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Sunday, 9 June 2013

Monsanto feels the heat over wheat

Some businesses just can't keep out of the news. One such enterprise is Monsanto, as Katfiriend and occasional guest blogger Miri Frankel points out.  Miri, who like many readers is an IP enthusiast but not a patent specialist, reflects the concerns of many people who find themselves floating in that strange position of being somewhere between a layman and an expert. This is what she writes:
"Only weeks after the US Supreme Court ruled in favour of Monsanto’s right to control the sale, licensing and planting of second generation (and beyond) soybean seeds bearing its patented Roundup Ready technology (Bowman v Monsanto, reported on in depth here, here and here), Monsanto is at the receiving end of a lawsuit related to its Roundup Ready technology – this time involving wheat. 
Genetically modified wheat is banned in many countries, including several major importers of American wheat.  Because about 50% of US-grown wheat is exported to other countries, including those that ban genetically modified crops, wheat farmers have resisted growing any genetically modified wheat on their farms.  Though Monsanto had tested Roundup Ready wheat on a number of farms around the country about a decade ago, many farms refused to embrace the patented technology because the genetically modified crops would be ineligible for sale and export to foreign clients.  Monsanto ultimately ended the testing (the US Food and Drug Administration did, at that time, declare the modified wheat safe for consumption, but did not approve it for sale because Monsanto voluntarily withdrew its application for approval in light of the backlash among farmers).  Yet, a decade later, the Roundup Ready genes were discovered in a crop of wheat on a farm in Oregon.  This recent discovery has caused several countries to ban American wheat imports, or to modify or cancel their orders for the purchase of US wheat from American farms (even in states other than Oregon), which in turn has also affected wheat prices.  
How did this happen?  Forbes theorizes as follows: the best case scenario is that rogue seeds were carried by wind from former test fields and by some inexplicable natural phenomena happened to land and grow just in this one field. A worse case scenario is that seeds have been carried intermittently over the years and wheat fields have been contaminated with small amounts of GM wheat undetected for up to a decade. Then there’s the worst case scenario, for Monsanto, certainly: GM seeds were routinely mixed with conventional seeds through human error. 
In response, a wheat farmer in Kansas has sued Monsanto, claiming that Monsanto’s negligence in controlling the Roundup Ready technology caused his farm harm in the form of cancelled orders and depressed prices. On one hand, it seems unreasonable to hold a company liable for a natural process (pollination) over which the company has no control.  The pollination of seeds by insects and wind, and the resulting germination of those seeds, is under the control of Mother Nature.  A farmer’s crop that is contaminated with Roundup Ready genes because of this process is an unintended consequence of nature.  On the other hand, Monsanto actively leverages Mother Nature to assert its patents against farmers whose crops have been contaminated by cross-pollination from neighbouring Roundup Ready-licensed farms.  And Monsanto has frequently prevailed in such cases, most recently in Bowman, noted earlier, and in other cases, including this one in Canada.  
I can’t help but wonder, though, if Monsanto’s patent rights give it continuing control over the planting of future generations of seeds borne from its initial sale of Roundup Ready seeds, shouldn’t Monsanto also be responsible for the unintended consequences that stem from a self-replicating technology that cannot necessarily be controlled or limited?  Cross-contamination of other non-licensed farms is a foreseeable result. 
Taking Bowman as an example: rather than purchase new seeds from a supplier each year, let’s say Bowman’s habit had generally been to harvest his crops and replant that entire generation’s resulting seeds (as opposed to what he actually did: plant only those seeds that he knew contained Roundup Ready technology).  If he had discovered that so many of his crops had been accidentally contaminated with Roundup Ready technology from a neighbour’s farm that he did not have enough non-contaminated seeds left to replant his field, would Monsanto be liable to him for the cost of any seeds he would need to purchase as a replacement for the unusable Roundup Ready seeds generated by the contaminated plants in his field? That seems reasonable to me, since Bowman’s only alternatives would be to take a licence from Monsanto in order to use the Roundup Ready seeds or to purchase non-Roundup Ready seeds on the open market – in either case, it is a direct financial harm that is directly attributable to Monsanto’s self-replicating patented product.  
Looking at the reverse view – a farmer, I’ll call him John, owns a certified-organic farm, and actively opts not to buy Roundup Ready seeds..  But unbeknown to him, his crop is contaminated with Roundup Ready crops due to cross-pollination from a neighbouring farm that uses Roundup Ready seeds.  Is John infringing Monsanto’s patents if he plants seeds from his harvested crops, which contain Roundup Ready technology?  Monsanto’s previous litigation wins suggest that John would be considered an infringer, even though his actions were unintentional.  [Thankfully, in light of widespread, unintentional cross-contamination of crops in farms neighbouring those that are licensed for Roundup Ready crops, Monsanto claims that its current strategy is to pursue only those farms that discover their crops have been contaminated and subsequently intentionally plant the Roundup resistant crops instead of not-Roundup-Ready seeds from uncontaminated sections of their crop.  This was not always the case in the past.]  In addition, if the contamination of John’s farm causes him to lose his organic certification, should Monsanto be responsible for the loss?  This exact question is under consideration in lawsuit filed by an organic cotton farmer in Texas, as described by the Texas Observer here. 
Turning back to the suit filed in Kansas, it is perhaps too broad a claim to hold Monsanto liable for a nationwide disruption to wheat prices and exports because of the unintended contamination of a farm in a single state (though we don’t yet know whether more wheat contamination will be discovered).  These lawsuits invariably remind me of a quote originally articulated by US President Franklin Delano Roosevelt, but made famous in the current generation by Spider-Man: “great power involves great responsibility.”  Perhaps the owners of patents on self-replicating and uncontrollable processes and technologies should have to accept the burdens (liabilities) that accompany such patents if they are also going to reap the rewards (revenues).  It is time to review the patent system if there is no mechanism to balance the rewards with the responsibilities that come with patent ownership.  But I must admit, my background is not in patent law, and my science education ended many years ago in college so, readers, please do share your thoughts on the likelihood of a court holding Monsanto responsible in these scenarios".  

