanto patent for Bt cotton invalid.
The genesis of the dispute between the parties is a sub-licence agreement dated February 21 2004 in which Nuziveedu was authorised to develop "Genetically Modified Hybrid Cotton Planting Seeds" with the help of Monsanto's technology and to commercially exploit the seeds in the context of the limitations prescribed in the agreement. The agreement also provided for payment of a licence fee/trait value by Nuziveedu, for use of Monsanto's patented technology.
The agreement, after an extension, was ultimately terminated by Monsanto on November 14 2015 due to disputes regarding payment of licence fee/trait value in view of a subsequent price control regime introduced by the state. Monsanto filed a lawsuit (before a single judge of the Delhi High Court) and an injunction application a) to restrain the defendants from using their registered trade mark b) for violation of the registered patent during the duration of the suit in view of the termination of the agreement. The Court refused to grant an injunction and observed "that the issues arising in the suit necessarily required formal proof, particularly expert opinion". Nuziveedu filed a counterclaim seeking revocation of the patent, the primary argument being that Monsanto's patent claims violated Section 3(j) of the Patents Act which covers plants and animals in whole or any part thereof, other than microorganisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals. On the counterclaim, the Court simply issued notice to Monsanto. Both sides appealed to the Division Bench of the Delhi High Court which heard the counterclaim of Nuziveedu and the refusal of the preliminary injunction to Monsanto together and came to the conclusion that Monsanto's patent was invalid.
Supreme Court ruling
The Court did not go into the merits of Monsanto's patent claim and the reasoning of the Division Bench in revoking the patent. The Court took the view that the challenge to the patentability was by way of a counterclaim by Nuziveedu Seeds Ltd. This was decided and considered by the Division Bench (a two judges bench) of the Delhi High Court in a summary manner by relying on documents extracted from the public domain and not even filed as exhibits in the suit. The Court was of the view that "the issues raised were complicated, requiring technological and expert evidence with regard to issues of chemical process, biochemical, biotechnical and microbiological processes and more importantly whether the nucleic acid sequence trait once inserted could be removed from that variety or not and whether the patented DNA sequence was a plant or a part of a plant" and these matters should be considered at the final hearing of the suit. Thus, it proceeded to set aside the Division Bench order, since the counterclaim of Nuziveedu (in which it challenged Monsanto's patent) was not even considered (on merits) by the single judge. The Supreme Court was of the view that the Division Bench "ought not to have examined the counterclaim itself, usurping the jurisdiction of a single judge."
The issues raised in the suit are not merely technical but have a deep impact on the livelihood of farmers. When the Bt cotton technology was introduced, the yield of cotton increased tremendously and India became the second largest producer of cotton in the year 2007-2008. The problem started when the ability of cotton plants to resist pests was found to reduce with time. However, Monsanto demanded the same royalties from its licensees. This led to several state governments intervening to control the licence fee/trait value to be paid to Monsanto, resulting in disputes with licensees.
The trial and final decision of this case may take three to four years. However, it is clear that the decision will not be easy to make and has far-reaching ramifications considering this is the first patent case concerning a DNA sequence/DNA constructs and plant varieties based on the sequence/construct and therefore involves the objections under Section 3(j) of the Indian Patent Act.