OWNING GENES AND
ORGANISMS: NEW ISSUES FOR
AGRICULTURE AND SOCIETY
John H. Barton
Stanford Law School
(Emeritus)
OUTLINE
PATENTS AND CROPS
 WHAT THEY HAVE DONE TO THE
INDUSTRY
 WHAT THEY’VE DONE TO THE
FARMER
 WHAT THEY’VE DONE
INTERNATIONALLY
 EVALUATION

WHAT ARE THE CROPS?

Bt-based insect resistance
– Corn
– Cotton

Herbicide resistance
–
–
–
–
Canola
Corn
Cotton
Soybeans
Pictures from USDA & Monsanto, courtesy of
http://cls.casa.colostate.edu/TransgenicCrops/current.html
HOW DO YOU PATENT A
GENE?

Possible claims on:
– The isolated gene
– Constructs containing it (that are used to transform
plants)
– Transformed cells
– Transformed plants
– Seeds of transformed plants
– Methods of transforming plant or of producing the crop
through use of the gene inserted into the crop
– Specific crop lines (JEM v. Pioneer (2001))
WHAT ELSE IS PATENTED?
Promoters
 Recoding processes
 Transformation processes

A SENSE OF NUMBERS
Annual applications for cell and tissue
culture: ~ 24
 For vectors etc: ~ 64
 For traits: ~ 80
 For germplasm: ~ 180

(2001 numbers, from Aurigin Systems/MicroPatent,
presented in Boettinger et al 2004)
IMPACT ON THE INDUSTRY

The seed industry in the 1960s and 70s:
– Small and middle-sized entities (Pioneer, DeKalb, etc.)
– Substantial role for land grant universities

Today
– Vertically and horizontally integrated (Monsanto,
Syngenta, DuPont, Bayer, Dow)
– For Bt corn, Pioneer/DuPont has ~ 50%, Monsanto ~
20%, Syngenta ~ 30% (Benbrook 2002)
– Monsanto technology in 59-97% of GMO seed market
(2004 numbers ETC group 2005)
– Much less role for land grant universities
REASONS FOR
INTEGRATION

Vertical integration
– Marketing
– Production

Horizontal integration
– Covering research costs
– Settling patent disputes

Implication -- ?? --decreased expenditures
on R & D! (decline reflects market as well
as concentration)
THE PATENT FACTOR - I

Litigation: early & mid 1990s: at least 21 cases
among:
–
–
–
–
–
–
–

Agracetus
Boehringer
Calgene
Ciba-Geigy
DeKalb
DNAP
Ecogen
Enzo
Mycogen
Monsanto
Novartis
PGS
Pioneer
Over transformation, vectors, Bt etc.
THE PATENT FACTOR II

These companies are now:
– Agracetus =>
–
–
–
–
–
Boehringer
Calgene =>
Ciba-Geigy =>
DeKalb =>
DNAP =>
– Ecogen =>
Monsanto
Monsanto
Syngenta
Monsanto
Different
business
Mitsui
Enzo =>
Different
business
Mycogen => Dow
Monsanto
Novartis => Syngenta
PGS =>
Bayer
Pioneer => DuPont
THE PATENT FACTOR III

And the 2004-05 litigation includes:
– Monsanto v. Bayer (Bt gene)
– Syngenta v. Monsanto & others (coding
sequences) (2005 jury decision, now on appeal)
(Also 2004 cross license to settle other
Syngenta-Monsanto patent disputes)(and 2006
Syngenta-DuPont joint venture)
– Mycogen v. Monsanto (gene modification)
PATENTS AND FARMERS
http://cls.casa.colostate.edu/TransgenicCrops/current.html
h
t
Commercialization really began in 1996.
SUMMARY OF STUDIES:
HERBICIDE TOLERANCE

Yield
– 5 increase
– 2 small increase
– 5 same

Pesticide use
– 4 decrease
– 1 small increase

Returns
– 5 increase
– 4 same
SUMMARY OF STUDIES:
BT

Yield
– 13 increase
– 1 same

Pesticide use
– 7 decrease

Return
– 7 increase
– 2 decrease
– 2 depends on infestation
(compiled from Fernandez-Cornejo & Caswell, ERS
2006)
STACKED MARKETING
RESTRICTIONS
The patent
 The PVP right
 The technology agreement
 The seed label


Biological protection
– Hybrid
– Terminator gene (“GURT”)
THE TECHNOLOGY
AGREEMENT

Prohibition of
– Reuse of harvested seed
– Research on seed
– Use of competing herbicides/failure to respect
resistance management
– Not respecting channeling