16 comments:

Rahul B said...

I think it would be decided based on Regulatory laws prevailing in the USA for genetic crops. If the laws require the companies to take certain measures to stop the "unwanted" intervention of Mother Nature - like maintaining a healthy distance between the trial farm and non-trial farms -properly confining the trial farms etc. If all the measures were met according to the regulatory laws, I really wonder how the courts are going to decide such a case. If some of the measures were flouted, then sure there will be a remedy and it will be easier for courts to decide.

Also, if it is proven that the farmer himself flouted some rules (just saying, there are no rules but say accepted norms like GAP) say cGAP and did something which caused the seeds from trial farms to contaminate the seeds in his farm and subsequently to other farms, will the farmer then be penalised for negligence? And who will plead such a case against the farmer?

Sometimes, I shudder to think of future - when we will be growing plants producing vaccines, may be antibodies, antigens, or say Insulin etc.; how would the re-conciliation occur - between farmers, patients, companies, governments, scientists, political pundits?

Anyways, current case is interesting. Is there any equivalent case anywhere in world?

Anonymous said...

"A farmer’s crop that is contaminated with Roundup Ready genes because of this process is an unintended consequence of nature" - no, because if the unnatural Roundup Ready wheat had not been introduced into the environment by Monsanto, this contamination would not have occurred. I am no expert on the law in this area, but certainly common sense dictates that Monsanto is responsible.

Roufousse T. Fairfly said...

Part 1/3

How did this happen? Forbes theorizes as follows: the best case scenario is that rogue seeds were carried by wind from former test fields and by some inexplicable natural phenomena happened to land and grow just in this one field. A worse case scenario is that seeds have been carried intermittently over the years and wheat fields have been contaminated with small amounts of GM wheat undetected for up to a decade. Then there’s the worst case scenario, for Monsanto, certainly: GM seeds were routinely mixed with conventional seeds through human error.

It is not inconceivable that some GM-seeds remained in the ground from an earlier test crops in the region, and germinated when tilling brought them back up nearer the surface. There is also the possibility of cross-pollination. Even though wheat is essentially a self-pollinator, it is capable of having sex once in a while. [ That loaf of bread on the dinner table suddenly gives me that preverted glance... ;-) ]. Studies show that pollen can be transported over some dozens of metres. This is probably the practical range over which you can search for DNA transmission, but couldn't pollen under the right circumstances propagate over longer distances without being degraded by UV or taken down by rain? It seems to me to be a matter of statistics, in any case anemophily is not fully understood.

Roufousse T. Fairfly said...

Part 2/3

[...] shouldn’t Monsanto also be responsible for the unintended consequences that stem from a self-replicating technology that cannot necessarily be controlled or limited?
[...]
Perhaps the owners of patents on self-replicating and uncontrollable processes and technologies should have to accept the burdens (liabilities) that accompany such patents if they are also going to reap the rewards (revenues). It is time to review the patent system if there is no mechanism to balance the rewards with the responsibilities that come with patent ownership.


