The Notice on Plant Breeders’ Rights (II)- Who is to monitor Seed Prices?

In my previous post, I had summarised Monsanto’s past dealings with Indian seed companies and the history of seed price control orders in India. I had also pointed out the confusion regarding the applicability of both, the Patents Act and Protection of Plant Varieties and Farmer’s Rights Act (PPVFR Act), to Bt cotton seeds. From the Notice, it is clear that it seeks to give clarification on the powers of the Plant Authority to monitor prices of registered plant varieties under the PPVFR Act. As noted in this article, a large percentage of Bt cotton seeds in the market are those of registered plant varieties. It is, hence, essential to examine the scope of the PPVFR Act and analyse all the possible legal conflicts which may arise.

Who should monitor prices-The Central Government or the Plant Authority?

In its 2017 interim order, the Delhi HC had noted that Entry 33 of the Concurrent List allowed the State and the Central Government to monitor production, supply and distribution of cotton seeds. Entry 34 of the Concurrent List confers legislative power to determine price control. Under Section 3(c) of the Essential Commodities Act, 1955, the Central Government is authorized to fix the price of any essential commodities, including cotton seeds which may be transgenetically or genetically modified. The Seeds Act, 1966, under Section 7, provides for regulation of sale of seeds of notified kinds or varieties. The Cotton Seeds Price (Control) Order (“CSPCO”) in 2015, which gives the Central Government the power to monitor seed prices, derives its legitimacy from the afore-mentioned legislations.

There is an apparent clash, however, between the Central Government’s power to monitor prices of seeds and the Plant Authority’s power to monitor prices of Bt cotton plant varieties. Since it would be correct to assume that the PPVFR Act applies to the varieties of the Bt cotton seeds registered under the said Act, the Plant Authority is authorised under Section 8(2)(e) to ensure seeds of registered varieties are available to farmers and provide for compulsory licensing of such varieties if the breeder does not arrange for production and sale of seeds in the prescribed manner. Further, the recently released Notice on Plant Breeders’ Rights (“Notice”) also implies that the power to monitor sale and price fixation of seeds of registered varieties should vest in the Plant Authority.

In my opinion, the principle of “generalia specialibus non derogant” (the provisions of a general rule must yield to a special one) should apply in this case. Since the PPVFR Act is a special Act intended to “provide for the establishment of an effective system for protection of plant varieties, the rights of farmers and plant breeders and to encourage the development of new varieties of plants”, it should prevail over the Essential Commodities Act and Seeds Act, which are general laws. Further, the PPVFR Act itself provides a non-obstante clause under Section 92 which provides that the Act shall override other provisions to the contrary, in all other laws, to the extent of any “inconsistency”.

The Notification, hence, rightly points out that the fixation of prices of seeds of registered varieties (in the limited context of section 8(2)(e)) should be done by the Plant Authority.

Should the trait value be determined by the Central Government?

Note that the “trait value” differs majorly from the seed price. As already explained in my previous post, trait value can be described as the “licensing fees paid by seed companies to Monsanto for using its patented BG-II technology along with the associated ‘know-how’ and ‘trade secrets. Further, under the CSPCO, it has been described as “the amount, which the Licensor collects from the Licensee under the License Agreement for granting license to GM Technology”. Though the Notice mandates that the fixation of the trait value should be done solely under the PPVFR Act, the Act does not vest such power in the Plant Authority. Also, the Plant Authority’s power to monitor prices of seeds under Section 8(2)(e) cannot translate into the power to monitor trait values since, as mentioned earlier, trait value and seed price differ from each other.

It would then be prudent to assume that the power to fix trait value still vests in the Central Government, as laid out in the CSPCO. In an instance, when this power of the Government had been challenged, the Karnataka HC observed as follows:

Thus, unless it is manifestly unjust, any action by the Government in exercise of its regulatory power in the matter of availability of any essential commodity at a fair price will be perfectly legal and justified. With a view to ensure that the Bt. Cotton seeds are made available to the farmers at fair prices, regulation of the trait value is essential and is one of the steps, which will certainly help in ensuring fair price. In our opinion, trait value forms an intrinsic and integral part of the cotton seeds and the two cannot be severed if the price of the Bt. Cotton seeds is to be effectively regulated so as to benefit the consumer public. Trait value is a key component of the price of cotton seeds. Therefore, it was incumbent upon the Central Government to fix the trait value. We are also of the view that Bt. Cotton seeds are nothing but cotton seeds, which is an essential commodity. Prima facie, we are of the view that there is no illegality in fixing the trait value.”

Would it, however, be fruitful to vest this power in the Central Government? The reports of political pressure and backdoor deals to which the Central Government has apparently succumbed to in fixing such prices seems to imply otherwise. Further, in his post on the CSPCO, Rahul had pointed out that lowering the trait fees, unlike lowering MSP, would have no impact on farmers’ access to Bt technology since it would only prove beneficial to powerful seed companies and the National Seeds Association of India. He also noted that the same would amount to “grant of a license in the nature of a compulsory license to seed manufacturers to use the patented genes of biotechnology companies under the garb of promoting equitable distribution of an essential commodity”.

In such a case, would it not be preferable to have a neutral, independent Authority to be in charge of monitoring trait fees? Such questions need to be mulled over, in addition to the patentability of Monsanto’s invention, to arrive at a wholesome solution for all the stakeholders involved in this protracted legal battle.

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