Intellectual Property Rightsin Living Matter

Drew L. KershenEarl Sneed Centennial Professor

University of Oklahoma College of Law

© 2007 Drew L. Kershen, all rights reserved

Legal Foundation -- Fundamentals U.S. Const. Art. I, Sec. 8: “The Congress shall have the Power

[cl. 8] To promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to the respective Writings and Discoveries.”

Federal Copyrights, Trademarks, Patents, Plant Variety Certificates

State Trade Secrets: e.g. parental lines for hybrids Geographical Designations: e.g. Hawaiian Kona coffee

Patents on living organisms Canada, European Union, Japan, Australia UPOV (1961/1991) TRIPs Agreement of the World Trade Organization (WTO) There are no international patents -- WIPO

United States Plant Patent Act of 1930

Asexually reproduced plants – cuttings, grafting

Single plant – one claim, clones

Requirements Novelty Distinctiveness Non-Obviousness Description as complete

as reasonably possible Biological deposit

Subpart of General Patent Law – USPTO

Horticultural industry– flowers, fruits

Plant Variety Protection Act of 1970, amend. 1994

Sexually reproduced plants by pollination, seeds – the variety

Requirements New Distinct Uniform Stable Phenotype; Seed Deposit

Plant Variety Certificate – sub-patent IPR -- USDA

Exemptions from infringement

Public Interest Exemption Research Exemption Farmer’s Exemption

United States Patent Act of 1952 (1791) –

the general utility patent law

Scope: useful process, machine, manufacture, composition of matter

Requirements New Useful Non-Obvious Description

Written description (reduced to practice)

Enablement Biological deposit

Funk Brothers Seed Company v. Kalo Inoculant Company (1948) – invention v. discovery

Diamond v. Chakrabarty (1980) – scope of patents – man-made, genetically engineered bacteria for breaking down crude oil

J.E.M. Ag. Supply, Inv. v. Pioneer Hi-Bred Int’l, Inc. (2001) – inbred & hybrid seed corn, non-transgenic

Scope of patent Relationship to other IPR

laws Dual protection

European Union UPOV ‘61, ’78, ’91

1961 European Convention Requirements:

New Distinct Stable Uniform Biological deposit

1991 UPOV Strengthen breeders’ rights Weakened exemptions to

breeders’ rights, particularly farmer’s exemption

Removed prohibition on dual protection

U.S. PVPA (amended 1994) patterned after UPOV 1991

Plant variety certificates

European Patent Convention (1977)

Scope: Not patentable Discoveries, scientific

theories, mathematical method

Art. 53(b) – “plant or animal varieties or essentially biological processes” but does not apply to microbiological processes and products thereof

“Ordre publique” or morality

Requirements New Inventive Step Industrial Application Description

European Union Novartis/Transgenic Plant (2000)

Art. 53(b) – plant variety compared to genes and plant cells and plants generally

Invention embraces plant varieties but not targeted to plant varieties

Interrelationship between UPOV and EPC – no dual coverage

Art. 53(b) interpreted to establish demarcation to prevent dual coverage

Patent granted to Novartis for anti-pathogenic transgenic plants and processes for producing the transgenic plants

Harvard/Oncomouse (2003) Claim for process of introducing

oncogene sequence Claim for the transgenic animal

(mammal - rodents) itself

Art. 53(b) – exclusion for animal variety

Technical Board of Appeal (1990) Art. 53(b) language does not

include animals in general, only animal varieties

Harvard application – for animal variety? – rodents

Opposition Division (2003) EPC Rule 23c(b) – patentable if

technical feasibility not confined to particular plant or animal variety

Technical Board 1990 legal rulings

Compatible with Novartis (2000) Harvard/Oncomouse patent upheld

for process patent and on transgenic animal

EPO upheld Harvard/Oncomouse patent but limited it to mice (July 2004) –

Canada Patent Act of 1985

Adapted from U.S. Patent Act of 1952

Plant Breeder’s Rights Act of 1990

UPOV ver. 1978 Dual protection

prohibited Patent Commissioner

Manual of Patent Practice 1990

“multi-cellular differentiated organisms (plants, seeds, and animals)” are not considered within scope of patent act

Harvard Oncomouse Patent Office (1995)

Process claims for creation of transgenic embryo allowed

Product claims for the mammal (rodent) disallowed

Supreme Court Canada (2002) Scope: does not include

higher life forms – not a composition of matter or manufacture

Canadian parliament must address issue

Unexpressed concern about humans

Sixteen jurisdictions grant; two have analogous case granting; only Canada has denied patent for oncomouse.

