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Supreme Court decision favours innovators

'Too close' vote shows how much could have been lost.


November 12, 2007
By Ralph Pearce

14aA Supreme Court decision handed down in May 2004 provided a final, and for
the most part welcome, resolution to a long-standing legal battle between Monsanto
and Saskatchewan grower Percy Schmeiser. Stripping away all of the side issues,
the case involved patent rights and the protection of technology innovations.
But the result also served to underscore the lack of awareness of the meaning,
the long-term implications and the value of what plant breeders and innovators
bring to the agri-food sector in Canada.

The ruling, handed down May 21, 2004, upheld lower court decisions which found
Schmeiser had deliberately planted genetically modified canola in his fields,
without having signed a technology use agreement with Monsanto. The point of
debate in the long-running case became less a matter of 'did he or didn't he?',
focussing instead on the proprietary rights and protection issue.

In brief, the decision from Ottawa included four key findings:

  1. If an individual or company innovates and patents a gene, the patent includes
    the whole plant in which the gene is incorporated.
  2. The Supreme Court recognized that agriculture requires 'the Hand of Man',
    things do not 'just happen' in agriculture, and the Schmeiser case illustrated
    this.
  3. The Supreme Court also said if a grower has a patented product growing in
    his field, there is no need for the patent holder to prove his use (because
    agriculture requires 'the Hand of Man').
  4. The Supreme Court said if a grower has benefitted from growing the plant
    with a patented gene, then the grower must pay for its use and benefit.

In spite of this five to four decision by the nation's high court, Canadian
agriculture came so close to losing so much, yet most of those involved in the
industry might never have understood the loss had the decision gone the other
way.

Denise Dewar, executive director of plant biotechnology with CropLife Canada
in Toronto, Ontario, realizes just how close the vote was and agrees the loss
would have been devastating. "If the decision had gone the other way, it
certainly would have, from our industry standpoint, put a severe investment
chill on bringing products forward here," she says. "Protecting intellectual
property and freedom to operate are the two fundamentals of investing in any
country, and having a strong, predictable regulatory system is an important
component."

Dewar believes the change in investing in Canadian agriculture would have been
gradual, with corporations pulling out of Canada over a period of months, if
not years. Even with the decision, she adds, there are challenges ahead given
the current status of biotech research and development. At one tenth the size
of the US market, Dewar points to the need for extra incentives to come to Canada.
"With the status quo on IP protection and the smaller market size, we're
not nearly as attractive as the US, so Canada becomes an afterthought, as opposed
to a country that you automatically think to invest in bringing new technology."

Innovations stop, innovators leave
Like Dewar, Lorne Hadley, executive director with the Canadian Plant Technology
Association in Saskatoon, Saskatchewan, acknowledges the depth of loss that
could have been imposed on biotechnology in Canada, had the Supreme Court vote
been different. More than just the loss of innovators in Canada, Hadley contends
the innovators might leave the agricultural industry, altogether. "If they
can't innovate in soybeans, and someone is willing to pay that individual to
move into another field, they may do that, despite the learning curve it might
require," cautions Hadley. "They'll go towards fields where they can
be protected, and get the return."

What it boils down to, he says, is that farmers must mirror the high court
and recognize the value of what innovators bring to field and farm. To Hadley,
that was an important signal provided in the Supreme Court decision. "The
court recognized that breeders' contributions to our society have been and can
be very important, and that research and development needs to continue,"
he says, noting that many of the 'issues' were often shown to be posturing and
irrelevancies to the overall picture. "In order for innovation to continue,
the private sector, using tools like patenting, will deliver a product that
will help Canada move forward."

But there are those inside and outside of the industry that question whether
patent protection or plant breeders' rights are necessary in Canada. If the
technology exists in the US, certainly there is the opportunity to purchase
the rights to use it, without investing in biotechnology in this country.

Not so, says Dr. Tom Francis, global director of product evaluation and advancement
with Syngenta. He cites the case of a patent holder being unprotected in Canada.
Despite the patent being issued in the US, and a pledge to allow access to it,
the fact it is gene technology means it must go through the regulatory process
in Canada before it can be sold in this country. "The patent holder is
not going to go through the regulatory process, they're not going to provide
the package of environment and health assessments, and go through that very
expensive process in Canada, when they know they cannot get any protection,"
says Francis.

A similar scenario exists now in Europe, where US and Canadian technology is
not available to European producers because it has not gone through the necessary
steps. Francis joins the others in expressing the sense of loss that would have
resulted with a less favourable decision from Ottawa. "Canadian farmers
could have been faced with the prospect of being able to see their American
neighbours using the technology but not having access to it."

Costs are so high in Canada
Another facet of gene patents and plant breeders' rights that is not understood
very well is the cost. Francis states much of the basic work in technology is
done in the US, then brought to Canada where further testing and production,
along with all of the regulatory work, is done. "The testing of the technology,
the costs involved in registering the technology and bringing it forward in
the Canadian market is fairly significant, and all of that depends on the ability
to reap the rewards," he says. "It might not directly affect the investment
in research here, but it will affect the amount of dollars that are put into
developing the technology and bringing it forward to the market in a timely
way."

From Bill Leask's perspective, an interesting part of the whole Supreme Court
process was watching the irrelevant issues being stripped away to reveal only
those pertinent to the case. "When you started digging into them, you'd
find they're not at all relevant to the situation," says Leask, the executive
vice-president of the Canadian Seed Trade Association in Ottawa, Ontario. The
CSTA and the Canola Council of Canada were two of the organizations that served
as interveners in the case and helped to bring those irrelevancies to light.

Dewar adds the benefit of the interveners went beyond the political posturing
that some hoped might come from the image of a Saskatchewan canola grower pitted
against a US-based corporation. "The interveners were there to represent
the benefits of protecting intellectual property and what that meant to the
canola growers of Canada, for example," she says, thankful for focus on
science and protection of intellectual property rights, instead of a symbolic
'David and Goliath' scenario.

The bottom line, says Leask, is that growers in Canada recognize the value
of biotechnology, and that in turn led the Supreme Court to acknowledge its
value by protecting innovation and investment in the science. Like Dewar, he
points to the proclamation by Schmeiser that he was representing Canadian farmers.
Leask estimates that canola with novel traits account for upwards of 90 percent
of the acres in Canada. "When Mr. Schmeiser says, 'I speak for farmers',
I would think the farmers are collectively speaking for themselves when they're
up at the 90 percent level."