You are not the first to notice this apparent lack of symmetry between IP rights and product liability.

The 2008 book "The future control of food" touches this topic in a comment by Professor Christopher Rodgers of Newcastle University.

In box 1.6, found at pages 20-21 of the paper edition, or page 40/327 in the PDF, he observes:

In the common law world, the primary mechanism for protecting a property owner's rights is the law of nuisance and trespass. Can non-GM farmers use the law of nuisance to claim damages for alleged 'contamination' of their crops by cross-pollination from GM crops and further remedies (for example injunctions) to prevent further cross-pollination? This contentious issue has been rehearsed in the courts in Canada [...] and in the US [...], without a conclusive resolution. The only English case in which the issues have been discussed was R v. Secretary of State for the Environment ex parte Watson(1999).

In this case the grant of a licence for field trials of GM maize was challenged on judicial review by a neighbouring organic sweet corn producer. The challenge was unsuccessful due to the court's unwillingness to interfere with the risk assessment undertaken by the UK government's specialist scientific advisers, the Advisory Committee on Releases to the Environment (ACRE). The environmental risk assessment carried out by ACRE indicated that the danger of cross-contamination was so small as to be statistically insignificant. In the course of a short judgement dismissing the claim, Lord Justice Buxton commented that the applicant's case 'sounded like one of private nuisance' and should have been pleaded as such, as the claim was ultimately aimed at restricting the research institute's right to use its property for an otherwise legitimate purpose. The court characterized organic farming as a 'hypersensitive' land use that would not be protected by the common law of nuisance.

Roufousse T. Fairfly said...

Part 3/3

[continued]
Although the issues were not explored in depth, this case illustrates the considerable difficulties for any organic farmer seeking to establish legal liability for alleged GM 'contamination' of his land or crops in nuisance. There are difficult problems of causation, and in establishing that the cross fertilization of a non GM crop constitutes either property 'damage' in the required sense, or is causing an unreasonable interference with the farmer's use of his land. On the other hand, the courts have adopted a radically different stance to the protection of intellectual property. One of the causes célèbres in the recent history of biotechnology law is the decision of the Canadian courts in Monsanto v. Schmeiser (2004) [mentioned in your post].

Monsanto successfully sued a Saskatchewan canola farmer, Percy Schmeiser, for damages and an injunction, in circumstances where Schmeiser's crop had acquired (without his consent) Monsanto's patented RT73 gene. This gives crops resistance toMonsanto's 'Roundup' glyphosate broad-spectrum herbicide. The legal basis for Monsanto's successful claim for patent infringement was the courts' recognition that they could maintain patent protection in the patented gene even when it had passed by cross-fertilization into Schmeiser's canola crop. The Supreme Court of Canadasaw nothing to prevent the recognition of two sets of property rights subsisting simultaneously in Schmeiser's crop; that of the farmer in the land and the crops it produced, and that of Monsanto in the gene giving resistance to its Roundup herbicide.

Unlike nuisance (which requires the proof of 'unreasonable' interference with real propertyrights), the law protecting patent rights is based on strict liability: Schmeiser was in breach of patent law simply because he had harvested a crop in which he knew or should have known that the patented gene was present, and had (as is common agricultural practice the world over) kept back a proportion of the seeds, and had then planted them the following year. In protecting Monsanto's patent rights, the Canadian courts accorded priority to the intellectual property rights of the corporation over the real property rights of the farmer. This is not only arguably in contravention of the 'polluter pays' principle of environmental law – if this approach were to be adopted in other jurisdictions it would compromise the legal rights of non-GM farmers, who would find it much more difficult to maintain organic and/or traditional farming methods in the face of the spread of GM technology across traditional sectors of agriculture – it also illustrates a wider issue, namely the way in which intellectual property rights can be used by their owners to acquire control over the food production system, and to override the land use rights of farmers and their ability to save seed. The decision clearly gives support to the biotechnology companies to try to protect their patent rights, but jurisdictions outside Canada and the US may choose to fix a different balance between real property and intellectual property rights.


I'd say that in view of the preceding, and of the current context, the odds of seed manufacturers having to assume full liability for their wares don't look very promising. And the question is a bit like for nuclear power: does the concept of liability even make sense when everyone bears the consequences in one way or the other should things go awry?

Tim Roberts said...