Forum selection clause/choice of law/arbitration
Authorization for inspections
Warranty limitations & liquidated damages clause
STANDARD LITIGATION



Farmer reuses seed =>
Industry investigation & suit
Defenses:
– Patent doesn’t reach reuse of seed
– Contract/use of patent violates antitrust law
– These defenses rejected under Monsanto v. McFarling
(CAFC 2004)


Usual decision is for seed company save on minor
points.
At least 90 such suits as of 2003.
PERCY SCHMEISER:
AT TRIAL




Defense was that the seed/pollen blew across
fence in 1996.
Factual basis of this was at issue in trial court.
That court (Saskatoon) held that farmer infringed
patent when, knowing that it was resistant, he
retained seed and used in in 1998.
Thus, this case is not the example of inadvertent
infringement that it is often held to be.
SCHMEISER ON APPEAL
Five-to four majority of Canada Supreme Court held
for Schmeiser on narrow grounds: Monsanto had
asked for profits and Court held that there were no
profits beyond those with regular seed – had
Monsanto asked for royalties, result might have
been different
Minority held that the patent was being applied to
cover the entire plant, something not possible
under Canadian law.
INTERNATIONAL ISSUES
Europe – concern about GMOs (and serious
efforts to prevent developing nations from
using the technology)
 Developing countries – concerns about
access to technology, genetic resources

EUROPEAN ISSUES

Opposition to GMOs (food attitudes, different
regulatory experience, precautionary principle) =>
– Efforts to restrict applicability of patent law, based on
intervention through European Parliament
(1998)(fundamentally unsuccessful)
– Efforts to bar imports:
» De facto EU moratorium 1998 => 2003
» National moratoria
– Effective results are
» Labeling and
» Dual price system (2.5 to 15 % premium for non-GMO; 6 to 17
% cost of segregation (EU DG Ag 2000)
THE WTO CASE



Brought by US and Canada against EU on basis of
moratoria
WTO (interim decision) resolved case on basis of
Sanitary and Phytosanitary Code (1995):
Two issues
– EU moratorium
» Violated Annex C(1)(a) – dealing with undue delay
» But not inconsistent with Article 5.1 requiring a risk
assessment, nor had US established that EU violated Article
2.2 on need for scientific basis for conclusions
– Maintenance of member state prohibitions on particular
specific products
» EU acted inconsistently with Articles 5.1 and 2.2
DEVELOPING COUNTRY ISSUES
– GENETIC RESOURCES

Starting with PVP revisions (1980), concern about
genetic resources;
– Farmer’s rights
– Resentment at possible IP costs

Agreement efforts
–
–
–
–

FAO Commission; International undertaking (1983)
Convention on Biodiversity (1992)
FAO/CGIAR (1994)
International Treaty on Plant Genetic Resources (2001)
Access now difficult
DEVELOPING COUNTRY ISSUES –
GLOBAL PATENT LAW PRESSURE

TRIPS – 1995
– Duty to protect plants through PVP or patents

Concerns
– Exchange among poor farmers
– Farmer reuse of seeds
– Structure of seed industry

CGIAR and difficulty of research (research tool
issue, more severe than in medicine, but effect in
developing world often overstated)
DEVELOPING COUNTRY
ISSUES -- ADOPTION

Adoption by market mechanism
– Argentina & Monsanto
– India & Mayhco & Monsanto

Adoption by smuggling
– Brazil

Adoption by public sector research
– China

Counterforces
– NGO opposition to CGIAR research and in India
– Concern about export markets to Europe
GLOBAL ADOPTION
EVALUATION
Hard to separate patent issues from
biosafety and political aspects of GMOs
 Moreover, much anti-GMO and anticorporate thinking included in the critiques
of patents

SUCCESSES OF PATENTS
Almost certainly increased the private
investment in research on introducing GMO
crops
 And these crops have been a success for
farmers in US, Canada, Argentina
 Some possibility of the mechanism working
in Brazil, China, and India

COSTS OF PATENTS
Significant contribution to industry
concentration, with probable negative
impact on farmer/industry division of rents,
and on level of research.
 Significant complications for land grant
universities.
 Significant disruption of international
research access to agricultural genetic
resources

MIGHT WE HAVE DONE
BETTER?
Patent office misjudgments?
 Antitrust and the industry mergers?
 Reuse of patented seeds?
 Research on patented seeds?
 Industry errors on biosafety?

THANK YOU
jbarton@stanford.edu