Canada Schmeiser v. Monsanto

Patented transgenic canola Infringement dispute Saved seed known or should

have known for 1998 crop – not an innocent infringer

Federal Court Trial (2001) and Federal Court Appeal (2002) – ruled on all points for Monsanto, except amount of damages

Monsanto claims genes and cells genetically modified for herbicide tolerance

Kershen, Of Straying Crops and Patent Rights, 43 Washburn L. J. 575-610 (2004)

Siebrasse, The Innocent Bystander Problem in the Patenting of Higher Life Forms, 49 McGill L. J. 349-392 (2004)

Supreme Court Canada – 2004 SCC 34 (2004)

Patent Commissioner granted Monsanto patents; different burden of proof

Scope – higher life forms Breadth of claims – if genes and

cells, effectively plants – analogy to product with incorporated patented part

Disputes about how to interpret infringement in self-reproducing patented plants or animals

Election of remedies – profits or royalties – Monsanto lost on damages

Siebrasse, A Remedial Benefit-Based Approach to the Innocent User Problem in the Patenting of Higher Life Forms, 20 Can. Intell. Prop. Rev. 79-134 (2003)

Legal Issues: Infringement – U.S. Protection of intellectual property (seed breeding)

All crops, not just transgenic crops J.E.M. Ag Supply v. Pioneer Hi-Bred

Plant variety certificates, Plant Patent Act (asexually reproduced), Utility Patents

Trade Secrets (hybrids) – parental lines Saving seeds

For own farm only for plant varieties (only PVPA) Bin run, not brown bag or seed exchange

Contractual prohibition for patented plants For agronomic reasons not feasible for hybrids Self-pollinated crops: Soybeans, wheat, canola (rarely) Farmers quite capable on economic calculation about seed costs

Infringement Litigation As of Jan 2005, 98 lawsuits Monsanto and farmers Monsanto has won 73 of 73 resolved lawsuits Numerous other settlements; in fact, most settle quickly

Monsanto v. McFarling (2002) Facts:

McFarling purchased Round-up Ready soybeans and signed Technology Use Agreement in 1997

Technology Use Agreement – payment of a license fee per bag – license authorizes crop for one season and prohibits saving seed for replanting or supplying seed to anyone for replanting

McFarling did not dispute that he purposefully saved seed and replanted seed for the 1999 and 2000 crop years

Legal Issue McFarling argued that prohibition on saved seed was a

tying-arrangement prohibited by anti-trust laws Ruling – not tied to repurchase of RR soybeans – free to

purchase any soybean seed – superior performance of RR soybeans is not tying arrangement

Monsanto v. McFarling (2002)

Legal Issue McFarling argued that contractual

prohibition on saving seed violated the doctrines of patent exhaustion and first sale

Ruling – Scope of patent grant allows patentee to license only use of patented product – patentee by contractual license can condition the authorization – the TUA prohibited saving seed and authorized growth for single season for commercial sale as commodity soybeans

Monsanto v. McFarling,05-1570-1598 (Fed. Cir. 5-24-07)

Reaffirmed 2002 decision on substance Invention is plant cell with the modified

gene whatever generation of plant Focus of 2007 dispute – damages

35 U.S.C. 284 “… adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer …”

Monsanto v. McFarling (2007) McFarling – by law, the established royalty

was the $6.50 per seed bag technology fee Rejected for two reasons

Test is what parties would “hypothetically” agree as the price – royalty is usually best measure but not always

Competitive advantage to infringer because ignores the cost of seed from seed companies – seed cost was $19 to $22 per bag

Without additional evidence, minimum would be what other farmers pay to gain access to the technology that was between $25.50 and $28.50 per bag

Monsanto v. McFarling (2007) Monsanto additional evidence

Increased yield -- $14 to $25 per acre Reduced costs weed control -- $26 to $36 per

acre Court ruled that this additional evidence of

benefits was part of damages “adequate to compensate for the infringement.” Justified jury verdict of $ 40 per bag Upheld damages verdict of $ $375,000 Using information in case, inference that Mr.

McFarling planted approximate 4687 ac. each yr.

Monsanto v Trantham (2001) Facts

Trantham purchased cottonseed from cotton gin for planting in 1999 – sprayed the planted cotton with Roundup herbicide – repeated the same process in 2000 – 93% of samples RR cotton

Trantham purchased soybeans from an authorized dealer but did not sign the Technology Agreement – 100% of samples RR soybeans

Legal Issues Trantham argued that the Technology Agreement violated the

Sherman Anti-trust laws prohibiting monopolization and unreasonable restraint of trade

Ruling – the technology agreement as a license does not violate the anti-trust laws – patent holders are entitled to a monopoly – technology agreement by itself sets forth legal restrictions

Ruling – clauses prohibiting seed saving and charging a technology fee are not unreasonable restraints of trade based on argument that Monsanto markets RR soybeans without the restriction and fee in Argentina – Argentina does not allow patents on plants -- Monsanto’s different marketing strategy responds to different market conditions

Legal Issues:Infringement -- CanadaAll infringement cases, both conventional and transgenic, except two,

farmers admitted that they saved patented seeds intentionally. Schmeiser v. Monsanto Canada, Inc.