Not all rights and freedoms are compatible. The right to grow 'organic' food may not be compatible with the right to grow GM. Which should prevail? GM food is cheaper to produce – 'organic' food is more expensive. The belief that 'organic' food is better for you, though not evidence-based, means that it can be sold at a higher price. Shouldn't the real benefit of cheaper food prevail over the perceived benefit of healthier food?

Rahul B said...

Roufousse T. Fairfly
Thanks for the insights and pointing us towards possibility of recognition of tangible property rights in such cases and the possible clash between tangible and intangible property rights. However, I do not think there is any clash between tangible property rights and intangible property rights. I think it is not even possible to have such clashes.
I think across jurisdictions, anti-trespassing laws are very broad so that "any harm" to any personal property is trespassing. In case of Monsanto v. Schmeiser (2004), the "harm" was actually done by the owner of the personal property himself; he continued to "harm" his own property by planting seeds again and again despite knowing their content. So, there was a willful infringement and willful “abuse” of his own property. He knew the advantages of the technology and hence saved the seeds purposefully and used them to make profits. Moreover, it was infringement suit by Monsanto, therefore IP rights were to be hold superior. Also farmer, in no way, could plead that since farm is his property, he is allowed to infringe patent rights. Patent rights are not bound to tangible property rights within a single jurisdiction. And with respect to the "polluter pays" theory - why do you think Monsanto was the polluter? The farmer, who continued growing seeds despite knowing that the seeds were GM seeds, is also polluter. In that he polluted his own property and the environment around it. When the book says that the farmer’s right in the land were not recognized, I think they made a grave error. The farmer has every right in his property but he has no right to trespass on other’s property, in this case the patents. Otherwise tomorrow, it will be easy to claim that since I manufacture this particular Insulin or machine or process on my personal property, I do not infringe their respective patents held by a business.
And I do not think current case will have anything to do with patent rights at all. Because the farmer has sued Monsanto, and not vice-versa. In counter-suit, if any filed by Monsanto, I do not see they will be suing the farmer for infringement of their patent rights, since the farmer has already, by suing Monsanto, proven that his use of their patent was not willful and that he is adversely affected because of this.

Carlos A. Conde said...

I have seen a similar case which has been ruled in favour of Monsanto, i.e., Organic Seed vs Monsanto in which organic farmers sued Monsanto to prevent the company to contaminate their organic seeds with GMs. Here is the link http://www.pubpat.org/monsanto-seed-patents.htm http://derechoeinnovacion.co/?p=35

Norman said...

“Is John infringing Monsanto's patents if he plants seeds from his harvested crops, which contain Roundup Ready technology?” On this question the answer, in my view, is yes, but Monsanto has is no remedy. Damages are zero, as Monsanto has suffered no loss; John cannot be made to account for his profits - while he has grown the patented plants, he has gained no benefit (see Supreme Court of Canada in Monsanto v Schmeiser 2004 SCC 34); and John will not be enjoined from an action which he cannot control. See my article “A Remedial Benefit-Based Approach to the Innocent-User Problem in the Patenting of Higher Life Forms” (2004), 20 Can IP Rev 79 (available in draft from SSRN paper 2277540)

On the problem generally, it is worth remembering that the question of who should be liable when two beneficial activities interfere with each other was the subject of Coase’s article The Problem of Social Cost, 3 J. L. & Econ. 1 (1960)

Miri Frankel said...

@Rahul, I agree with you that a property right in the land doesn't give carte blanche to infringe on another's intangible patent rights merely because the patented product has turned up on the property. However, if the patented product's presence on the land has a detrimental effect on how the land can be used (e.g. growing only organic crops or being able to replant all the seeds from a harvest without worry that such action is an act of infringement), there should be some recourse, in my opinion. Unfortunately, there is no recourse to be had under the current legal landscape.

In fact, just yesterday, the Court of Appeals for the Federal Circuit affirmed a lower court's dismissal of the declaratory action filed by the US organic farmers against Monsanto (which I referenced in the original blog post). I find the court's basis for the affirmation to be puzzling. The orgnic farmers filed suit after Monsanto refused to sign a statement saying it would not pursue them as infringers if their land was accidentally contaminated. Despite Monsanto's refusal, the court nonetheless determined that the farmers could rely on a general statement on Monsanto's website claiming its practice is not to pursue users of trace amounts of GM seed. A portion of the court's ruling is as follows:
"Monsanto's binding representations remove any risk of suit against the appellants as users or sellers of trace amounts (less than one percent) of modified seed."
I've never considered a statement on a corporate website, which is generally written to build loyalty among clients and brand fans, to be considered a binding unilateral contract. Has anyone else heard of such a ruling from another court or jurisdiction?

