In this post, I intend to provide my views on the recent judgment of the Superior Court of Brazil (the highest Court in Brazil) dated October 9, 2019 on the overlap (or non-existence thereof) between patent law and plant variety law.
1. I represent Monsanto in India in ongoing litigations on related and unrelated issues. Accordingly, I will not express any views on the position in India;
2. This post is based on a rough/uncertified translation of the judgment, which I have on file. While not the most accurate, I believe the copy I have is not a palpably wrong version and would suffice for this short comment.
The judgment concerns a claim by an association of farmers on their right to use, replant, sell, donate and exchange Roundup Ready® Soybean Seeds and produce therefrom, without paying any royalties to Monsanto. The undisputed fact was that the Roundup Ready® Soybean Seeds contained technology patented by Monsanto (Note: the judgement referred to the patent number as PI 110008-82; I have not studied this patent because the details thereof are not relevant to this post). The judgment holds that the farmers are obligated to pay Monsanto for use of the patented technology contained in seeds and that the farmers’ privilege under plant variety law cannot be applied to limit the rights of a patentee under patent law.
The Plant Variety Protection Law (or the Cultivar Protection Law) is Law No.9.456/97 in Brazil (here). Article 10 of this Law No. 9.456/97, reproduced below in its relevant part, inter alia, contains the farmer privileges:
“The breeder’s right in the plant variety shall not be deemed infringed by a person who:
(iv) being a small rural producer, multiplies seed, for donation or exchange in dealings exclusively with other small rural producers, under programs of financing or support for small rural producers conducted by public bodies or non-governmental agencies, authorized by the Government.”
(Note: there was some difference in the version I accessed from WIPO and the version reproduced in the judgment; however, this was immaterial for the purposes of this post)
The patent law of Brazil is contained in Law No. 9.279/96 (Industrial Property Law) (here). As per Article 8, every invention that needs requirement of novelty inventive step and industrial application is deemed patentable. Articles 10 and 18 of this Law No. 9.279/96 declare what are not inventions and thus, not patentable. The relevant portions of said Articles 10 and 18 of Law No. 9.279/96 are reproduced below:
“Article 10. The following are not considered to be inventions or utility models:
IX- all or part of natural living beings and biological materials found in nature, even if isolated therefrom, including the genome or germplasm of any natural living being, and the natural biological processes.
The Article 18. The following are not patentable:
III- all or part of living beings, except transgenic microorganisms that satisfy the three requirements of patentability—novelty, inventive step and industrial application—provided for in Article 8 and which are not mere discoveries.
Sole Paragraph. For the purposes of this Law, transgenic microorganisms are organisms, except for all or part of plants or animals, that express, by means of direct human intervention in their genetic composition, a characteristic normally not attainable by the species under natural conditions.”
There is also a provision for patent infringement under right to seek appropriate civil remedies. It was in this context that the issue arose whether farmers can exercise their rights under the Plant Variety Law to replant seeds etc. containing the patented technology, without having to pay royalties (pursuant to exercise of rights under patent law). The Appellant believed that the rights conferred on farmers under the Plant Variety Law would trump and supersede patent rights. Several arguments were raised to support the proposition.
The court rejected the first argument that if the farmers claims are not allowed, it would amount to conferment of double protection. Factually, the court noted that there was lack of information whether the specific Monsanto entities before the court had any plant variety right in the first place and therefore, the question was considered as an abstract one. On a point of law, however, the court categorically held that patent and plant variety protection are “different kinds of intellectual property right aimed at protecting different intangible assets”. The question of double protection did not arise because what was protectable under both laws was not the same object – the plant variety law protects the variety/cultivar, the patent law does not protect the variety but only the gene created and the insertion process. Based on the scheme of the two laws, the Court noted there are differences in the protected object, the protection comprehensiveness, the exceptions and limitations, the grant criteria, the term and so on. The court concluded that there was no incompatibility between the statute concerning such different subject matters and no question of overriding or supersession would arise. I found the following paragraph important:
“The protection scope the technology developed by the appellees [sic] [Monsanto] is subject to cannot be confounded with the object of the protection provided for in the Cultivar Law : patents do not protect the vegetal variety, but the insertion process and the very gene inoculated thereby in the RR [sic] [Roundup Ready] soybean seeds. The intellectual property protection in the form of cultivars comprises the whole plant vegetative reproduction or multiplication material, while the patent system specifically protects the inventive process or the genetically modified material”
The next argument of the Appellant farmers that was rejected by the court was the principle of exhaustion. Article 42 of the Patent Law entitled the patent holder to prevent third parties from infringing the patent. Article 43 contains the exceptions to the same. The exhaustion principle appears to be present in Article 43 (IV) and (VI), reproduced below:
“Article 43 The provisions of the previous Article do not apply:
IV. to a product manufactured in accordance with a process or product patent that has been introduced onto the domestic market directly by the patentholder or with his consent;
VI. to third parties who, in case of patents related to living material, use, place in circulation, or market a patented product that has been legally introduced into commerce by the patentholder or the holder of a license, provided that the patented product is not used for commercial multiplication or propagation of the living material in question.”
