GM Canola on the Prairie: gene patents, farmers’ rights

Matthew Rimmer
26 March 2004

On 20 January 2004, the Supreme Court of Canada heard an appeal by Percy Schmeiser, a 73 year old canola farmer from Bruno, Saskatchewan, against findings that he had infringed the patents of the biotechnology company Monsanto. The matter raises important questions about gene patents, innocent infringement, and farmers’ rights. Are biological inventions patentable – like mechanical inventions? Can an innocent bystander be held liable for infringing a patent? Should farmers’ privileges to save seed trump patent rights and technology user agreements?

The case concerns a Canadian patent granted to Monsanto in 1993 for an invention named “Glyphosate-Resistant Plants”. The patent was for “man-made genetically engineered genes, and cells containing those genes which, when inserted in plants, in this canola, make those plants resistant to glyphosate herbicides” such as Monsanto’s product Roundup Ready.

In 1997, Monsanto sent private investigators – ex-Mounted Policemen – to take samples from the canola farm of Percy Schmeiser. It claimed that the farmer planted glyphosate-resistant seeds to grow a crop of GM canola, for harvest. It claimed that Schmeiser used, reproduced, and created genes, cells, plants and seeds containing the genes and cells claimed in the patent.

Both the Federal Court and the Full Federal Court held that Percy Schmeiser knew or should have known that those plants were glyphosate resistant when he saved their seeds in 1997 and planted those seeds the following year. It was the cultivation, harvest and sale of the 1998 crop that made Percy Schmeiser vulnerable to Monsanto’s infringement claim.

As a result of the decision, Schmeiser owed Monsanto about $140,000 in judgments. He also had to pay substantial legal fees of $230,000. He has rented out all but 140 acres of his farm. Monsanto has placed a lien against the house and farm of Schmeiser. As a result, the farmer has raised funds from donations by supporters to help fight the considerable costs of his legal battles.

Percy Schmeiser was supported by a group of six NGOs – including the Council of Canadians, the Sierra Club, and the International Center for Technology Assessment. Monsanto was supported by the Canadian Seed Trade Association, the Canadian Canola Growers Association, and the industry group BIOTECanada.

The provincial government of Ontario was also a party to the case because of its concerns about the impact of gene patents on biomedical research and health care. The provincial government has taken a strong interest in the topic since it was sued by the Utah biotechnology company, Myriad Genetics, for infringement of the company’s patents on genetic tests for breast and ovarian cancer.

The Supreme Court of Canada will have to consider a complex array of issues surrounding gene patents, innocent infringement, and farmers’ rights. There are three main areas of dispute. First, the court will consider whether Monsanto’s patent on “Glyphosate-Resistant Plants” is valid given the prohibition on patenting high life forms in Canada. Second, the Supreme Court will evaluate whether Percy Schmeiser infringed the patent of Monsanto by having a patented GM canola crop on his land. Third, the court will consider the defence of Schmeiser that he is permitted under law to save and reuse seed. I will examine each of these issues in turn.

Biological inventions

The first area of dispute the Supreme Court of Canada will have to consider is whether biological inventions – such as Monsanto’s patented GM canola – are patentable subject matter.

The modern patent system was a product of the industrial revolution, and designed to protect mechanical and chemical inventions. The regime was not designed to provide protection for living organisms. Indeed, life forms were considered to be discoveries of nature, rather than scientific inventions.

However, there has been a progressive accommodation of biotechnology within the legal system. The French barrister Bernard Edelman summarises the evolution of the law: “Life has been integrated into the market as easily as could be imagined because it has been a progressive process.”

In 1873, Louis Pasteur was granted a patent in the United States on a certain yeast, which was a living organism. The Plant Patent Act 1930 (US) provided limited protection for plants. The Plant Variety Protection Act 1970 (US) extends the category of an artificial nature to the reproducibility of plants. The decision of the Supreme Court of the United States in Diamond v Chakrabarty determined that genetically-engineered organisms are either a manufacture or a composition of matter and are therefore patentable.

From single-celled organisms, the line then passes through genetically engineered plants to oysters and transgenic animals – like Oncomouse. From there, patent offices and courts have been willing to grant patents on human genes and gene sequences, and stem-cell lines.

