Bad news ... Monsanto wins key biotech ruling

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Monsanto wins key biotech ruling

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By KIRK MAKIN and ALLISON DUNFIELD

Globe and Mail Update

Friday, May. 21, 2004

 

The Supreme Court of Canada made biotechnology history Friday with a 5-4

ruling that a Saskatchewan farmer violated a patent Monsanto Canada Inc.

held on genes of genetically engineered canola seeds.

 

The ruling is considered to have global importance to the biotechology

industry, farmers, health care and any other field where genetic

engineering has made inroads. Canada is believed to be the first country

where a top court has ruled on patent issues involving plants and seed genes.

 

At the centre of the litigation was a gene that Monsanto invented, patented

and introduced into canola. Created in 1996 and known as Roundup Ready, it

makes canola plants resistant to a common weed-control herbicide that the

company markets under the name of Roundup. Its progeny are equally resistant.

 

The litigation commenced in 1997, when Monsanto found its genetically

engineered canola plant growing on Percy Schmeiser's farm. Mr. Schmeiser

contended that since a plant is a higher life form and cannot be patented,

he had done nothing wrong.

 

Monsanto did not claim protection for the genetically modified plant

itself, but rather for the genes and the modified cells it is composed of.

 

At a news conference after the ruling, Mr. Schmeiser said he felt that the

past six years had been a personal victory because the case made it all the

way to the Supreme Court.

 

" That's where I always wanted it to be, at the Supreme Court, where the

whole issue of patenting life forms would be addressed, or the patent of

organisms. ... It may not be the victory that we were looking for, but ...

I and my wife have done everything possible to bring it this far. "

 

He said he hoped that the whole issue of patenting genes and putting them

into organisms and then claiming ownership of the plants would be examined

in the near future by Parliament.

 

Carl Casale, Monsanto's vice-president of North American and Latin America

North, said the decision shows a genuine regard for technological innovation.

 

“The message that Canada sends in terms of respect for intellectual

property and what it means to international investment is very, very

strong,” he told globeandmail.com in an interview.

 

Mr. Casale said Monsanto will continue to expand its product lines in

Canada, in contrast to its activities in countries such as Argentina, where

the company recently withdrew from the soya bean market “because our

intellectual property rights were not being respected.”

 

The 5-4 majority, led by Chief Justice Beverley McLachlin and Mr. Justice

Morris Fish, concluded: " The appellants actively cultivated Roundup Ready

Canola as part of their business operations. In light of all of the

relevant considerations, the appellants used the patented genes and cells,

and infringement is established.

 

”By cultivating a plant containing the patented gene and composed of the

patented cells without licence, the appellants deprived the respondents of

the full enjoyment of the monopoly,” they said, writing on behalf of Mr.

Justice Ian Binnie, Mr. Justice Jack Major and Madam Justice Marie

Deschamps. " The appellants' involvement with the disputed canola was also

clearly commercial in nature.”

 

Mr. Schmeiser saved the seed and reused it ”for production and advantage,”

the majority noted. ”Whether or not patent protection for the gene and the

cell extends to activities involving the plant is not relevant to the

patent's validity.”

 

The dissenting judges, however, said the majority were being inconsistent

with a recent Supreme Court ruling that higher life forms – which include

seeds – cannot be patented. That case involved a genetically engineered

laboratory animal known as the Harvard mouse.

 

Led by Madam Justice Louise Arbour, the dissenting faction said a

reasonable observer would conclude that ”gene claims and the plant-cell

claims should not be construed to grant exclusive rights over the plant and

all of its offspring.

 

”Mr. Schmeiser was entitled to conclude that since plants cannot be

patented, they fell outside the scope of patent protection,” they said.

”Accordingly, the cultivation of plants containing the patented gene and

cell does not constitute an infringement. The plants containing the

patented gene can have no stand-by value. To conclude otherwise would, in

effect, confer patent protection on the plant.”

 

Mr. Schmeiser, 74, cast himself as a farmer of the old school who

habitually used seeds from previous crops to plant new canola. No fan of

chemical herbicides, Mr. Schmeiser used Roundup sparingly in 1997 to

eliminate weeds around some power poles and ditches.

 

He has steadfastly insisted that the seed somehow blew onto his fields from

passing trucks or from neighbouring farms, which had paid Monsanto Canada

Inc. the licensing fee of $15 an acre to use it.

 

He said he was astonished to discover that a great deal of the canola in

those areas survived his spraying, suggesting that had somehow acquired a

resistance to the herbicide. He used portions of the seed from those areas

for his crop the following year.

 

On Friday, Mr. Schmeiser said he got into the legal battle because he felt

that " a farmer should never, ever lose his rights to use his seed year to year.

 

" That was the basis we fought for, for the rights of farmers, and I know

that if my grandfather and my father were here today, that's exactly what

they would want me to do because that's the reason they came to this

country, to be free and to use their seeds from year to year. "

 

With the aid of environmentalists, he quickly acquired the image of a

little guy taking on a greedy corporate conglomerate.

 

Although Monsanto disputed Mr. Schmeiser's version of events, the company's

main contention was simply that Mr. Schmeiser reaped and reused the

herbicide-resistant seed without authorization.

 

Approximately 20,000 farmers now plant Roundup Ready canola, representing

40 per cent of the Canadian canola crop.

 

Mr. Schmeiser lost the first round on March 29, 2001. Mr. Justice Andrew

MacKay of the Federal Court of Canada ruled that Mr. Schmeiser ”knew or

ought to have known” his 1998 seed was resistant to Roundup. He said it was

more likely that he planted the seed himself than that he came by it

innocently.

 

The Canadian Canola Growers Association, one of a dozen intervenors in the

case, warned when the case was argued in the Supreme Court that an overly

restrictive court ruling could harm Canadians interests.

 

Such a ruling, it said, would make Canada ”the only significant canola

exporter to refuse to patent plants and plant material, which would drive

away technology developers and leave Canadian growers without access to

technological advances in new varieties.”

 

In assessing damages after the original trial, Judge MacKay noted that

tests revealed that 1,030 acres of the canola on the farm were more than 95

per cent resistant to the herbicide. He awarded Monsanto the equivalent of

Mr. Schmeiser's profits on his 1998 canola crop – $19,832 – as well as

legal costs estimated at $153,000.

 

The Federal Court of Appeal upheld the ruling in 2002. In an unexpected

twist on Friday, however, the Supreme Court reduced the damages to zero.

 

It said that Mr. Schmeiser profits ”were precisely what they would have

been had they planted and harvested ordinary canola.”

 

Since there was no evidence that he sprayed Roundup herbicide to reduce the

weeks, the majority said, there is no way to conclude that he gained any

financial advantage. ”On this evidence, the appellants earned no profit

from the invention and the respondents are entitled to nothing on their

claim of account.”

 

Mr. Schmeiser's lawyer, Terry Zakreski, said Friday that he felt that

" we're at the end of the road as far as the legal battle is concerned. "

While he characterized Friday's Supreme Court decision as a " well-fought

legal battle, " he said he had hoped that they would have won their ground

of appeal that they won on was the one that would say that just because a

company has a patent on a gene or a cell, it does not have a patent on a

plant.

 

He said he feels the decision gives a large company such as Monsanto the

ability to patent a higher life form.

 

" Many people around the world had pegged their hopes on that ground of

appeal and hoped that we would succeed, but I don't think it ends the war.

The war's going to continue. "

 

A representative for the Council of Canadians said that the council is

calling on elected officials to assume responsibility and to update the

country's Patent Act to address these newly created life forms.