The Court held that the exhaustion principle cannot be extended to situation where the patented product is used for commercial multiplication or propagation or living matter. In one paragraph, the judgment even goes on to note that permitting the actions of the farmers under this exception would tantamount to rendering the rights meaningless.
The Court then proceeds to address the nub of the issue and concludes that that limitations prescribed on plant variety certificate holders cannot be imposed or applied to the rights of patent holders, both being regulated by separate laws that are not incompatible with each other. The court appears to cite with approval the following views from an authoritative commentary:
“If the inventor inserts a new attribute into an existing plant, such as a new gene with new function, his industrial property right is limited to the attribute inserted therein, so it is not extended to the entire modified plant. The other plants of the same species that have not received such new attribute shall remain not belonging thereto. From such right, three situations arise […]
1. If such plant, with the new attribute, is replicated, conserving in the offspring the attribute originally inserted, the holder of the [patent] owns such attribute. If such replicated plant is used because of the protected attribute, it is clear that such attribute given to tis holder the right to charge its use.
2. However, is such plant, with the new attribute, is cultivated, and the attributed inserted therein does not remain in the plant, or is not used by the plant user, we can conclude that the inventor of the attribute cannot charge royalties for the use of the new protected attribute.
3. Moreover, if such plant, with the new attribute, or the products derived therefrom, are used, and, in such use, the new attribute is irrelevant, the inventor has no right to charge for its use […] However, we must let clear that, if the protected attribute exists in a plant, even though such plant, per se, is protected by third party, the existence of such attribute grants to its holder the right to charge royalties for its use, as well as to the holder of the cultivar protection. (BRUCH, Kelly Lissandra; VIEIRA, Adriana Carvalho Pinto and DEWES, Homero. A Propriedade industrial: duple protecao ou protecoes coexistentes sobre uma mesma planta. In propriedade intellectual e inovacoes na agricultura. Organization: Antonio Marcio Buainain, Maria Beatriz Machado Bonacelli, Cassia Isabel Costa Mended. Brasilia; Rio de Janeiro: CNPq, FAPERJ, INCT/PPED, IdeiaD; 2015, page 314).”
In responding to (and rejecting) the policy argument that a ruling against the Appellant Farmers would result in a monopoly in an important socio-economic area, the Court found:
“The intellectual property can offer an important advantage, but it is not a monopoly. In monopoly, especially when it is created by a government initiative, as it often occurs in many communist and developing countries, the company, in fact, does not fail for being protected. The intellectual property protects the idea, the invention, the creating expression, not the company. In the case of the intellectual property, the product from the mind can fail or be supplanted in the market. In the case of a monopoly, the very company is the object of protection (SHERWOOD, 1992, Page 61)
Further, it cannot be cogitated, by the Judicial Branch, the legal regime of intellectual property protection for, indirectly, correcting possible imperfections related to the market operations. Results, to such effect, are to be sought in proper sphere, intended to competition and economic order defense, subject to otherwise imposing on the patent system a function it does not have.
And finally, it should be registered, that as highlighted in the appealed collegiate decision, nothing prevented the farmers represented by the appellants to employ conventional soybean in their plantation, without the cost of royalties or know-how fee; but from the moment they opted for cultivating seeds modified by the patented invention, the consideration obligation for the used technology becomes unavoidable. If they chose to use such specific variety was because it seemed economically advantageous thereto, so they must bear the consequences of such option.”
The final conclusion of the Court was formulated in the following manner:
“the limitations to the intellectual property right included in Article 10, of the Law no. 9.456/97 – only and solely applicable to the holders of Cultivar Protection Certificates – cannot be enforced against the holders of product and/or process patents connected with transgenics, the technology of which appears in reproductive material of vegetal varieties.”
There are several references to the obligations under the TRIPs agreement as well guidance drawn from UPOV sourced references, though, ultimately, it is clear that the judgment turns more on the interpretation of the domestic statute. The Court did note that to allow the Appellant farmers’ claims would frustrate commitments assumed by Brazil under Article 28.1 of the TRIPS Agreement.
Given my conflict of interest on the subject, I will obviously refrain from raising any pointers to the position in India. However, undoubtedly, this judgment rendered by the highest authority in one of the BRICS countries would have significant influence across the globe.