OWNING GENES AND OWNING GENES AND ORGANISMS: NEW ISSUES FOR ORGANISMS: NEW ISSUES FOR AGRICULTURE AND SOCIETYAGRICULTURE AND SOCIETY

John H. BartonJohn H. Barton

Stanford Law SchoolStanford Law School

(Emeritus)(Emeritus)

OUTLINEOUTLINE

PATENTS AND CROPSPATENTS AND CROPS WHAT THEY HAVE DONE TO THE WHAT THEY HAVE DONE TO THE

INDUSTRYINDUSTRY WHAT THEY’VE DONE TO THE WHAT THEY’VE DONE TO THE

FARMERFARMER WHAT THEY’VE DONE WHAT THEY’VE DONE

INTERNATIONALLYINTERNATIONALLY EVALUATIONEVALUATION

WHAT ARE THE CROPS?WHAT ARE THE CROPS?

Bt-based insect resistanceBt-based insect resistance– CornCorn– CottonCotton

Herbicide resistanceHerbicide resistance– CanolaCanola– CornCorn– CottonCotton– Soybeans Soybeans

Pictures from USDA & Monsanto, courtesy of http://cls.casa.colostate.edu/TransgenicCrops/current.html

HOW DO YOU PATENT A HOW DO YOU PATENT A GENE?GENE?

Possible claims on:Possible claims on:– The isolated geneThe isolated gene

– Constructs containing it (that are used to transform Constructs containing it (that are used to transform plants)plants)

– Transformed cellsTransformed cells

– Transformed plantsTransformed plants

– Seeds of transformed plantsSeeds of transformed plants

– Methods of transforming plant or of producing the crop Methods of transforming plant or of producing the crop through use of the gene inserted into the crop through use of the gene inserted into the crop

– Specific crop lines (JEM v. Pioneer (2001))Specific crop lines (JEM v. Pioneer (2001))

WHAT ELSE IS PATENTED?WHAT ELSE IS PATENTED?

PromotersPromoters Recoding processesRecoding processes Transformation processesTransformation processes

A SENSE OF NUMBERSA SENSE OF NUMBERS

Annual applications for cell and tissue Annual applications for cell and tissue culture: ~ 24culture: ~ 24

For vectors etc: ~ 64For vectors etc: ~ 64 For traits: ~ 80For traits: ~ 80 For germplasm: ~ 180For germplasm: ~ 180

(2001 numbers, from Aurigin Systems/MicroPatent, (2001 numbers, from Aurigin Systems/MicroPatent, presented in Boettinger et al 2004)presented in Boettinger et al 2004)

IMPACT ON THE INDUSTRYIMPACT ON THE INDUSTRY

The seed industry in the 1960s and 70s:The seed industry in the 1960s and 70s:– Small and middle-sized entities (Pioneer, DeKalb, etc.)Small and middle-sized entities (Pioneer, DeKalb, etc.)– Substantial role for land grant universitiesSubstantial role for land grant universities

TodayToday– Vertically and horizontally integrated (Monsanto, Vertically and horizontally integrated (Monsanto,

Syngenta, DuPont, Bayer, Dow)Syngenta, DuPont, Bayer, Dow)– For Bt corn, Pioneer/DuPont has ~ 50%, Monsanto ~ For Bt corn, Pioneer/DuPont has ~ 50%, Monsanto ~

20%, Syngenta ~ 30% (Benbrook 2002)20%, Syngenta ~ 30% (Benbrook 2002)– Monsanto technology in 59-97% of GMO seed market Monsanto technology in 59-97% of GMO seed market

(2004 numbers ETC group 2005)(2004 numbers ETC group 2005)– Much less role for land grant universitiesMuch less role for land grant universities

REASONS FOR REASONS FOR INTEGRATIONINTEGRATION

Vertical integrationVertical integration– MarketingMarketing– ProductionProduction

Horizontal integrationHorizontal integration– Covering research costsCovering research costs– Settling patent disputesSettling patent disputes

Implication -- ?? --decreased expenditures Implication -- ?? --decreased expenditures on R & D! (decline reflects market as well on R & D! (decline reflects market as well as concentration)as concentration)

