GM technology: Trait fee war between Monsanto and Indian seed firms intensifies

A new battlefront is opening up between Monsanto and a section of Indian seed companies that are sub-licencees of the US life sciences giant’s proprietary Bollgard-II (BG-II) Bt cotton technology.

The National Seed Association of India (NSAI), representing domestic seed firms such as Nuziveedu Seeds, Ankur Seeds and Kaveri Seed Company, has claimed that the power to fix royalty or ‘trait value’ payable to the developer of any plant genetic modification (GM) technology lies with the Protection of Plant Varieties & Farmers’ Rights (PPVFR) Authority.

The reason for this is that Section 3 of the Indian Patents Act, 1970 specifically excludes from patentability any “method of agriculture or horticulture” and “plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals”. On the other hand, Section 2 (za) of the PPVFR Act, 2001 clearly defines a plant variety to include “transgenic (i.e. GM) variety”.

“GM crops such as Bt cotton, therefore, receive intellectual property protection (IPR) only under the PPVFR Act. By implication, trait value payable to the GM technology supplier is a matter to be decided by the PPVFR Authority. There is, in fact, a section 26 in the Act relating to the determination of benefit sharing between the supplier of a unique genetic material and the breeder/seed company who has used this in the development of his variety. The PPVFR Authority has the powers to stipulate the amount of such benefit sharing, which obviously extends to prescribing a reasonable trait fee payable by the breeder,” says Kalyan Goswami, executive director, NSAI.

The above interpretation has, however, been completely rejected by Monsanto. The PPVFR Act, it contends, deals only with providing IPR protection to varieties, which refer to “a plant grouping…within a single botanical taxon (i.e. species, family or class)”. Moreover, “varieties” excludes micro-organisms that cover bacterium such as Bacillus thuringiensis or Bt, whose genes have been incorporated into cotton hybrids. The Bt genes code for proteins toxic to Helicoverpa or American bollworm insect pests.

“A breeder can develop a hybrid or variety containing the Bt genes and seek IPR protection for the same under the PPVFR Act. But the GM trait per se (the technology for inserting the Bt or any other alien genes into the genome of the host plant) is not covered by this Act. A modified gene sequence cannot be considered as a plant grouping and the PPVFR Act has no provision conferring the authority the power to protect or regulate GM traits. Benefit sharing provisions, too, are triggered only for a registered variety/hybrid that may contain GM traits, but not for the GM traits per se”, contends Dhiraj Pant, Technology Development Lead-Asia for Monsanto.

Monsanto has sublicensed its BG-II Bt technology — which was granted an Indian patent in February 2008 – to 49 companies. In November 2015, the multinational terminated its sublicense agreement for the technology with Nuziveedu Seeds, alleging that the latter, along with group companies, had pending trait value dues of over Rs 165 crore.

According to Monsanto, trait fees are governed by technology licensing agreements bilaterally executed between it and individual seed companies. Bringing in the PPVFRA — when GM traits are patentable and Monsanto clearly has a patent for Bollgard-II Bt technology — is only aimed at wriggling out of payment of contractual liabilities. Monsanto has even cited the Nuziveedu Seeds chairman M Prabhakar Rao’s recent appointment as a member of the PPVFRA, which, it believes, raises possible conflict of interest in the matter of licensing and trait fees involving GM seed technology.

“This is nonsense. The PPVFRA has a representative from the seed industry and Prabhakar Rao is there today by virtue of being the president of NSAI. Was there no conflict of interest in the past when the industry was represented by Usha Barwale Zehr of Maharashtra Hybrid Seeds Company, Monsanto’s partner in the 50:50 joint venture (Mahyco-Monsanto Biotech) through which the BG-II technology is being sublicensed?” quips Goswami.