Patentee Rounds Up and Reins In Farmer

In a case that received national attention, Monsanto v. Schmeiser, Monsanto successfully enforced its patent rights to stop a farmer from using herbicide-resistant canola seeds that he claimed blew on to his farm from adjacent farms.

In 1993, Monsanto obtained a Canadian patent on certain genetically engineered genes and cells containing those genes that, when inserted into plants, conferred resistance to glyphosate herbicides such as Monsanto's well known herbicide Roundup. Glyphosate herbicides inhibit the action of the plant enzyme EPSPS such that most plants sprayed with Roundup do not survive. Monsanto had developed a modified EPSPS gene that, when inserted into plant cells, could confer a high level of tolerance to glyphosate herbicides, including Roundup. Plants containing this modified EPSPS gene would, in turn, produce seeds that contained the modified EPSPS gene. Plants grown from these seeds would also be resistant to Roundup. Included in Monsanto's patent were claims to a chimeric plant gene containing the modified EPSPS gene as well as a glyphosate-resistant plant cell containing the chimeric plant gene.

Monsanto began marketing a variety of canola containing the modified EPSPS gene in 1996 under the trade-mark Roundup Ready. By the year 2000, nearly 40% of all canola grown in Canada was Monsanto's Roundup Ready canola. There are numerous advantages associated with Roundup Ready canola. For example, Roundup can be sprayed when the desired crop first emerges so as to kill other non-resistant plants or weeds.

In addition to its patent protection, Monsanto also developed a licensing arrangement that limits the ability of a farmer to sell, give away or retain for his own use seed produced from Roundup Ready canola. First, Monsanto licensed commercial seed growers to grow Roundup Ready canola for seed purposes. Second, Monsanto required that farmers attend a "Grower Enrolment Meeting" conducted by Monsanto so that the farmers can be advised about the gene technology and the licensing terms for its use. Third, in order to grow and purchase Roundup Ready canola, farmers must be certified to use the patented technology by signing Roundup Ready canola "Grower Agreements" and "Technology Use Agreements" ("TUA"). Under a TUA, a farmer can use the seed for planting only one crop that is to be sold for consumption to a commercial purchaser authorized by Monsanto. Furthermore, the farmer undertakes not to sell or give seed to any third party and not to save seed for his own replanting. The TUA also gives Monsanto the right to inspect fields of the contracting farmer and to take samples to verify compliance.

Saskatchewan farmer Percy Schmeiser never entered into a licensing agreement with Monsanto. For a number of years, he had grown canola and, as was common practice, saved a portion of his harvest to be used as seed in the following year. In 1997, Schmeiser began to notice that Roundup resistant canola was appearing on his fields. Despite this discovery, Schmeiser continued to collect seed from his canola crop, which included the herbicide resistant canola, to be used as seed for the following year.

In 1997, Monsanto began to conduct audits of the farms growing canola in Saskatchewan. Monsanto had also received an anonymous tip that Schmeiser was growing Roundup Ready canola without being licensed. During its investigation, Monsanto obtained samples of seeds of canola plants grown by Schmeiser. According to Monsanto, its tests established that all of the samples of canola crops taken from Schmeiser contained Roundup Ready canola. Monsanto sued Schmeiser in Federal Court for patent infringement, alleging that he had used canola seeds and plants containing genes and cells as claimed in Monsanto's patent.

Schmeiser attacked the validity of the Monsanto patent on two grounds. First, he argued that the patent was invalid because it did not claim patentable subject matter. The court held, however, that the chimeric genes, expression vectors containing the chimeric genes, plant cells transformed with the expression vectors and processes for producing a glyphosate-resistant plant in the Monsanto patent were patentable in Canada.

Second, Schmeiser argued that the subject matter of the Monsanto patent was of the type that was governed by the Plant Breeder's Rights Act (the "PBRA") and not the Patent Act. On this point, the court held that the PBRA does not preclude protection under the Patent Act of "inventions that relate to plants, and that may lead to new varieties or characteristics of plants." As a result, Schmeiser's arguments against the validity of the patent were unsuccessful.

In an interesting defence, Schmeiser argued that as his fields were found to contain seeds or plants that resulted from contamination by Monsanto, he owned those seeds or plants and should be allowed to do with them whatever he wished. In this regard, Schmeiser argued that this case was on all fours with "stray bull" cases, which recognize that when a first person's stray bull impregnates a second person's cow, the progeny belongs to the second person and the owner of the stray bull may be liable for damages that are caused to the owner of the cow. Schmeiser argued that Monsanto introduced Roundup Ready canola for unconfined release into the environment without control over its dispersion and, as such, lost any claim to the enforcement of its right to the exclusive use of its patented technology.

The court found that despite the fact that Schmeiser may have property rights in the physical plant, plant cell and gene, this right is subject to Monsanto's rights that flow from its patent. More specifically, while Schmeiser may own the physical plants regardless of how they found their way on to his land, Schmeiser does not own the right to use the patented gene or the seed or plant containing the gene. Furthermore, as evidenced at trial, Monsanto had taken numerous steps designed to control the unwanted spread of canola containing the patented gene. To the court, the conduct of Monsanto did not constitute a waiver of its exclusive rights granted by the Patent Act.

Schmeiser also argued that there was no intention to infringe, as the source of the contamination of Schmeiser's crop with Roundup Ready canola was uncertain. Schmeiser had suggested several ways in which the contamination could have occurred. These included cross-field breeding by wind or insects, seed blown from passing trucks, seed dropping from farm equipment or swaths blown from neighbouring fields.

The court found, however, that the various potential sources of contamination suggested by Schmeiser could not explain the concentration or extent of Roundup Ready canola contamination found on the defendant's farm. The court also held that even if Schmeiser's farm had been contaminated by stray canola seed, he still was liable by virtue of the fact that he planted canola seed in 1998 that had been saved by him from his 1997 crop in circumstances where he knew or ought to have known that it was Roundup Ready seed.

Finally, Schmeiser urged that a finding of infringement would adversely affect the longstanding right of a farmer to save his own seed for use for another crop. In particular, Schmeiser suggested that those who do not purchase Roundup Ready canola seed but find the plant invading their land would be precluded from saving their own seed for use another year since their crop may be contaminated through no fault of their own. The court was not sympathetic to this argument given its finding that Schmeiser seeded his crops from seed that he knew or ought to have known contained Roundup-tolerant seed. Schmeiser's infringement did not arise from occasional or limited contamination of his Roundup-susceptible canola by plants that were Roundup-resistant. The evidence at trial showed that Monsanto took steps to assist farmers whose fields were contaminated with Roundup Ready canola. Other farmers who found Roundup-tolerant plants in their fields, two of whom testified at trial, had Monsanto remove the undesired plants at Monsanto's expense. Unlike that accidental contamination, the court found that Schmeiser's actions, not accidental contamination, gave rise to the infringement.

Consequently, the court awarded Monsanto damages, an injunction and delivery up of any of Schmeiser's plants or seeds that were Roundup-tolerant.

Despite Monsanto's victory at trial, stay tuned for round 2. On June 19, 2001, Schmeiser filed a Notice of Appeal with the Federal Court of Appeal. In his Notice of Appeal, Schmeiser listed 17 grounds of appeal, including most of the issues dealt with at trial.

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©2001 Blake, Cassels & Graydon LLP