THE PATENT FACTOR - ITHE PATENT FACTOR - I

Litigation: early & mid 1990s: at least 21 cases Litigation: early & mid 1990s: at least 21 cases among:among:– AgracetusAgracetus EnzoEnzo– BoehringerBoehringer MycogenMycogen– CalgeneCalgene MonsantoMonsanto– Ciba-GeigyCiba-Geigy NovartisNovartis– DeKalbDeKalb PGSPGS– DNAPDNAP PioneerPioneer– EcogenEcogen

Over transformation, vectors, Bt etc.Over transformation, vectors, Bt etc.

THE PATENT FACTOR IITHE PATENT FACTOR II

These companies are now: These companies are now: – Agracetus =>Agracetus => MonsantoMonsanto Enzo => Enzo => Different Different

business business

– BoehringerBoehringer Mycogen => Mycogen => DowDow

– Calgene => Calgene => MonsantoMonsanto MonsantoMonsanto

– Ciba-Geigy =>Ciba-Geigy => Syngenta Syngenta Novartis => Novartis => SyngentaSyngenta

– DeKalb => DeKalb => MonsantoMonsanto PGS => PGS => Bayer Bayer

– DNAPDNAP => => DifferentDifferent Pioneer => Pioneer => DuPont DuPont

businessbusiness

– Ecogen => Ecogen => MitsuiMitsui

THE PATENT FACTOR IIITHE PATENT FACTOR III

And the 2004-05 litigation includes:And the 2004-05 litigation includes:– Monsanto v. Bayer (Bt gene)Monsanto v. Bayer (Bt gene)– Syngenta v. Monsanto & others (coding Syngenta v. Monsanto & others (coding

sequences) (2005 jury decision, now on appeal) sequences) (2005 jury decision, now on appeal) (Also 2004 cross license to settle other (Also 2004 cross license to settle other Syngenta-Monsanto patent disputes)(and 2006 Syngenta-Monsanto patent disputes)(and 2006 Syngenta-DuPont joint venture)Syngenta-DuPont joint venture)

– Mycogen v. Monsanto (gene modification) Mycogen v. Monsanto (gene modification)

PATENTS AND FARMERSPATENTS AND FARMERS

http://cls.casa.colostate.edu/TransgenicCrops/current.html

http://cls.casa.colostate.edu/TransgenicCrops/current.html

Commercialization really began in 1996.

SUMMARY OF STUDIES:SUMMARY OF STUDIES:HERBICIDE TOLERANCEHERBICIDE TOLERANCE

YieldYield– 5 increase5 increase– 2 small increase2 small increase– 5 same5 same

Pesticide usePesticide use– 4 decrease4 decrease– 1 small increase1 small increase

ReturnsReturns– 5 increase5 increase– 4 same4 same

SUMMARY OF STUDIES:SUMMARY OF STUDIES:BTBT

YieldYield– 13 increase13 increase– 1 same1 same

Pesticide usePesticide use– 7 decrease7 decrease

ReturnReturn– 7 increase7 increase– 2 decrease2 decrease– 2 depends on infestation2 depends on infestation(compiled from Fernandez-Cornejo & Caswell, ERS (compiled from Fernandez-Cornejo & Caswell, ERS

2006)2006)

STACKED MARKETING STACKED MARKETING RESTRICTIONS RESTRICTIONS

The patentThe patent The PVP right The PVP right The technology agreementThe technology agreement The seed labelThe seed label

Biological protectionBiological protection– HybridHybrid– Terminator gene (“GURT”)Terminator gene (“GURT”)

THE TECHNOLOGY THE TECHNOLOGY AGREEMENTAGREEMENT

Prohibition ofProhibition of– Reuse of harvested seedReuse of harvested seed

– Research on seedResearch on seed

– Use of competing herbicides/failure to respect Use of competing herbicides/failure to respect resistance managementresistance management

– Not respecting channelingNot respecting channeling

Forum selection clause/choice of law/arbitrationForum selection clause/choice of law/arbitration Authorization for inspectionsAuthorization for inspections Warranty limitations & liquidated damages clauseWarranty limitations & liquidated damages clause

