Intellectual Property Rights in Living Matter Drew L. Kershen Earl 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 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, ’ 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 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 (2004) Siebrasse, The Innocent Bystander Problem in the Patenting of Higher Life Forms, 49 McGill L. J (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 (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, (Fed. Cir ) 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 -- Canada All 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 Hawaii Taro 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