In a special investigative report published on March 28, 2017 Reuters revealed the role being played by the Rashtriya Swayamsevak Sangh (RSS) in the IP dispute between Monsanto and Nuziveedu. For readers not familiar with the RSS, it is the ideological parent of the ruling Bharatiya Janata Party (BJP). Although the RSS claims that it is only a “cultural” body not involved in politics, there is little doubt that the BJP or the Prime Minister (who was a member of the RSS) work in active collaboration with the RSS. Given its nationalist underpinnings, the RSS and its affiliates are quite opposed to foreign companies preferring instead a “swadeshi” flavour to the Indian economy.
In its report, Reuters quotes RSS members admitting to working along with Nuziveedu’s Chairperson Prabhakar Rao to pressure the government to act against Monsanto. I reproduce excerpts of the report below.
Monsanto’s mistake was that it did not approach the RSS to plead its case, said Mishra in an interview at his office in central Delhi, which has peeling paint, dirty rugs and, in summer months, mosquitoes buzzing inside.
“It was the overconfidence of Monsanto that has destroyed their chances to do business in India,” said Mishra. “They failed to study and understand the RSS.”…..
A lean, moustachioed man, Rao denies seeking the support of the RSS or working in tandem with the group, which wants indigenous varieties of cotton seed to replace Monsanto’s products. But RSS powerbrokers – including the agriculture minister himself – told Reuters that Rao approached them for help in his battle with Monsanto. And they say they were happy to weigh in.
Kelkar, from the RSS farmers’ union, said the RSS had pushed for Singh to act against Monsanto. “In the previous regime we had to stand on the streets to launch anti-Monsanto protests,” Kelkar said. “But with this government we can sit and talk in a room – it’s because we all believe in the same agenda.
The agriculture minister, longtime RSS member Radha Mohan Singh, says his decision to intervene in the dispute was driven by the need to serve the interests of all Indian farmers, not just Rao.
The timing of Singh’s actions, though, was telling. In the months after the meeting between Monsanto and Rao’s man in Mumbai, the agriculture ministry first challenged and then slashed the royalties Monsanto is able to charge in India. The ministry called for an antitrust investigation into alleged monopolistic practices by the company. It also floated the idea of a compulsory licensing regime that would all but force Monsanto and other firms to hand over their proprietary technology to major Indian seed companies that applied for licenses…..
An RSS spokesman referred queries about Rao and Monsanto to the RSS farmers’ union, the Bharatiya Kisan Sangh. Its vice president, a man named Prabhakar Kelkar, said the union was working with Rao, who had approached it to complain about Monsanto’s seed pricing.
“It is important for all of us to unite to wage a war against Monsanto. No one can do it alone, be it Rao or the” farmers’ union, Kelkar told Reuters. “We are cooperating with him because he is fighting a battle that is meant for greater good.”
From the report it is very clear that both the RSS and the Government are colluding with Prabhakhar Rao in his battle against Monsanto. This smacks of impropriety for the simple reason that Monsanto and Nuziveedu have a contractual relationship. Any disputes between the parties should be resolved through independent arbitration or judicial intervention. The Indian government and non-state actors like the RSS have no business intervening in a commercial disputes.
It is rather surprising that nobody in the Indian media has reported on this aspect of the dispute. Even more surprising is their reticence to publish opinion pieces explaining the consequences of such interventions by the RSS and the government. Let me illustrate with an example. Last week, I received a request from Bloomberg Quint to write a piece on the Monsanto Nuziveedu dispute. I agreed to do so and sent them a piece emphasising that the collusion between Nuziveedu, the RSS and the government did not bode well for future IP licensing deals to India. (The entire piece is reproduced below). I then got the following surprising feedback from the editor:
“While the point on the risk premium and subsequent jump in the cost of IP transfer is well taken, that point is premised on a central narrative that does not have the required levels of primary attribution that BloombergQuint needs all its articles (including opinion columns). There is no substantiation backing up / or allows for the insinuation of collusion as alleged between a private entity, its promoter, the government, the ideological parent of the ruling party, and the government’s influence over quasi-judicial bodies.”
