Key Cases - Monsanto Canada Inc. v Schmeiser: Patent Rights for Biotechnology (1/3)

"Canola seed" by marcia-oc. https://www.flickr.com/photos/97477873@N00/9753845385

Appellant Percy Schmeiser was a farmer for over 50 years before facing off with agricultural bioengineering giant Monsanto in a legal battle that would set the precedent on biotechnology patent rights in Canada. [1]  

The Facts

Schmeiser and his wife were the sole owners of a corporate farm in Saskatchewan. In 1996, five farmers in the surrounding area purchased “Roundup Ready Canola”, a type of seed containing cells and genes patented by Monsanto that “when inserted into plants…dramatically increase their tolerance to herbicides” including the herbicide, Roundup. [2] In 1998, Monsanto required all farmers who used their patented material to enter into a Technology Use Agreement (“TUA”) and pay a licensing fee of $15 per acre planted with the seed. [3] Schmeiser never purchased the product, nor signed an agreement. He last bought canola seeds in 1993, choosing instead to “[save] part of his …harvest [each year] for future” planting. [4] He used the 1996 seeds during the 1997 sowing. However, unlike in past years, when he sprayed his crop with Roundup, he noticed that approximately 60 percent of the plants survived. [5] Despite this anomaly, Schmeiser collected the surviving plants and stored them for future use. [6]

An anonymous tip about an unlicensed farmer led Monsanto to audit the area. [7] Results showed “the presence of the patented gene in a range of 95-98% of the canola sampled” from Schmeiser’s farm. [8] Monsanto sued for patent infringement. Though Schmeiser acknowledged the presence of the Roundup Ready Canola, he denied any breach as he never “deliberately planted” the seeds, rather they blew onto his farm. [9] The trial judge found Schmeiser guilty of patent infringement and ordered him to pay Monsanto $19,832. [10] The Federal Court of Appeal dismissed both Schmeiser’s appeal regarding his infringement and Monsanto’s cross-appeal to receive more compensation, which led the parties to the Supreme Court in 2004. [11]

The Holding and Reasoning

Despite common misconception, the case does not concern how the seeds got onto Schmeiser’s farm [12], nor the validity of patenting “higher life forms” [13] as Monsanto was not “claiming protection of the genetically modified plant itself, but rather for the genes and … cells” [14]. Instead, the Court asked: (1) did Schmeiser’s actions, of collecting and replanting the seeds that survived a Roundup spray, constitute a use of the patent, thus infringing the Patent Act? and (2) If yes, can Monsanto claim remedies?

In a 5-4 decision, it was held that Schmeiser’s actions did constitute a use of Monsanto’s patented gene and cell. [15] A purposive and contextual analysis of the word “use” in s.42 of the Patent Act [16] revealed that granting exclusive rights to a monopoly over patented material “is usually for commercial purposes — to make a profit". [17] Therefore, any act that “interferes with the full enjoyment of the monopoly granted to the patentee” constitutes a use of the patent. [18] According to the Court, it was a “common sense view” that because the seeds were saved, planted, and then harvested to eventually be sold, Schmeiser deprived Monsanto of the full benefits of their intellectual property. [19]  

Although the genes and cells were contained within an unpatentable subject matter—plants – [20], infringement is still possible when “the patented invention is significant or important to the defendant's activities that involve the unpatented structure”. [21] To believe otherwise would confine infringement to the use of the genes and cells in a laboratory, which is seldom the reality.[22] Schmeiser could also not argue that he merely possessed the seeds but did not use them because he did not “provide sufficient evidence to rebut the presumption of use”. [23] Rather than remove the seeds once he discovered their tolerance to Roundup, he continued to deliberately cultivate the canola “as part of … business operations”. [24]

Remedies:

Despite infringement, a unanimous Supreme Court held that Monsanto was not eligible to receive remedy. [25] As outlined to them in the Patent Act, the company elected to pursue an accounting of profits, a type of remedy in which compensation is calculated as “the portion of the infringer’s profit which is causally attributable to the invention”. [26] All members of the court found Schmeiser to be a “non-benefiting defendant,” [27] meaning he did not make any direct gains because of the patented product; any crop sold from the 1998 harvest was for feed and “thus obtained no premium for the fact that it was Roundup Ready Canola”. [28]

Although cited as precedent in over 100 cases, the decision in Monsanto Canada Inc. v Schmeiser is not an uncontroversial one, particularly because of its implications for “farmers’ rights, and … the environmental and moral perversity of current interpretations of patent laws”. [29] Schmeiser remained an advocate for these causes until his death in 2020. [30]

Endnotes

[1] Monsanto Canada Inc. v. Schmeiser, 2001 FCT 256 at para 6 [Monsanto 2001].

[2] See Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34 at para 8 [Monsanto 2004].

[3] Ibid at paras 11 and 12.

[4] See Monsanto Canada Inc. v. Schmeiser 2002 FCA 309 at para 17 [Monsanto 2002].

[5] See Monsanto 2004, supra note 2, at para 61.

[6] Ibid at para 62.

[7] See Monsanto 2001, supra note 1, at para 37.

[8] See Ibid at para 53.

[9] See Ibid at para 11.

[10] Monsanto 2002, supra note 4, at para 2.

[11] Ibid at para 89.

[12] Monsanto 2004, supra note 2, at para 2.

[13] See Ibid at para 21.

[14] See Ibid at para 17.

[15] Ibid at para 97.

[16] Patent Act RSC 1985, c. P-4, s 42

Every patent … shall … grant to the patentee…the exclusive right, privilege, and liberty of making, constructing, and using the invention and selling it to others to be used

[17] See Monsanto 2004, supra note 2, at para 36.

[18] Ibid at para 34.

[19] Ibid at para 69.

[20] Ibid at para 40.

[21] See Ibid at para 58. 

[22] Ibid at para 76.  

[23] See Ibid at para 86.

[24] See Ibid at para 87.

[25] Ibid at para 106

[26] See Ibid at para 101.

[27] See Norman Siebrasse, “Comment on Monsanto Canada Inc. v. Schmeiser, 2004 CanLIIDocs 104,” Case Comment (2004) 83:3 Can Bar Rev 967 at 989.

[28] Monsanto 2004, supra note 2, at para 104.

[29] Sheinfield, “Remembering Percy Schmeiser: Farmer and Hero.” Food Tank (November 2020), online: <foodtank.com> [perma.cc/NW4C-6TBE]

[30] Ibid.