In 1997 Schmeiser sprayed canola with Round-up; purposefully harvested seed from surviving plants; purposefully segregated the harvested seed; purposefully used the harvested, segregated seed for the 1998 crop – approximately three acres

Tests on 1998 seed sample from Humboldt Elevator divided into three portions and sent directly to Schmeiser, Monsanto, and an independent expert; Schmeiser subdivided his portion and sent half to the independent expert

Results: S65%; M95-98%; IES 65%; IEH 95-98% The Canadian courts (trial, appellate, and Supreme Court)

found factually that he purposefully saved and planted patented seed that he knew or should have know contained a patented gene for herbicide tolerance.

Canadian judges concluded that Schmeiser’s explanations for 1997 presence were not plausible – legally irrelevant because 1998 claim

References:Infringement Adventitious presence should not create legal liability for

infringement under patents. Patent law will protect the truly innocent infringer

Trace levels of patented trait are commercially irrelevant at trace levels

Seed developers have no incentive to pursue innocent infringer

Company pledges to pursue only intentional infringers Kershen, Monsanto vs. U.S. Farmers: Commentary on the

Center for Food Safety Report, ISB News Report pp. 6-7 (April 2005)

Kershen & McHughen, Adventitious Presence: Inadvertent Commingling and Coexistence between Agricultural Methods, CAST Commentary (QTA2005-1, July 2005).

Uchtmann, Can farmers save Roundup Ready® beans for seed? McFarling and Trantham cases say “no,” 19 AGRICULTURAL LAW UPDATE 4-7, 3 (Oct. 2002)

University of HawaiiTaro Patents Three patents obtained in 2002 Plant patents, not utility patents, not PVPA

Palauan and Hawaiian varieties as parental lines

Conventional sexual breeding from which the single plant selected

Single plant claimed from asexual reproduction by tissue culture and stem (huli) propagation

No claim to taro as taro; no claim to taro by sexual reproduction – these are not legally possible under plant patents

Stem (huli) exchange would be prohibited by the law Common prohibition in the horticultural industry

Taro Patent Questions University of Hawaii owns the patents

Can grant a license to whomever and under whatever conditions

Prudential judgments How to distinguish from other “sacred”

plants? Unique to Hawaiian culture First Amendment – establishment of religion

questions

Taro Patent Questions How to deal with escalating demands? The

charge of biopiracy Permission from Palau Women’s Council (oversight of

lo’I kalo) and Palauan government in 1993; collection in 1994

No need for permission in the United States – plants within the United States are basically common heritage

Convention on Biological Diversity – 1992/1993 Art. 15 Access to Genetic Resources

prior informed consent on mutually agreed terms aim of sharing fairly and equitably the commercial utilization

Art. 16 Access to and Transfer of Technology – clear recognition of intellectual property

Palau is a member of CBD

Taro Patent Questions Charge of Biopiracy continued

FAO & Consultative Group on International Agricultural Research (CGIAR) – 1994

Materials Transfer Agreement Intellectual Property Rights recognized and protected

Plant Genetic Resources for Food & Agriculture Treaty (PGRFA) – 2002/2004

Art. 12 Facilitated access to plant genetic resources Purpose of treaty is to create multilateral system of exchange no IPRs “in the form received” but IPRs for plant genetic resources

that have undergone innovation Art. 13 Benefit-sharing

information, technology transfer, capacity building, sharing of monetary benefits of commercialization

mandatory trigger comes from IPRs Palua is not a member of PGRFA Treaty

Charge of Biopiracy rejected; praise for UH and its scientists

Taro Patent Questions What impact on the Samoan farmers?

Samoan farmers requested help due to disease infestation (leaf blight and root rot)

Agreement that only commercial Samoan farmers will pay any royalty

Differentiation endorsed by PGRFA Art. 13.d(ii) Native Hawaiian group with patent could

prevent Samoan farmers from growing the taro developed for them

Palau and Hawaii gave lost nothing and gained knowledge and three excellent taro varieties

Conclusion Plant researchers in research universities must be

aware of intellectual property issues in their research Intellectual property laws and lawsuits affect and

shape research plans and agendas Intellectual property and its impact on economic and

social development will continue to be an arena of contested s social policy

Ismael Serageldin, former chair CGIAR and VP of World Bank: “… if (patents) were to be stopped approximately 2/3 to 4/5 of the input to the total knowledge base could be lost.” ISB News Report (July 2002), Information Systems for Biotechnology, Virginia Tech

Thank you.

I look forward to answering questions about IPRs in living

matter or other questions about agricultural biotechnology law and

policy