My piece was hyperlinked to the Reuters report and also included block quotes from the Reuters report. What other evidence does Bloomberg-Quint require to substantiate the fact that the government, RSS and Nuziveedu are acting in collusion?
I informed the editor that I was not making any changes and that they were free to reject the piece, which they eventually did. I reproduce the entire opinion piece below, so that readers can draw their own conclusions.
In the last few years India has seen its fair share of patent litigation. Apart from the regular infringement lawsuits filed by the innovator pharmaceutical industry, a second class of disputes has arisen out of licensing and technology transfer agreements, usually between a foreign patentee and an Indian company. One such recent licensing dispute between Monsanto and Nuziveedu seeds, in which the Delhi High Court has recently refused an interim injunction, has revealed a new set of risks faced by IP licensing deals in India.
The origins of the dispute can be traced to the licensing of Monsanto’s patents over its Bt. technology to 48 Indian seed companies. This technology was used to create genetically modified cotton seeds that are then sold to Indian farmers. Monsanto’s technology was designed to increase the resistance of the seeds to pests like boll-worms thereby reducing the use of pesticides, increasing farm incomes and ensuring a steady supply of cotton to the textile industry, which is one of the largest employers in the country.
Licensing deals involve two parties – the patentee and the licensor who seeks to use the patented technology. However in the present case, state governments have routinely been influencing the pricing dynamic, through their use of the Essential Commodities Act, 1955 to set the price at which the seeds are sold in the Indian market. The Essential Commodities Act was usually invoked to affect only the retail prices of the seeds and not the patent licensing fee payable to Monsanto by the Indian seed companies for use of its patents. In 2015, this equation changed when some state governments intervened to regulate not just the retail price of the seeds but also the patent licensing fee between Monsanto and the seed companies. When some of the Indian seeds companies withheld royalties due to Monsanto and sought to renegotiate the licensing agreements, Monsanto terminated the contracts and initiated arbitration proceedings for recovery of the royalties. Since then the Central Government has stepped in to issue its own Cotton Seeds Price Control Order, 2015 using its powers under the Essential Commodities Act.
The most egregious aspect of this dispute is the government’s unabashed use of the Essential Commodities Act to regulate the patent licensing fee between two private parties. If the government is going to manipulate patent licensing fee through its executive powers, why even grant patents?
The Central Government also proceeded to issue another order which would force Monsanto to license its patents without the option of refusal. After an outrage by the agro-biotech industry, the order was withdrawn by the government with a promise to reintroduce it after further deliberations with stakeholders. The government however did make a reference to the Competition Commission of India (CCI) which has initiated an investigation into Monsanto for alleged abuse of its dominant position.
It was no secret at the time that the government’s actions were being inspired by Prabhakhar Rao, the head of Nuziveedu. Since then, a report published by Reuters has revealed that the RSS have been collaborating with Rao in his dispute against Monsanto. The Reuter’s report quotes a RSS leader saying, “It was the overconfidence of Monsanto that has destroyed their chances to do business in India…..They failed to study and understand the RSS”.
Every licensing deal is subject to some amount of commercial risk which is to be resolved through an impartial judicial system. The present dispute has however revealed the extent to which the government and the RSS are willing to interfere in purely commercial disputes, to side with their favoured private player. It is not even the case that Nuziveedu is a purely desi company, having attracted foreign investment from Blackstone. How is a patentee supposed to factor in these risks while licensing their IP to Indian companies?
If the risk of licensing technology to Indian companies increases, that risk will carry an additional premium making IP more expensive for Indian companies. The second option is for foreign patentees to impose more restrictive conditions while licensing their IP and transferring ‘know-how’. This too is not the best option for Indian companies. The third, nuclear option, is to simply stop licensing technology to Indian patentees. The present dispute between Monsanto and Nuziveedu has already led to Monsanto refusing to introduce the next generation of its patented technology in the Indian market.
The scale of the government’s interference in this dispute portends poorly for the country’s image amongst its international trading partners. The more unpredictable the behaviour of the government, the more expensive it becomes to do business in India.