Monsanto Wins Key Biotech Ruling
By Kirk Makin and Allison Dunfield
Globe and Mail Update
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.