Delhi HC holds Monsanto’s termination of agreement with Nuziveedu Seeds illegal

The Delhi High Court today held that the license agreement between US-based major Monsanto Technology against Hyderabad-based Nuziveedu Seeds for the sale of Monsanto’s patented BT Cotton seeds was wrongfully terminated.

Dismissing the interim application by Monsanto, the Court held that the agreement between the two parties was terminated “illegally and arbitrarily”. The bench of Justice RK Gauba restored the original position between the parties before the termination of the agreement in 2015. The bench held,

“The parties are to be treated as bound to each other as of November 2015, prior to the termination of the sub-license agreement.”

Monsanto’s Indian arm Mahyco Monsanto was represented in Court by Senior Advocates Prathiba M. Singh and Sandeep Sethi, briefed by Singh & Singh Lall & Sethi. Nuziveedu on the other hand were represented by Senior Advocates Sudhir Chandra Aggrawal and Jayant Bhushan, briefed by Lex Orbis.

Justice Gauba rejected the argument based on the Plant Varieties Act, stating that “invention is not the same as development of a variety.” The bench further held that the cause of action for the litigation proceedings between the two parties was triggered by the premature termination of the license agreement.

In light of this, the bench held that the use of trademark and patent becomes unauthorized only if the license agreement is legally terminated, which in this case, it wasn’t. Further, the plaintiff had also failed to address the question of legality of the termination.

The parties were directed to be bound by the obligations under the license agreement for the period stipulated in the agreement or until the agreement was terminated lawfully. For the fulfillment of this, the trade fee to be determined will be as per the prescription by the Central government.

In February last year, the Court had restrained Nuziveedu from selling the seeds manufactured after November 2015. They were also directed to submit records relating to the stock of seeds in their godowns to determine if the company was infringing Monsanto’s patented Boulegard II seed technology and trademark after the termination of its license.

The bench refused to comment on the aspect of BG I BG II technology at this stage.

The bench also directed that the defendants would stand injuncted from the sale of the BT Cotton seeds, in case of any default by them.

Counsel for the defendants stated that the verdict was a “win-win for both the parties”.

As an end note, the bench thanked the counsel for both the sides for the “high-profile assistance” they provided to the bench during the hearing of the case.

Read the full judgment here.