The NSAI’s new IP strategy in its dispute with Monsanto

Spoons and healthy seeds

The National Seed Association of India (NSAI), comprising mostly of Indian seed companies, has published on its website a series of documents outlining its IP strategy in its dispute with Monsanto. As explained in our earlier posts available over here, here and here, some of the biggest Indian seed companies like Nuziveedu (whose chairman heads NSAI) are engaged in a high stakes battle with Monsanto over the technology licensing agreements between both parties. The history of this dispute can be read in the earlier posts and I’m not reproducing all of it over here.

Let me however recount the basics of the technology transfer agreement at play over here. Monsanto owns a patent for a particular Bt. Gene sequence in a cotton genome. Seed companies from the NSAI, like Nuziveedu provide their seeds to Monsanto, which then inserts its Bt. Gene in Nuziveedu’s seeds. If Nuziveedu’s seeds are of a new variety, the variety may be registered under the Plant Varieties Protection and Farmer’s Rights Act (PVP), 2001 and Nuziveedu has a monopoly protection over such a variety. Thus when Nuziveedu sells the seed to the farmer, the seed may be protected by two forms of IP – one under the Patents Act belonging to Monsanto and the other under the PVP belonging to seed companies like Nuziveedu. This is of course a very brief summary of the technology issues.

NSAI’s new IP strategy

You can access NSAI’s new strategy documents over here, here, here and here or download them from the NSAI website. The argument being made by NSAI is quite complex and the note is not very articulate, so please bear with me, while I try to explain it.

To begin with, NSAI accepts that GM traits are patentable but argues that once they are introgressed into a cotton genome the resulting transgenic variety is not patentable because of Section 3(j). I reproduce the argument as follows – “While the biotechnologies required for developing GM traits are patentable under Indian Patent Act, after the transgene gets integrated in the genome and the GM traits express in a plant variety, such transgenic varieties are not patentable.”

At a later point the note also argues that under the Indian Patents Act, “there is no provision to collect a trait value by enforcing patent rights on seeds and plant varieties to recover the investment and efforts put in to develop a new GM trait and to obtain approvals under the Environment Protection Act (EPA) despite having a patent for technologies which have been used for developing the GM trait, as it becomes part of a plant variety”.

In other words NSAI is arguing that Monsanto can acquire a gene patent under Indian patent law but that once it inserts the patented Bt. Gene into a variety developed by a company like Nuziveedu, it loses the right to enforce its patent to collect royalties because under Section 3(j) of the Patents Act the resulting transgenic plant is not patentable. A related argument that it makes is that Section 92 of the PVP Act gives that law primacy over the Patents Act.

The second stage of NSAI’s argument is centred on the PVP Act – it argues that any variety containing the Bt. Trait will then be subject to the limitations and exceptions listed under the PVP Act. If the variety is not registered under the PVP Act then any person is free to use such varieties. But what if the variety containing the Bt. Trait is registered? In such a case NSAI argues that a combined reading of Section 30, followed by Section 26 of the PVP Act, gives any Indian seed company the right to conduct research on any registered variety to develop a new variety and subsequently commercialise such new variety subject to the benefit-sharing requirements.

Section 30 of the PVP Act contains a rather wide research exception – it states, that any person may use any variety registered under the PVP Act for conducting experiment or research or use such variety as an initial source of variety for the purpose of creating other varieties. The section also has a proviso which states that the authorisation of the breeder of a registered variety is required where the repeated use of such variety as a parental line is necessary for commercial production of such other newly developed variety. In other words, NSAI appears to be setting the ground for the argument that it can use existing varieties containing the Bt. trait to conduct research and develop new varieties. And if the varieties are registered and not within the scope of the proviso to Section 30, but within the scope of Section 23(8) i.e. an essentially derived variety, the owner of the initial variety may seek benefit sharing under the terms of Section 26 of the PVP Act. NSAI’s argument appears to be that any variety that its members develop, which contains the Bt. Gene, may be subject to the benefit sharing provision of Section 26. By making this argument, NSAI seems to be saying that a Monsanto which own the Bt. Gene can only seek compensation under the PVP Act and not an injunction under the Patents Act. And most importantly, the compensation under S. 26 is determined by the Registrar of PVP and not the market. This compensation according to NSAI should reflect the value of the agronomic utility of the trait and shall not exceed 10%.

So if NSAI is now arguing that Monsanto’s patent on the Bt. gene can no longer be enforced, how is it justifying its members taking a licence from Monsanto for the last several years? The answer to this question can be found in NSAI’s third argument which is based on regulatory law. In brief, NSAI argues that the current regulatory framework as enforced by GEAC under the Environmental Protection Act requires Indian seed companies to seek a ‘no objection certificate’ from the trait owner, in this case Monsanto, before they release a new variety containing the Bt. Trait. According to NSAI, Monsanto “misused” this power to issue a NOC, by forcing seed companies to sign one-sided agreements and extract unfair royalties from the seed companies. NSAI has therefore reportedly requested GEAC and RCGM (both are setup under environmental laws to regulate GMOs) to do away with this requirement to seek a NOC from Monsanto and instead allow the prevailing system under the Seeds Act, 1966 to approve new varieties.

As per NSAI, its arguments outlined above, ensures that the government doesn’t have to pursue the existing approach of issuing the controversial “Licensing and Formats for GM technology Agreements Guidelines, 2016”. Are the arguments put forth by NSAI viable? I would love to hear the views of our readers.

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1 thought on “The NSAI’s new IP strategy in its dispute with Monsanto”

  1. Prashant, NSAI’s arguments are one sided. It now thinks of one-sided agreements. Most of these companies have years’ of experience in business and know laws of the land. I wonder as to how they did not think of one-sidedness of agreement when they signed with Monsanto. I feel that NSAI think it is the last battle for technology and forget that there is far more need of technology updates and new technologies to help raise farm productivity. As of now, R and D efforts either in Govt setup or by these private seed companies are not worthy of appreciation. You may remember the claims made by the at native Agbiotech public institutions and actual products delivered until now.

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