Cancellation of Monsanto’s patent over Bt cotton by Delhi HC: Ensuring agricultural security

On April 11, 2018, a division bench of the Delhi High Court pronounced a judgment overturning the decision of a single-judge bench regarding the interpretation of Section 3(j) of the Indian Patents Act, 1970, holding that transgenic plants, seeds and varieties cannot be patented. This is a path breaking judgment, the full import of which is yet to be assessed. The case arose over a dispute between several seed companies and Monsanto regarding Bt cotton trait fee payments. This genetically modified seed was introduced in India in 2002 amidst a raging controversy. Many “activists” were alarmed at the government’s decision to permit GM crops in India, and there were widespread agitations. Perhaps, because of that past history, Bt cotton continues to be the only genetically modified crop permitted in India, and has captured about 95% of the crop area under cotton. However, the increase in productivity has not been commensurate. The average yield was 472 kg per hectare in 2005-06 (when only about 15% of the cotton crop was covered by Bt cotton.) The yield rose marginally to 484 kg per hectare in 2015-16.

Initially, the crux of the dispute between Monsanto and the seed companies was the quantum of royalties or trait value to be paid by the latter. In 2010, some state governments fixed the maximum retail prices of cotton seeds, which included the trait values as a component. The governments did this so as to ensure that seeds were available to the farmers at reasonable prices. However, Monsanto put pressure on the seed companies to pay the trait values as determined by them on the ground that they had a patent on Bt cotton seeds. The seed companies had no alternative but to pay under protest. In June 2015, the Nagpur Bench of the Bombay High Court upheld the right and, therefore, the action of the government of Maharashtra in fixing the maximum retail price of seeds, including the trait value. Subsequently, in July 2015, the seed companies wrote to Monsanto that they cannot pay a higher trait value. Interestingly, it was not only the seed companies of Andhra Pradesh, but almost all others, along with the National Seeds Association of India, that backed this action.

Since different state governments were fixing different retail prices and trait values, the Centre decided that in the best interest of all stakeholders, it would be advisable to have a uniform price and trait value for the entire country. In pursuance thereof, it issued orders in December 2015, fixing uniform prices for the entire country, with effect from April 1, 2016. Predictably, Monsanto challenged this diktat. It was during the course of meeting this challenge that the fundamental question arose as to whether Monsanto had a valid patent in conformity with the Indian Patents Act, 1970. The main issue before the division bench of the Delhi High Court was whether Section 3 (j) of the Indian Patents Act, 1970, excludes from patentability 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.

The division bench has ruled that Monsanto does not have a valid patent and, therefore, at best, it can seek compensation under the Protection of Plant Varieties and Farmers Rights Act, 2001. The judgment has been criticised on various grounds; one of them being that the patent had been granted by the Patent Office of the government. This is a tangential argument. Many patents granted by the Patent Office in the past have been challenged, some successfully. All actions of the government bodies are open to scrutiny and challenge at any point in time. The entire issue has grave implications for security of agriculture in the country as nearly half the population is financially dependent on it. The Parliament was conscious of the dangers of monopoly in the supply of agricultural inputs, including seeds. That is why it excluded from patentability “a method of agriculture or horticulture” under section 3(h) and “plants and animals in whole or any part thereof… including seeds…” under section 3(j).

Having excluded seeds, etc, from the ambit of patents to give due protection and encouragement to research, the Centre enacted a sui generis law, viz, the Protection of Plant Varieties & Farmers Rights Act 2001, to protect the intellectual property rights of breeders of plant varieties. In terms of acreage, India is ranked fourth after the US, Brazil and Argentina in adopting GM crops, but while the top three grow more than one GM crop, we have only cotton. Brinjal was cleared for introduction by the Genetic Engineering Approvals Committee in 2010, but it has been put on an indefinite hold.

It has been argued by some that this judgment of the Delhi High Court will discourage research and development in agriculture. On the contrary, others anticipate that with the clarity flowing out of the judgment, research will get a shot in the arm. Only time will tell which way research in agriculture will be impacted. But, it is abundantly clear that in a country where farming is largely of the subsistence variety, the state governments and the Centre will not let monopolists dictate prices of essential inputs.