Lessons from Canada  

The introduction of genetically modified (GM) organisms and in particular genetically modified seeds such as Bt cotton has been quite controversial. Until now, debates have focussed on the possible environmental impacts of GM seeds and their overall contribution to sustainable agriculture, in particular their capacity to raise yields. Issues of intellectual property rights have been relatively less visible.

Monsanto Canada Inc. vs Schmeiser

The Canadian Supreme Court recently took an important decision in Monsanto Canada Inc. vs Schmeiser. Though the decision has no direct relevance in India, it has the potential to influence significantly policy making in other countries, in particular those related to liability issues. It is therefore important to draw lessons from the Schmeiser case.

Monsanto, the United States-based multinational company has developed a GM variety of canola, which is resistant to the application of Roundup Ready, a herbicide that kills most plants. Percy Schmeiser, a farmer from Saskatchewan, Canada, has been growing canola for many years. A number of his neighbours decided to use the Monsanto variety on their fields but not Schmeiser. He was nevertheless found in possession of Roundup Ready Canola even though he had never purchased it.

The source of the introduction of GM seeds on Schmeiser's land has not been established conclusively. Seeds blown on his fields or pollination from GM seeds may have been one of the causes, though the court found that this could not explain the high percentage of GM canola seeds found on his fields. Monsanto brought an action against Schmeiser claiming that he had infringed their patent on Roundup Ready Canola.

The Supreme Court found that the patent had been violated. First, the judges decided that this was exclusively a case concerning the infringement of a patent held by Monsanto and therefore excluded concerns about biosafety or farmers' rights.

Secondly, the judges sought to determine whether the Monsanto patent on GM cells also extended to the plants themselves. In Canada, as well as in India, plants themselves and plant varieties are not patentable. There should, therefore, be a strict distinction between the patent on the GM gene and the plant itself. The court, however, found that since the gene was present throughout the plant, it was not possible to dissociate the two.

Thirdly, the judges considered whether Schmeiser had 'used' the patented gene or cell and thereby infringed the patent. Several issues were addressed by the judges in this respect. They contemplated whether the mere fact of possessing the patented gene implies use. The conclusion was that in commercial circumstances - any farmer selling to the market falls in that category - there is a presumption of use unless Schmeiser could have demonstrated that he had never intended to spray his crop with Roundup Ready even if there had been an unexpected need to do so.

This led the Court to determine that Monsanto has been deprived at least in part of the enjoyment of the patent, on the basis that even if the invention was not used directly by Schmeiser, its possession gave him a chance to sell it to other farmers unwilling to pay the licence fee. In other words, even though it is possible that Schmeiser may not have known that his crop was Roundup Ready tolerant, he is held to have used the invention. This is an odd result.

Given that farmers cannot test their seeds for the presence of patented genes, the only way in which Schmeiser could have effectively determined if his crop was genetically modified would have been to spray Roundup Ready, which would have had the effect of killing his whole crop had it not been genetically modified. The judges also asserted that even if the seeds were blown by wind to his field, Schmeiser could not be held to own the seeds. In fact, he does not have the right to use the patented gene or the seed containing the patented gene or cell.

Overall, the Judges found that Schmeiser had infringed the Monsanto patent but found that he had not benefited from the seeds (since he had not sprayed his crop with Roundup Ready). As a result, they decided that he did not have to pay anything to Monsanto.

The judgement is nearly exclusively grounded in patent law. In the narrow context in which the Judges decided to consider this case, they reached the conclusion that patent rights clearly prevail over real property rights and that Schmeiser should be deemed to have infringed the invention even if he had not actually used and taken advantage of it. Having established these principles, the court then limited its findings by determining that Schmeiser owed nothing to Monsanto because he had not gained economically from his 'use' of the invention.

The judgment first raises concerns from the point of view of the analysis undertaken by the judges. In the context of patent law, the fact that the patentability of a GM gene or cell can be deemed to extend to plants would tend to imply that the prohibition on plant patents and plant variety patents has the potential to be meaningless in practice. This is true in Canada and could potentially be true in India since the legal framework on this point is broadly similar.

Besides, the judgment raises concerns because it fails to consider some important issues. First, it fails to consider biosafety aspects through which the environmental and health impacts of genetically modified organisms are examined. The main issue here is not whether the GM canola is safe or not (this analysis has been carried out before its commercialisation) but whether Monsanto should be deemed responsible for introducing into the environment a GM construct which has the potential to self-replicate.

Seen from this broader perspective, the dispute between Schmeiser and Monsanto becomes a question of the liability of Schmeiser concerning the patent infringement and that of Monsanto's for the contamination of his property. This raises problems that were not even indirectly addressed by the court.

Firstly, the responsibility of the different entities and individuals involved in the introduction of genetically modified seeds into the environment should be clearly established. The fairest solution is to provide that the entity that has been authorised to introduce a genetically modified organism into the environment is solely liable for damage that is a result of the modification of the genetic material. This is a solution, for instance, adopted in the recent Swiss gene technology law.

Secondly, the issue of a balance of liabilities raises the question of the control that farmers have or can have over the land they own. Different farmers may take different decisions concerning the kind of agriculture they want to undertake and some do decide to pursue organic agriculture. Since the definition of organic agriculture implies in most cases that there should be no GM plants, contamination by GM seeds would immediately disqualify the organic farmer from selling his/her crop as organic and would lead to a loss of earning since organic produces fetch in general a higher price than non-organic produces. Unless there is a clear decision to forego organic agriculture, contamination of organic crops should be compensated by the entity causing the contamination.

Thirdly, there is the issue of farmers' rights. The situation can be divided between the rights of farmers who purchase GM seeds and those of other farmers. In the case of farmers who purchase, for instance, Roundup Ready Canola from Monsanto, they have to sign as part of the transaction a technology use agreement, which contractually restricts the rights they have over the seeds they purchase. These agreements have been challenged in the U.S. but the courts have found that even if they deprive farmers of some statutory rights, this does not invalidate the contract that they voluntarily sign as part of the purchase agreement with the company.

These contractual provisions should not, in principle, affect the rights of other farmers. Farmers who do not purchase these seeds should, in principle, have the rights they customarily enjoy as part of the `farmer privilege' under the plant breeders' rights system. These farmers should theoretically have the right to save and use seeds that they have grown even if they have been pollinated by GM pollen. The Schmeiser case, however, seems to indicate that unless a farmer had no inkling of the potential presence of GM seeds, she/he would be liable. In practice, this means that the onus of proof is on the farmers. This also implies that if farmers grow non-GM crops in an area where GM crops are grown, there could be a presumption that they ought to know of the possible presence of protected GM seeds on their fields.

Overall, the Schmeiser case can be seen as relatively insignificant if India adopts a clear and strong framework that would not provide any scope for this kind of case. However, at present the legal framework is not necessarily specific enough to ensure that a Schmeiser-like case is completely impossible in India in the future.

In particular, the legal framework remains inadequate with regard to issues of liability. There is very little guidance that would help judges to work out an appropriate balance between the liability of the entity marketing the GM seeds and the rights of this entity against the users of its invention.