STANDARD LITIGATIONSTANDARD LITIGATION

Farmer reuses seed =>Farmer reuses seed => Industry investigation & suitIndustry investigation & suit Defenses:Defenses:

– Patent doesn’t reach reuse of seedPatent doesn’t reach reuse of seed– Contract/use of patent violates antitrust law Contract/use of patent violates antitrust law – These defenses rejected under Monsanto v. McFarling These defenses rejected under Monsanto v. McFarling

(CAFC 2004)(CAFC 2004) Usual decision is for seed company save on minor Usual decision is for seed company save on minor

points.points. At least 90 such suits as of 2003. At least 90 such suits as of 2003.

PERCY SCHMEISER:PERCY SCHMEISER:AT TRIALAT TRIAL

Defense was that the seed/pollen blew across Defense was that the seed/pollen blew across fence in 1996.fence in 1996.

Factual basis of this was at issue in trial court.Factual basis of this was at issue in trial court. That court (Saskatoon) held that farmer infringed That court (Saskatoon) held that farmer infringed

patent when, knowing that it was resistant, he patent when, knowing that it was resistant, he retained seed and used in in 1998. retained seed and used in in 1998.

Thus, this case is not the example of inadvertent Thus, this case is not the example of inadvertent infringement that it is often held to be.infringement that it is often held to be.

SCHMEISER ON APPEALSCHMEISER ON APPEAL

Five-to four majority of Canada Supreme Court held Five-to four majority of Canada Supreme Court held for Schmeiser on narrow grounds: Monsanto had for Schmeiser on narrow grounds: Monsanto had asked for profits and Court held that there were no asked for profits and Court held that there were no profits beyond those with regular seed – had profits beyond those with regular seed – had Monsanto asked for royalties, result might have Monsanto asked for royalties, result might have been differentbeen different

Minority held that the patent was being applied to Minority held that the patent was being applied to cover the entire plant, something not possible cover the entire plant, something not possible under Canadian law.under Canadian law.

INTERNATIONAL ISSUESINTERNATIONAL ISSUES

Europe – concern about GMOs (and serious Europe – concern about GMOs (and serious efforts to prevent developing nations from efforts to prevent developing nations from using the technology)using the technology)

Developing countries – concerns about Developing countries – concerns about access to technology, genetic resourcesaccess to technology, genetic resources

EUROPEAN ISSUESEUROPEAN ISSUES

Opposition to GMOs (food attitudes, different Opposition to GMOs (food attitudes, different regulatory experience, precautionary principle) => regulatory experience, precautionary principle) => – Efforts to restrict applicability of patent law, based on Efforts to restrict applicability of patent law, based on

intervention through European Parliament (1998)intervention through European Parliament (1998)(fundamentally unsuccessful)(fundamentally unsuccessful)

– Efforts to bar imports:Efforts to bar imports:» De facto EU moratorium 1998 => 2003De facto EU moratorium 1998 => 2003» National moratoria National moratoria

– Effective results are Effective results are » Labeling andLabeling and» Dual price system (2.5 to 15 % premium for non-GMO; 6 to Dual price system (2.5 to 15 % premium for non-GMO; 6 to

17 % cost of segregation (EU DG Ag 2000)17 % cost of segregation (EU DG Ag 2000)

THE WTO CASETHE WTO CASE

Brought by US and Canada against EU on basis of Brought by US and Canada against EU on basis of moratoriamoratoria

WTO (interim decision) resolved case on basis of WTO (interim decision) resolved case on basis of Sanitary and Phytosanitary Code (1995):Sanitary and Phytosanitary Code (1995):

Two issuesTwo issues– EU moratoriumEU moratorium

» Violated Annex C(1)(a) – dealing with undue delayViolated Annex C(1)(a) – dealing with undue delay» But not inconsistent with Article 5.1 requiring a risk assessment, nor But not inconsistent with Article 5.1 requiring a risk assessment, nor

had US established that EU violated Article 2.2 on need for had US established that EU violated Article 2.2 on need for scientific basis for conclusionsscientific basis for conclusions