Anonymous said...

@Tim Roberts: your reasoning puts the "real" benefit of GM food against the "perceived" benefit of organic food. However, one real benefit of organic food is that (among others) no herbicides such as Roundup are used, which avoids such chemicals to end up and possibly accumulate in the environment (see also the recent discussion on neonicotinoids and bees, for instance). Whether or not that leads to healthier food is another matter.

You may find the price of food more important than whether certain chemicals are used or not, but that is a matter of values, opinions and choices, not just of "real" versus "perceived" benefits. I would think a rather thin basis to decide whether GM should prevail over organic or vice versa.

Anonymous said...

Miri, why only patented product? I will say even if it is a non-patented product or a product whose patent has expired, and it damages property of a third party, there should be and there is way of paying for damages; only if the case is contested on “sound arguments” - and not “standard Anti-GM rhetoric”. Anti-GM lobby is high on emotions, public opinion but fares very poorly on data and evidence. Anyhow, in all these scenarios, patent rights or law has no role to play.
I believe before giving NOC for trials or registration of the wheat crop for marketing, US agencies would have given certain guidelines to be followed like confining the field trials, maintaining buffer zones, educating the farmers, labels, packaging, educating the community etc. If Monsanto is found to be in breach of these guidelines, I see no reason why US courts will not penalise Monsanto, when they have penalised likes of Microsoft, Apple etc. on such similar counts. Please refer to the Starlink case. As a result of this case, new guidelines were enforced, and it was held that standard tort theories would apply to recover damages, but it declined strict liability. But ironically, in that case the US government itself was in breach of many international guidelines and flouted various laws in order to allow startlink to be grown for non-human purpose. Us is not a party to CBD, or Cartagena Protocol which has clauses on liabilities, international obligations etc. There is a legal landscape which US is not adopting.


Rahul B said...

The anonymous above is myself, Rahul. Don't know how I got "anonymous".

I guess the genetic crop lobby in US is bigger than pharma lobby - that US is not signing any of the international obligations, laws and standards despite being the largest producer of GM crops.

Miri Frankel said...

Rahul, your point "why only patented product?" is a good one. I focus on the patented products (here, GM seeds) because it seems from prior cases that patent rights in the GM seeds (and resulting infringement claims) have received greater deference and attention than the claimed harm caused by the patents to the alleged infringer/farmer (who in some cases did intentionally infringe, but in others did not). It leaves me wondering if the alleged infringing farmers might have prevailed in claims for damages had it not been for the existing patents on the GM seeds.

Tim Roberts said...

Anonymous at 14:54, you underline my point. The benefit of doing without pesticides is perceived rather than actual. People don't like pesticides as a class, because some pesticides can do damage. Nicotinoids may damage bees (or not, possibly). But this should be looked at case-by-case, rather than with a blanket prejudice. Do you think glyphosate ('Roundup') is unsafe ? If so, why? The sad thing is that GM should have been classified (by whom?)as 'not organic' when it offers the opportunity to cut down the use of less safe pesticides, among numerous other advantages. Why this fatwa?

Rahul B said...

I focus on the patented products (here, GM seeds) because it seems from prior cases that patent rights in the GM seeds (and resulting infringement claims) have received greater deference and attention than the claimed harm caused by the patents to the alleged infringer/farmer
Miri, I urge you to reconsider your observation. In none of the infringement suits, whether intentional or unintentional, no harm was claimed by the farmers (since the ‘harm’ was claimed by the GM crop company). And obviously farmers too were in no position to claim any “harm”, since they were reaping profits (intentionally or unintentionally), therefore patent rights were upheld by the courts. Now, consider the Starlink case where farmers explicitly claimed harm and demanded damages, and there were no averments by farmers on the patent rights of Aventis (there need not be obviously), since it did not concern them because they were harmed as the suit by them proves. As I said before, in my humble opinion, there is actually no clash possible between tangible property rights and intangible property rights. If a farmer is aggrieved by someone growing GM crop and contaminating his/her field, then he will request damages under torts. Patent law is not about providing damages to someone getting harmed by the invention, it is only about protection of the inventors, their inventions and dissemination of information to society. And if a farmer is not aggrieved and is intentionally or unintentionally infringing patent rights on particular genetic crops, in this case the company holding patent rights is aggrieved, so the farmer will have to pay damages. If there is a scenario where the clash between the two kinds of rights is possible, particularly in field of GM crops, I will like to be educated.

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