However, there has been a backlash in Canada against the dramatic expansion of the scope of patent law. In the case of Harvard College v the Commissioner of Patents, the Supreme Court of Canada considered whether the transgenic animal, the Harvard Oncomouse, could be the subject of a patent. The Court decided by a majority of five to four that higher life forms were not patentable subject matter. In the leading judgment, Justice Bastarche emphasised that Parliament must give an express legislative direction to authorise the patenting of higher life forms:

“Patenting higher life forms would involve a radical departure from the traditional patent regime. Moreover, the patentability of such life forms is a highly contentious matter that raises a number of extremely complex issues. If higher life forms are to be patentable, it must be under the clear and unequivocal direction of Parliament.”

Justice Bastarche indicates that there are also a number of reasons why parliament might want to be cautious about encouraging the patenting of higher life forms – such as plants, seeds, animals, and human beings. In his view, whether higher life forms such as oncomouse ought to be patentable is a matter for parliament to determine.

The supporters of Percy Schmeiser are hopeful that the Supreme Court of Canada will overturn the past judgments. Nadège Adam, a biotechnology campaigner for the Council of Canadians, said:

“We are very confident that the Supreme Court will do the right thing by reversing the Federal Court of Canada’s decision, and exonerating Mr. Schmeiser and all farmers. The Oncomouse case last December demonstrated how inadequate the federal patenting legislation is vis-à-vis genetic engineering.”

This appeal of Percy Schmeiser has undoubtedly been strengthened by the recent decision made in relation to the transgenic animal oncomouse.

Monsanto’s lawyer, Robert Hughes, argued that the company did not possess a patent on the entire canola plant, but rather an “ingredient” of the plant. Therefore, he reasoned, the biotechnology company did not fall foul of the prohibition against the patenting of higher life-forms. Hughes likened the company’s patent to that of an inventor who develops a new kind of steel for automobiles and receives a patent for that component rather than the whole car. However, Justice Arbour dismissed the analogy drawn between patenting steel and a canola plant. She observed: “According to the Harvard mouse ruling, I don’t think the steel analogy works.”

The Canadian biotechnology industry has been concerned that an adverse decision against Monsanto would jeopardise investment and venture capital to the country. Cate McCready said on behalf of BIOTECanada: “It was on behalf of the entire biotech community in Canada that we chose to intervene in order for the Court to hear the perspective of the innovators who have given us more than 18,000 biotech products and processes currently under development here in Canada.” Biotechnology companies could invest in other jurisdictions, such as the United States and Australia, which provide comprehensive legal protection for gene patents.

The Canadian Biotechnology Advisory Committee has released an advisory memorandum on “Higher Life Forms and The Patent Act”. It seeks to allay fears that the jurisprudence of the Supreme Court of Canada spells the ruin of the Canadian biotechnology industry. The Committee maintains: “If the Government of Canada wishes higher life forms to be patentable, it must propose amendments to the Patent Act and gain Parliament’s agreement.” It stresses that Canada has an unprecedented opportunity to define the special characteristics of biological inventions at the legislative level.

Innocent infringement: from India to Australia

The second are of dispute in the case is whether an innocent bystander could infringe a patent.

Percy Schmeiser argued that the GM crops on his land were the result of accidental contamination – such as cross-field breeding by wind or insects, or by seed being blown off neighbour’s trucks, which did not have their tarpaulin firmly secured. In any case, he maintained that he did not derive any benefit from the GM canola because he did not spray it with Roundup Ready.

Monsanto maintained that the presence of the GM canola on the farm was not accidental. It conducted a number of tests on canola taken from the field of Percy Schmeiser. The results of these tests showed the presence of the patented gene in a range of 95-98% of the canola sampled.

The Supreme Court of Canada heard much argument over patent infringement. There was much discussion over whether the mere handling of the seeds was enough to constitute a breach of patent rights. Justice LeBel suggested that there could be an innocent explanation for why Schmeiser’s field contained such a high amount of GM Canola: “There is no evidence that Mr. Schmeiser bought the seeds.” Justice Binnie wondered what additional profit Schmeiser made with Monsanto’s seeds given that the farmer had not used Roundup Ready on his crop.