– Maintenance of member state prohibitions on particular Maintenance of member state prohibitions on particular specific products specific products

» EU acted inconsistently with Articles 5.1 and 2.2 EU acted inconsistently with Articles 5.1 and 2.2

DEVELOPING COUNTRY DEVELOPING COUNTRY ISSUES – GENETIC RESOURCESISSUES – GENETIC RESOURCES

Starting with PVP revisions (1980), concern about Starting with PVP revisions (1980), concern about genetic resources;genetic resources;– Farmer’s rightsFarmer’s rights– Resentment at possible IP costsResentment at possible IP costs

Agreement effortsAgreement efforts– FAO Commission; International undertaking (1983)FAO Commission; International undertaking (1983)– Convention on Biodiversity (1992)Convention on Biodiversity (1992)– FAO/CGIAR (1994)FAO/CGIAR (1994)– International Treaty on Plant Genetic Resources (2001) International Treaty on Plant Genetic Resources (2001)

Access now difficultAccess now difficult

DEVELOPING COUNTRY ISSUES – DEVELOPING COUNTRY ISSUES – GLOBAL PATENT LAW PRESSUREGLOBAL PATENT LAW PRESSURE

TRIPS – 1995TRIPS – 1995– Duty to protect plants through PVP or patentsDuty to protect plants through PVP or patents

ConcernsConcerns– Exchange among poor farmersExchange among poor farmers

– Farmer reuse of seedsFarmer reuse of seeds

– Structure of seed industryStructure of seed industry

CGIAR and difficulty of research (research tool CGIAR and difficulty of research (research tool issue, more severe than in medicine, but effect in issue, more severe than in medicine, but effect in developing world often overstated)developing world often overstated)

DEVELOPING COUNTRY DEVELOPING COUNTRY ISSUES -- ADOPTIONISSUES -- ADOPTION

Adoption by market mechanismAdoption by market mechanism– Argentina & MonsantoArgentina & Monsanto– India & Mayhco & MonsantoIndia & Mayhco & Monsanto

Adoption by smugglingAdoption by smuggling– BrazilBrazil

Adoption by public sector researchAdoption by public sector research– ChinaChina

CounterforcesCounterforces– NGO opposition to CGIAR research and in IndiaNGO opposition to CGIAR research and in India– Concern about export markets to EuropeConcern about export markets to Europe

GLOBAL ADOPTIONGLOBAL ADOPTION

EVALUATIONEVALUATION

Hard to separate patent issues from Hard to separate patent issues from biosafety and political aspects of GMOsbiosafety and political aspects of GMOs

Moreover, much anti-GMO and anti-Moreover, much anti-GMO and anti-corporate thinking included in the critiques corporate thinking included in the critiques of patentsof patents

SUCCESSES OF PATENTSSUCCESSES OF PATENTS

Almost certainly increased the private Almost certainly increased the private investment in research on introducing GMO investment in research on introducing GMO cropscrops

And these crops have been a success for And these crops have been a success for farmers in US, Canada, Argentinafarmers in US, Canada, Argentina

Some possibility of the mechanism working Some possibility of the mechanism working in Brazil, China, and Indiain Brazil, China, and India

COSTS OF PATENTSCOSTS OF PATENTS

Significant contribution to industry Significant contribution to industry concentration, with probable negative concentration, with probable negative impact on farmer/industry division of rents, impact on farmer/industry division of rents, and on level of research.and on level of research.

Significant complications for land grant Significant complications for land grant universities.universities.

Significant disruption of international Significant disruption of international research access to agricultural genetic research access to agricultural genetic resourcesresources

MIGHT WE HAVE DONE MIGHT WE HAVE DONE BETTER?BETTER?

Patent office misjudgments?Patent office misjudgments? Antitrust and the industry mergers?Antitrust and the industry mergers? Reuse of patented seeds?Reuse of patented seeds? Research on patented seeds?Research on patented seeds? Industry errors on biosafety?Industry errors on biosafety?

THANK YOUTHANK YOU

jbarton@stanford.edujbarton@stanford.edu