M2L5: Gene Patenting & The Future of Agri-Biotech. In India

The context:

Recently the SC in India ruled out that the gene patent by Monsanto on Bt Cotton, Bollgard-II was prima facie valid. Section 3(j) restricts patenting on micro-organisms, Monsanto tried to prove that it is not a microorganism and therefore it is not covered under Section 3(j). The controversy also centers around which of the two IP regimes is applicable upon Bt cotton viz. the Patents amendment Act (2005) or the Protection of Plant Varieties and Farmers’ Rights Act (PPVFRA (2001))

What is Bt Cotton?

Bt cotton is an insect-resistant transgenic crop designed to combat the bollworm pest. It was created by genetically altering the cotton genome to express a microbial protein from the bacterium -- Bacillus thuringiensis. The transgene inserted into the plant’s genome produces toxin crystals that kill the pests that eat it. Monsanto’s GM cotton seed technology currently dominates 90% of India’s cotton acreage.

Patenting History of Bollgard and Bollgard-II

Monsanto was first granted a patent for the first version of their Bt Cotton seed, Bollgard in the United States in 1992, which expired in 2012. In India, Monsanto tied up with Mahyco (which later became Mahyco Monsanto in 1998) to import Bollgard. The Genetic Engineering Appraisal Committee (GEAC) gave Monsanto permission to commercially release Bollgard in 2002 and Bollgard-II in 2006.

Why does the Indian market matter to seed companies?

India's share (as the world’s biggest cotton producer) in global cotton production is currently 23% and is expected to rise to 26.5%. Thus, Indian cotton seed market compared is the world's biggest farm markets, worth around $3 billion a year.

Why do seed companies matter to India?

The cotton textile sector contributes 13% to the export earnings of India. India is the 2nd largest producer of Manmade Fiber and Filament. India spends tens of billions of dollars in importing food, as outdated technologies, poor yields, shrinking farms and unreliable weather patterns afflict the country of 1.3 billion people. High quality seeds produced by GM technologies can help to reduce this problem.

Timeline of events

1986 : India passes Environmental Protection Act

1990 : Multinational seed company Monsanto denied permission to test Bt cotton technology in India.

1995 : India joins WTO, signs TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement. Developing nations get ten-year transition period (1995-2005) to make the domestic legislation compatible with TRIPs. Govt. of India passes Patent Amendment Act in the year 2005, to harmonize the earlier IPR laws with WTO’s TRIPS agreement.

1997 : US patents and trademarks office (USPTO) grants Monsanto patent on Bt cotton, a biotech invention involving the infusion of the Bt gene Cry1ac into the cotton genome. The crop is called as Bollgard-I (BG I).

1998 : Establishment Monsanto-Mahyco Biotech (MMB), a joint venture between local seed company Maharashtra Hybrid Company and Monsanto

1999 : Monsanto applies for patent for Bollgard II (BG II) seeds that have stacked genes Cry1Ac and Cry2Ab. Monsanto claims that it can protect the plant against three pests: American boll worm, pink bollworm and spotted boll worm. (thus, claims to be superior to Bollgard I. Bollgard-I was never patented in India since this technology was discovered prior to India’s undertaking of TRIPS commitments).

2001 : Introduction of local Bt cotton variety Navbharat 151. Navbharat 151 survives fierce bollworm pest.

2001 : Protection of Plant Varieties and Farmers’ Rights Act

2002 : MMB acquires biosafety approval for first generation Bt cotton technology (Bollgard)

2007 : Monsanto sub-licenses its Bt cotton technology for 10 years to many Indian seed companies, to sell to farmers. Seed companies are supposed to register such variety under the PPVFRA and paid royalty to Monsanto. (Thus, India comes under special case wherein Monsanto’s upsteam patent rights and the protection to plant variety co-exist)

2007 : Andhra Pradesh govt. uses the Monopolies and Restrictive Trade Practices act and the Essential Commodities act to cut the hefty royalty fee charged by Monsanto. 

2008 : An indigenous seed containing the Cry1Ac gene was developed by researchers at the University of Agricultural Sciences (UAS), Dharwad, Karnataka in India. However, reportedly, under the assumption that Monsanto had a patent on this gene, UAS was not allowed to sell the seed commercially on the directions of the Ministry of Environment and

Forests.

2009 : Farmers started witnessing the signs of development of resistance in Bollworm pests. The Bt cotton seed could no longer act as biopesticide as claimed by Monsanto in its patent. The patent can therefore patent can be revoked under Section 64(1)(g) of the Indian Patents Act (2005) on the grounds of violation of claims since the said invention is no longer useful.