The Supreme Court of Canada may well fashion a defence in respect of innocent infringement in respect of agricultural biotechnology patents. In the Oncomouse case, Justice Bastarache recommended that the Patent Act 1985 (Can) contain a provision that would allow the so-called “innocent bystander” to rebut the usual presumption concerning knowledge of infringement in respect of inventions capable of reproducing, such as plants, seeds and animals

Brad Sherman comments that the case poses fundamental conceptual problems for the operation of patent law: “One of the recurring themes in patent law has been the instability of biological inventions. Many of the problems they have posed for patent law can be traced to the fact that, unlike mechanical inventions which are inert and stable, biological inventions are volatile, unstable and dynamic.”

The case has significant ramifications for other jurisdictions. As the Indian advocate for farmers rights, Vandana Shiva, has said: “Not only will that decision have a considerable influence on the policy debate in Canada, but it is likely to also influence lawmakers around the world who are grappling with this issue.”

The case has ramifications for my own home country, Australia. The Australian Law Reform Commission is currently investigating the impact of gene patents upon health, agriculture, and research. In light of the Percy Schmeiser case, the law reform body might consider whether Australia needs to include an innocent bystander defence and protection of farmers’ rights in its patent regime.

Furthermore there is a need to address the potential conflict between the patent regime and the Gene Technology Regulator. In a similar situation to that raised by Percy Schmeiser, the Gene Technology Regulator would place the responsibility upon a biotechnology company to clean up any GM plant contamination. However, such a biotechnology company could sue a farmer who had patented GM plants on their land. There is a need to resolve such potential disharmony between the two regimes.

There are also similar repercussions in the European Union. The English legal academics, Robert Burrell and Maria Lee, have noted: “The decision in Monsanto v Schmeiser presents us with the spectre of a successful action being brought against a farmer who is entirely unaware of the presence of the claimant’s patented genetic material, and who infringes merely by replanting seeds taken from these plants as part of normal farming practice.” The interaction between intellectual property and environmental regulation is a very vexed area, indeed.

Farmers’ rights

The third area of dispute in the Supreme Court of Canada is about the status of farmers’ rights in modern agricultural economies.

As was common practice for a number of canola farmers in the Bruno area, Percy Schmeiser routinely saved a portion of the canola harvested on his property to serve as seed for the next generation of crops. He observed: “My wife and I are known on the Prairies as seed developers in canola and as seed savers. Hundreds of thousands of farmers save their seed from year to year.” The farmer maintained that he was entitled to save and reuse seed under the ancient notion of farmers’ rights.

Agricultural chemical and biotechnology companies have sought to erode farmers’ rights. They have attempted to limit the capacity of farmers to save and reuse seed through the means of patent law, contract law, and genetic use restriction technologies, in three ways.

First, there is some limited recognition for the protection of farmers’ rights at a national and international level. The Plant Breeders Rights Act 1990 (Can) protects the right of farmers to save and reuse seed. However, unlike the regime of plant breeder’s rights, the Patent Act 1985 (Can) provides no farm saved seed exception. Therefore when farmers use patented seed, they do not have the right to save the seed from a crop and reuse that seed in the next year. Accordingly, Monsanto has sued Percy Schmeiser under the general regime of patent law, rather than the specific system of plant breeder’s rights. As such, it maintains that Percy Schmeiser should not have been allowed to save and reuse patented seed.

Moreover, agricultural and biotechnology companies have become increasingly reliant upon contract law and technology user agreements in their commercial dealings with farmers and growers. The terms and conditions of such agreements are quite restrictive. Under the standard Monsanto agreement for canola, the growers are required to pay a technology fee and a premium rate for the GM seed. They are required to relinquish the right to save and reuse seed:

“The Grower shall use any purchased Roundup Ready® canola seed for planting one and only one crop for resale for consumption. The Grower agrees not to save seed produced from Roundup Ready canola seed for the purpose of replanting nor to sell, give, transfer or otherwise convey any such seed for the purpose of replanting. The Grower also agrees not to harvest any volunteer Roundup Ready canola seed crops.”

Second, then, the grower could only use Monsanto’s Roundup Ready brand of glyphosate herbicide (there are other brands). The company has the right to inspect and test their fields for up to three years. If any of these terms were breached, Monsanto could seek liquidated damages. There remains legal debate as to whether such private contacts are valid and enforceable, and can override the public defence to save and reuse seed. However, thus far, Monsanto has prevailed in legal actions for breach of contract against farmers in the United States.

