Monsanto Wins Legal Case on Seed Patent in Top Cotton Grower

(Bloomberg) -- Monsanto, the U.S. agribusiness giant acquired by Bayer AG last year, won a legal battle to own patents on genetically-modified cotton seeds in the world’s biggest producer of the fiber.

India’s Supreme Court ruled on Tuesday that the company’s patent for Bt cotton seeds is valid, overturning a judgment by the High Court of Delhi saying certain items such as seeds, plants and animals can’t be patented under Indian laws. The apex court’s two-judge bench, headed by Justice Rohinton F. Nariman, said a lower court will decide if Indian companies infringed Monsanto’s patent on Bt cotton seeds.

The verdict has far-reaching implications as it will boost foreign investors’ confidence about the validity of patents awarded to firms. Biotech companies may revive their expansion plans, which were put on hold following several restrictions imposed by the government and local courts in the past years. It’s a boost for Monsanto, which faced the risk of losing significant revenues without a claim over exclusive rights and higher royalties in India.

“Pirates cannot be innovators,” said Ashok Gulati, a professor at the Indian Council for Research on International Economic Relations in New Delhi. “If we are to respect intellectual property only then we can expect to access the best technologies in the world.”

Shares of Kaveri Seed Co. erased gains to drop as much as 3.6 percent on Tuesday, while Monsanto India Ltd. jumped as much as 13.5 percent in high volumes after the verdict.

Legal Battle

The ruling is the result of years of legal battles between Monsanto and domestic seed companies, led by Nuziveedu Seeds Ltd. The Indian firm, one of the licensees of the U.S. company’s seeds in India, had petitioned in the court to cancel Monsanto’s patent. Monsanto had lodged counter cases for patent infringements by Indian companies.

“The division bench order has been overruled. It essentially means that the patent is in force,” said a Bayer spokesman in India.

The issue of the validity of Monsanto’s patent and the applicability of the Protection of Plant Variety and Farmers’ Right regime has been left for the lower court to decide, Nuziveedu’s lawyer Diya Kapur said. It will be open for farmers, breeders and seed companies to argue again before the court that Monsanto can’t have patents on Bt cotton seeds.

Local seed firms, which get licenses from Monsanto to sell genetically-modified seeds, pay a ‘trait fee’ fixed by the government. They had argued that the foreign player was not entitled to get any more money from them. India cut the fee on Monsanto’s cotton seeds last year to 39 rupees ($0.56) per 450-gram pack from 49 rupees. About 50 million packs of GM cotton seeds are produced each year in India, according to the National Seed Association of India.

“After the High Court decision, there was a shock in the market. Companies which have gone back will now rethink,” said M Ramasami, Chairman of the Federation of Seed Industry of India. “Companies will not have any hesitation in investing more. If technology is protected companies will be able to give better products.”

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