May 21,2019 | 20 min read

Monsanto Case and PepsiCo Case: Explained

Author - Associate Debasmita Patra

Recent developments in the field of plant biotechnology have promoted multifold growth of the agro-biotech industry. Genetically modified species are finding an ever-rising growth in their population. This paradigm shift in the field of plant biotechnology has resulted in an increasing number of patents and similarly increasing infringement instances.

The Monsanto Case

Monsanto is an American multinational agricultural and agro-chemical company which had licensed its patent IN214436 related to Bacillus thuringiensis (Bt) cotton technology to different Indian companies including Nuziveedu Seeds, a Telangana based Indian agri-business company, which is among the most extensive hybrid seed companies in the country.

The Indian seeds companies used above-patented technology to produce cotton seeds that are bollworm resistant. As Monsanto did not consent to the Indian companies’ demand for lower trait fees, these companies stopped paying royalties to Monsanto. In November 2015, it canceled or terminated their sub-licenses. Subsequently, Monsanto filed a lawsuit against Nuziveedu claiming they infringed Monsanto’s patents through the continued use of the patented technology despite termination of the license.

In its defense, Nuziveedu claimed that its seeds had acquired their uniqueness and hence an infringement of Monsanto’s patent cannot be claimed. The defendant, Nuziveedu, urged to revoke the patent as per the provisions of Section 8 and Section 10(4) and made an argument that the patent was invalid.

There were two orders from the Delhi High Court in this regard, first an interim injunction by a single judge, followed by the dismissal of the same by a division bench. In the judgment by a Single Judge of the Delhi High Court, Nuziveedu and other companies in the suit were allowed to continue using the patented technology until the lawsuit was disposed of. The companies were ordered to pay a license fee according to the government sector rates. A Division Bench of the Delhi High Court concluded that the subject patent fell under the provisions of Section 3(j) of the Patents Act and held that the claims of the patents are unpatentable. The Court gave Monsanto a time-period of 3 months to seek protection for its invented technology under the Protection of Plant Variety and Farmers Right (PPV&FR) Act, 2001.

Both Monsanto and the seeds companies appealed this decision in the Supreme Court. After extensive arguments from a battery of counsels, the Supreme Court noted that “the suit involved complicated mixed questions of law and facts concerning patentability and exclusion of patent, which could be examined in the suit based on evidence”. The matter was, therefore, remanded back for trial by the single Judge of the Delhi High Court. As ruled by the single Judge, the seed companies can continue to use and sell the cotton seeds, subject to payment of royalty fees to Monsanto. Now the issue is back to square one; like a suit before the Delhi High Court single judge. It is expected that the Court shall pronounce judgment with reasoning, such that companies can continue to innovate and seek protection within the framework of the Patents Act and the international obligations which India has agreed to.

The PepsiCo Case

In the wake of the above ongoing dispute by agro-biotech giant Monsanto, against domestic seed companies on the question of intellectual property rights related to genetically modified seeds, another related case arose as the PepsiCo v. Potato farmers.

PepsiCo is a U.S based snack and beverage giant who sued a handful of farmers in Gujarat, India, for cultivating a variety of potatoes that the MNC claims as its own. As a real David versus Goliath battle, the American behemoth sued four small potato growers with their miniscule farms in a country that is synonymous with acute agrarian distress. PepsiCo claimed that its intellectual property right of cultivating FL2027, a variety of potato registered by the company, was infringed by four farmers of Sabarkantha in North-East Gujarat, by allegedly growing the variety above of potatoes. The company sought INR 1.05 crores each from the farmers.

PepsiCo withdrew its lawsuit against 2 of the farmers due to fear of a fierce backlash from a host of farmers’ organizations. The sued farmers claimed that they bought the potato seeds locally where there are available, in what is known as the grey market, and are taken aback by the infringement suit slapped on them. These farmers believed that they are entitled to grow and sell any variety of crops without any hindrance in the country. 

The farmers were accused of using proprietary potato seeds of PepsiCo, that are used to manufacture potato chips sold under the brand name or trademark of Lay’s, without the company’s authorization. It accused the farmers were “illegally growing, producing, selling without permission, such variety in violation of the statutory rights granted under Sections 64 and 65 of the Protection of Plant Variety and Farmers Rights (PPV&FR) Act.” PepsiCo now offers to call off its demand for compensation only if either the farmers join the company’s vast contract farming program, consisting of 12000 farmers as a part of a collaborative project, or by signing an agreement that they will no longer grow FL2027.

The law in India gives a definite edge to the farmers as per Section 39(1) of the PPV&FR Act, which overrides other provisions to guarantee the right of farmers to use seeds as they wish. The Section states that “notwithstanding anything contained in this Act, a farmer is entitled to save, use, sow, re-sow, exchange share or sell his farm produce, including seed of a variety protected under this Act in the same manner as he was entitled before the coming into force of this Act, provided that the farmer shall not be entitled to sell branded seed of a variety protected under this Act.”

The next hearing is scheduled to be held on June 12, 2019. The Court may be persuaded of the above arguments and come up with favorable decisions. While the Indian legislation in this regard is definitely lacking, the interests of poor farmers and the future of Indian agriculture needs to be protected.

 

Both the cases deal with different forms of intellectual property rights; while one is claiming plant breeder rights, the other is claiming patent rights. Monsanto wants to use the Patents Act while PepsiCo wants to use the Plant Varieties Act. Generally speaking, with the Indian Patents (Amendment) Act, 2004 and the Protection of Plant Varieties and Farmer Rights, 2001, we thought we had created an intellectual property regime favorable for ourselves. While the law is clear, what makes the battle unequal is the power of the big MNCs. PepsiCo and Monsanto are finding that their earlier monopolies are not enough; they need even more profits. Monsanto coupled up with Bayer, the chemical and pharma giant, to control the fertilizers, seeds and agro-chemicals market together. PepsiCo also aimed at becoming a monopoly seller of its products. As a challenge, we have to fight the intellectual property infringement cases and continue to stand up against monopolization of agro-products and markets.


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