2008 : Monsanto releases a press note to defend its claims as mentioned within the patent were still valid. The resistance to Cry1Ac was seen in only four districts in the Indian state of Gujarat i.e. Amreli, Bhavnagar, Junagarh and Rajkot. Further, according to the information provided on the company’s website, no insect resistance has been confirmed outside the four districts in Gujarat. The company recommended that it would be safer for the farmers to adopt Bollgard-II instead.

2009 : Monsanto’ application for patent on Bollgard-II granted (Indian patent no. 214436 and Indian patent no. 232681). The patents expiry date is 2019, that is, 20 years after the date of filing.

2013 : Monsanto applies for approval from GEAC for the commercial release of Bollgard II-RRF cotton, harboring both insect-resistance (from Bt genes) and glyphosate-tolerance (cp4-epsps gene) traits.

2015 : Central Institute of Cotton Research (CICR) reports that pink bollworm has also started to develop resistance against Bollgard-II. Surveys indicate that the damage to the cotton crop from pink bollworm attacks is particularly severe in Gujarat with an estimated 9% loss, and it was found to have spread to wider areas

2015 : Later reports then claimed that Bt cotton has resulted in the death of at least 300,000 farmers between 1995 and 2013. Around 84% of the farmer suicides have been attributed to Monsanto’s Bt Cotton.

2015 : Centre too files an affidavit (Mahyco Monsanto Biotech and others vs Union of India) saying rising prices of Bt cotton seeds was financially burdening farmers, who still had to spend additionally to buy other pesticides to make the crop pest-resistant.

2015 : Government claims that the high cost of seeds and royalties has left thousands of farmers in a vicious cycle of debt, which inevitably led to many suicides when crops failed. Andhra Pradesh, Maharashtra, Gujarat and Telangana enact price-control measures thereby fixing different retail prices and trait values to make them more affordable for cotton-growing farmers. Centre decides to fix a uniform price and trait value for the entire country.

2015 : Agriculture Ministry issues a Cotton Seeds Price (Control) order (2015). The government then lowers the prices of GM cotton seeds by 7.5% to help farmers and cuts Monsanto’s royalties by more than 70%. Monsanto is restricted from charging royalty exceeding 10% of the MRP of the seeds being marketed by the licensees. Monsanto refuses to lower royalty

2015 : Eight Indian seed companies stopped paying Monsanto royalties pending issue in the court. Monsanto terminates the sub-license agreements with them for non-payment of royalties as decided by itself. Monsanto's sales of seeds and genetic traits for cotton dropped 16% or $83 million, in the fiscal year ending August 2016

2016 : Government releases draft 'Licensing and Formats for GM Technology Agreement Guidelines (2016). Under the same, after the first 5 years, royalty to technology provider would reduce by 10% of initial value every year. If the GM technology loses efficacy (effectiveness), the technology provider would not be eligible for any royalty.

2016 : Monsanto sues various seed companies who continue to sell the seeds on the claims that that since Bollgard-II is patented, the companies are not allowed to use the technology without undertaking a license from her.

2016 : Seed producers approach the Competition Commission of India (CCI), alleging “abuse of dominant position” and “anti-competition agreements” by Monsanto. (As per govt. rules, seed companies cannot commercialize their hybrids without a patent license from Monsanto, in much the same way that Monsanto cannot sell or distribute these hybrids without permission from the seed company)

2016 : Seed companies claim that if Monsanto refuses to license them, they can move the court for a compulsory license (CL) by requesting revocation of the monopoly rights on patent (allowed under TRIPS and the Indian Patents amendment act (2005)).

2016 : Agri. Ministry passes a draft notification on compulsory licensing of GM technologies. This obliged Monsanto and other technology developers to license their proprietary GM traits on demand. After lobbying by the U.S. ambassador to India, the measure is frozen.

2016 : Under the new IPR Policy released in 2016, government clarifies that only the PPVFR Act (2001) will govern IP rights for transgenic varieties.

2017 : The Special 301 report released by USTR in year 2017 put India is on its Priority Watch List on the grounds that India continues to provide inadequate protection for IP holders.

2017 : CCI rules out that the seed companies are not obliged to pay more than the “trait value” fixed by State Governments. Later on, the Delhi HC declares Monsanto’s termination of contracts with Indian seed companies as illegal. The ruling forbids Monsanto from stopping supplies to seed companies and holding farmers hostage. Monsanto will have to abide by Indian laws to operate in India.