Third, agricultural chemical and biotechnology companies are investing in genetic use restriction technologies – known as “GURTs” for short. Such technologies render seed sterile, so that growers are forced to buy new seeds each year from a biotechnology company. The Rural Advancement Foundation International famously dubbed GURTs as “terminator technologies”. In a study for the Convention on Biological Diversity, Richard Jefferson and his collaborators comment upon the impact of genetic use technologies on intellectual property:

“By rendering seeds sterile if replanted a second time, a distinct effect of V-GURT technology is to protect the seed producer against multiplication of the seed by a third party. It may thus prevent the unauthorized copy of a plant variety either conventionally bred or genetically engineered to express a specific trait.”

Thus the GURTs technology can be used to prevent infringement of plant breeder’s rights and patent law. Analogies could be drawn with copyright law, and the provisions banning circumvention devices and other technological protection measures. However, there have been concerns that the use of GURTs technology provides excessive protection for the holders of intellectual property rights.

The Supreme Court of Canada may well be sympathetic to such arguments about farmers’ rights. In the Oncomouse case, Justice Bastarache emphasised that there is a need for farmers’ privilege provision to be included within the scope of the patent legislation. He envisioned that the privilege would permit farmers to collect and reuse seeds harvested from patented plants and to breed patented animals for their own use, so long as these were not sold for commercial breeding purposes.

Similarly, the Canadian Biotechnology Advisory Committee recommended that a farmers’ privilege provision be included in the Patent Act 1985 (Canada). It should specify that farmers are permitted to save and sow seeds from patented plants or to breed patented animals, as long as these progeny are not sold as commercial propagating material or in a manner that undermines the commercial value to its creator of a genetically engineered animal, respectively. Further action would be necessary to ensure that farmers’ rights could not be overridden by contract law or technological measures.

An epic, unequal battle

The Supreme Court of Canada has reserved its judgment in the case between Percy Schmeiser and Monsanto. It is difficult to predict how the judges will respond to the issues relating to gene patents, innocent infringement, and farmers rights. In the Oncomouse case, the Supreme Court of Canada was divided five to four.

Trained in a civil, French legal tradition, the majority judges emphasised the ethics of patenting. By contrast, the minority judges from a common law, English tradition stressed the commercial goals of patenting. In the meantime, there has been a new appointment to the Supreme Court of Canada. Justice Morris Fish has replaced one of the judges in the majority in the Oncomouse case. This criminal lawyer from Quebec, both Anglophone and Jewish, remains an unknown quantity in matters of intellectual property. His judgment will prove to be decisive in the outcome of the appeal of Percy Schmeiser.

Percy Schmeiser is a canny politician. His past experience as Mayor of Bruno has put him in good stead for the epic litigation. Schmeiser has run a brilliant public relations campaign, playing up on his plain-speaking image. He has portrayed himself as an underdog in a “David vs Goliath” fight. Schmeiser has jet-setted around the world, speaking to farmers, consumers, and environmentalists. He has polarised opinion. Schmeiser has become the unlikely folk hero and darling of the anti GM-crop movement. However, he has also attracted criticism from research and industry groups for spreading superstitious ideas about genetic technology.

For all the success of the public relations campaign, the legal defence of Percy Schmeiser has been less than convincing. His lawyer Terry Zakreski has been enthusiastic, but not necessarily very effective. His legal understanding of intellectual property has sometimes been questionable. His tortuous arguments about trespass and nuisance have fared poorly. His constitutional arguments were underdeveloped. Nonetheless, Percy Schmeiser could still win the case against Monsanto because of the recent precedent of the Supreme Court of Canada in the Oncomouse case. His favourable position, though, is the result of good fortune, rather than careful planning.

In all the fuss over the litigation with Monsanto, Percy Schmeiser poses as a reluctant hero:

“I got thrown into something that I never ever wanted to be in. I’d rather be fishing with my grandkids. But, now that I’m in it, I don’t regret the decision. I don’t want to be a hero or a saint but, by God, there comes a time when you’ve got to take a stand.”

It remains to be seen whether his quixotic appeal in the Supreme Court of Canada will result in a groundbreaking precedent in patent law and biotechnology.

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