The Bt cotton saga

Rajeev Kumar, Partner, LexOrbis provides a commentary on the facts and questions of law that are raised in the current Bt. cotton patent infringement suit filed by Monsanto against its ex-licensee Indian seed companies

There have been extensive discussions in India related to genetically modified plants, especially with respect to their acceptability within Indian agro ecosystem and on environmental impact. Bt. cotton, however passed through those tests and by 2002 it was the only genetically modified crop that was allowed for commercialisation by the Supreme Court in India. The result of introduction of Bt. Cotton, particularly the integration of the Bt. trait in locally developed proprietary cotton varieties developed by the Indian seed companies was phenomenal. Today, the Bt. cotton crop forms almost 95 per cent of cotton grown in India.

Monsanto, the developer of the Bt. trait in the US, through its joint venture in India Mahyco Monsanto Biotech (India) Ltd. (MMBL), sub-licensed the Bt. trait to many Indian seed companies to develop and sell local varieties which contained the said trait. For this purpose, Monsanto provided 50 seeds of Bt. cotton variety to the sub-licensee companies in consideration of an upfront payment and also bound the said companies to pay trait value on sale of Bt. cotton hybrid seeds in India. The trait value, thus payable by the seed companies to Monsanto significantly increased the price of cotton seeds in India leading to the intervention of the state governments. Several state governments enacted laws and issued notification to fix the maximum selling price of cotton seeds, keeping in consideration of trait value, payable by seeds companies to Monsanto. Disputes arose between the parties with regard to trait value and Monsanto terminated the sub-license agreements of the defendants and filed the civil suit C.S. (Comm.) No. 132 OF 2016 on the cause of actions for infringement of its patent and trademark and passing off.

Monsanto contended that, once the sub-license agreement has been terminated, the use of patented invention and the registered trademarks by the defendants amounted to infringement of its IPR. The main issue that was addressed by the plaintiffs was the infringement of the patent 214436, especially claims 25-27. Claim 25 of IN 214436 is directed to a nucleic acid sequence, which when expressed in a plant cell, exhibits bollworm resistance trait. The infringement is alleged because the seeds produced and sold by defendants contain the patented nucleic acid.

The questions raised by the defendant seed companies before the Delhi High Court were twofold. One, whether the termination of the sub-license agreement by Monsanto on the ground of non-payment of the agreed trait value by the defendant was legally tenable in view of the fixation of the trait value by respective state governments, and secondly, whether the development and sale of a cotton variety (containing a nucleic acid), wherein a variety /seeds are barred from patent, can still be considered as infringing a claim on the nucleic acid contained in those seeds. The finer question is, can the patent rights be extended (directly or indirectly) to provide protection over those subject matters which were expressly excluded from the purview of patent protection.

These issues would be decided if and when the case moves to full trial. But at the interim stage, on March 28, the Single Judge Bench of the Delhi High Court has found that the termination of the sub-license agreement by MMBL was illegal and arbitrary. The Single Judge accordingly, modified its earlier order of injunction, and directed for restoration of the sub-license agreement between the parties with modification of trait fee payable by the defendants to MMBL.

Monsanto appealed the decision of the Single Judge and a Division Bench of the Delhi High Court on April 10, stayed the restoration of the sub-license agreement.

(As the case is sub judice, the article is a commentary on facts and not a view point)