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IP in Agri-Biotech in India

(Non-technical Summary)

The recent years have been witnessing a spate of high stakes litigation in India in the area of agri-biotech. The emerging space of biotech inventions is increasingly implicated by the patents and other kinds of intellectual property (IP) rights. Although innovation in agriculture was mostly carried forward through government funding and in the labs with a focus on local needs and national interest, the entry of private companies investing in the agricultural biotechnology the role and significance of IP as an instrument of competitiveness in the marketplace has radically transformed agriculture in worldwide. The Indian cotton agriculture saw a revolution in the growth of cotton production and trade since its embrace of BT cotton during the last two decades.

And yet there are a variety of concerns that have been subject of a wide ranging debate in an emerging economy like India. This can be seen from recent litigation involving invalidity of Monsanto’s BG II patents in India, including the exercise of regulatory autonomy to check Monsanto’s ‘monopoly’ by imposing royalty caps through measures such as price control and CCI’s investigations for alleged anticompetitive conduct.  A section of the seed industry which benefited from Monsanto’s licensing regime in India is today at the forefront of a high stakes litigation over royalties and have dubbed Monsanto’s licencing regime ‘one-sided’.

Right from Monsanto’s decision to introduce its biotech inventions in India (BG I and BG II- claiming effectiveness against certain pests that attack the cotton plant), the story spanning over two decades ending with Monsanto’s decision not to introduce their new inventions owing to regulatory uncertainty in India, raises questions about the working of India’s regulatory, IP and Competition regime. There is ample scope for research in their area. The project aims to study the following components as part of its research by focusing on the Monsanto litigation in India.

Bio-tech Regulation and Market Entry

The Genetic Engineering Approval Committee (GEAC) constituted under the Ministry of Environment and Forest, and the Review Committee on Genetic Manipulation (RCGM) established by the Department of Biotechnology under the Ministry of Science and Technology are tasked with approving biotech inventions in India. Seed companies have claimed that the regime was lopsided in favour of biotech companies because of the need to produce a ‘no-objection certificate’ from patent owners, which they claim led to the signing of one-sided licensing agreements with Monsanto. In an environment where India does not have any data exclusivity regime, it remains to be seen if the requirement to seek a NOC was a technical one or artificially created to deter market entry.

The IP Landscape

A patent confers an exclusive right to an inventor to exclude all others from making, using, selling or offering to sell the invention. Monsanto’s patents have been at the heart of the challenge by seed companies. In the recent ruling by the Division Bench of the Delhi High Court, the patent granted on BT cotton technology falls within the exclusion provided in Section 3(j), and the same cannot be patented. The Hon’ble court also directed Monsanto to continue to supply its donor seeds since cotton was listed as an essential commodity and Monsanto’s technology was a subject matter of price control. The High Court further stated that Monsanto’s biotech invention could be registered as a variety and allowed it to file an application under the plant variety legislation.

Alternatively, the Indian Government has issued show cause notice as to why another patent owned by Monsanto (a complementary technology) must not be revoked under Section 66 since the proprietary technology has shown growing resistance to pests. The provision states that if a patent or the mode in which it is exercised is mischievous to the State or prejudicial to the public, then the Central Government may revoke the patent.

These developments raise peculiar questions about the certainty and predictability of India’s IP regime. At some level, there is a deeper conflation of the nature of the biotech invention, coupled with a mix of regulatory issues to deter the ability of patentees to benefit from private ordering based on market conditions.

Price Control Measures to cap the royalties

The Central Government and various State Government issued orders for the price control of Bt cotton seeds and have in the process capped the trait value (royalties) charged by Monsanto. The basis on which such interventions were made in the market are a subject of litigation in different courts in India. It will be interesting to see how the exercise of regulatory space by the Indian Government in favour of seed companies is legally sustainable within the framework of the Essential Commodities Act and the arbitrariness that is discreetly manifested in such measures.

Competition Commission Investigations

The information provided by various seeds companies and the Government agencies led to CCI initiating investigations against Monsanto for abuse of dominance and that Monsanto’s licensing agreement could have an appreciable adverse effect on competition. It is specifically alleged that the licensing agreement between Monsanto and seeds companies facilitated abusive conduct by charging of unfair price, discriminatory treatment, limiting and restriction of technical and scientific development relating to BT cotton technology and cotton seeds market, denial of market access and leveraging of dominant position in the BT cotton technology market to protect cotton seeds market. Even as these matters are currently pending investigations, it would be worthwhile to examine the underlying antitrust theories behind these allegations, the evidence adduced, the threshold required to be complied under the applicable law and the approach taken by comparative jurisdictions on similar issues.

Principal Investigator: Mr Yogesh Pai

Research Fellow: Ms Khushbu Kumari