2018 : Delhi High Court rejects Monsanto’s patent for Bt cotton technology on the basis that the product patented is a living modified organism (LMO). Indian Patents act prohibits the grant of patents for plants, plant varieties or seeds or any part thereof under Section 3(j). The court however allowed Monsanto to apply for registration of these seed varieties under the Protection of PPVFRA 2002.

2018 : Monsanto files reverse petition in SC claiming that the premises on which this judgment is given by Delhi HC regarding the patent is incorrect. The patent actually does not cover the plant itself. It involves creation of a transgenic variety by insertion of a man-made transgene Cry2Ab that doesn’t have an existence of its own. Its efficacy is proved only after its placement into a plant genome. This was not possible without human intervention as it involves laboratory processes and is not a naturally occurring substances. Therefore, these products are not ‘microorganisms’ and it comes under the category of invention. This makes it patentable under the terms of the Indian Patents Act.

2019 : SC directs Monsanto to continue with its obligations under sub-license agreements while the royalties would be decided by a specialized agency in the agriculture ministry. The court noted that the patent appeared to be prima facie valid but refused to rule on the issue of patent validity at the interim stage.

Inference from SC judgment

By the logic in the Court ruling, all patented products which are designed to be incorporated into any plant or animal are at the risk of being invalidated. The Patent Authority of India has granted over 100 patents so far for agri-biotech innovations, genes, and traits. Over 1000 applications are pending. These are from the private industry, public institutions, Indian companies and multinationals who have invested thousands of crores of rupees in R&D.

Why do the technology developers emphasize on gene patent?

Inadequate coverage	·                     The PPVFRA (2001) covers all categories of plants, but does not cover micro-organisms, or DNA or RNA or protein sequences. ·                     The Indian patents office therefore allows genetic sequences with sufficient modifications done by human intervention, with commercial applications to be patented.
Lack of protection to seed developer	·                     Section 39 of the PPVFRA gives farmers the right to save, sow, re-sow, exchange, share and sell farm-saved seeds of any protected variety, including transgenic variety. On this basis, the technology developers fear that the licensee party may transfer the gene from the donor seeds developed by itself to its own varieties and not get that variety registered under PPVFRA. ·                     The technology provider would not be able to seek compensation for use of its gene under PPVFRA as the variety is not registered with the authority and benefit sharing does not apply
Judicial delays	·                     In certain cases, many varieties of plant are not even eligible for protection under PPVFRA which makes them completely redundant for benefit sharing with the seed companies. ·                     There is little a Monsanto can do except to file a civil suit which can take decades to resolve

Why this can back-fire?

Loss of technology stewardship	·                     Practically all crops are covered under the Essential Commodities Act. This means that the monopoly rights to the technology developer will not be protected. ·                     Thus, in case they come out with the seed, they will have to surrender the genes, traits, and parent material in all crops to anyone who wants them.
Discourage crucial research by the agri-biotech industry	·                     Theoretically now, after this judgment of SC, these companies like Monsanto, Bayer and DuPont can apply for ‘benefit-sharing’ under PPVFRA. ·                     In this case, they will have to accept the benefits as decided by the PPVFR Authority, which is quite different from their own version on fixing royalties that is commensurate with the investments they have made to develop the product. ·                     This judgement is believed to deter companies like DuPont and Bayer who are trying to introduce new-generation pesticide molecules like Rynaxypyr ‘Coragen’ by Dupont and Flubendiamide ‘Fame’ by Bayer.
Impact on agriculture	·                     India most needs genetic modification (GM) technology to raise yields, to protect against certain pests, to provide protection against water stress or floods. ·                     They are already facing woes due to severe deficit by Indian government in research investment and lack of access to globally available innovation for yield improvement. ·                     This may impact food security and income security of the 56% population still dependent on agriculture as a source of income
Impediment for the development of industrial biotechnology under Make in India	·                     India is among the top 12 biotechnology destinations in the world, and has the third-biggest biotechnology industry in the Asia-Pacific. ·                     While bio-pharma constitutes the major part of the bio-tech industry, the bio-agri segment accounted for 14% of the industry.

Way forward: The government and the judiciary need to integrate scientific and technical expertise into the judicial processes, especially in patent disputes that inherently involve perplexing scientific issues. Additionally, the government needs to ensure that these companies do not engage in price gouging, while simultaneously promoting domestic breeding and R&D efforts.