On Bt Cotton, FRAND Licensing and Recent Governmental Initiatives: Putting Things in Context – I

We are happy to bring to you a two part guest post by one of our former bloggers, Dr. Mrinalini Kochupillai. Mrinalini is a senior research fellow at the Max Planck Institute for Innovation and Competition, Munich and a Program Director and faculty member at the Munich Intellectual Property Law Center (MIPLC). She has been associated with the MIPLC and the Max Planck Institute since 2008, first as an independent MIPLC research fellow (2008-2009) and then as a doctoral fellow with the International Max Planck Research School for Competition and Innovation (IMPRS-CI) from 2009-2013 during which time she completed her PhD titled ‘Promoting Sustainable Innovations in Plant Varieties’ under the guidance of Prof. Josef Drexl. She joined the MIPLC as Program Director in September 2014.

On Bt Cotton, FRAND Licensing and Recent Governmental Initiatives: Putting Things in Context – I

Dr. Mrinalini Kochupillai

I have been a silent observer of the Bt licensing fees dispute (herein after, the ‘Bt dispute’) between Monsanto, other Indian seed companies and the Indian government, for quite some time now. The nuanced and most fascinating legal issues thrown up by this dispute have attracted some of the best legal minds (including those at SpicyIP) in India towards the complex world of plant patents and plant variety protection.

A lot of what needed to be said from the legal perspective has in fact already been said, and said really well, within this forum (see for example, posts by Mathews and others here and here) and elsewhere (see for example, Prashant’s excellent analysis on IPKat). What I seek to do in this post is not to repeat what has already been said, but to highlight some facts that might encourage the development of an alternative approach to the entire issue. Some of these facts may be termed as ‘common sense’, while others have been unearthed during my 5 year-long research in the field of plant variety protection at the Max Planck Institute for Innovation and Competition (MPI), the final product of which, is available here.

Studying the Underlying Rationale

Let’s start by examining what exactly the government is/may be trying to achieve from the perspective of (i) larger or long term agricultural policy, and (ii) the more specific policy pertaining to cotton cultivation in India, by first issuing, and thereafter withdrawing guidelines for licensing GM (including Bt) technology or even in trying to fix a ceiling on cotton seed rates.

In relation to (i) above, the following come to mind (as a best case scenario):

1. The government wants to create a precedent to ensure that technology developed by the private sector seed companies worldwide becomes more affordable for the Indian seed companies (i.e., for the technology licensees);
2. The government expects that if it is able to accomplish the above goal, the benefits will trickle down to:
   • Indian farmers, who will then be able to afford seeds incorporating such technology more cheaply and make a larger profit at the end of the day
   • The (downstream) R&D efforts of the private sector seed industry of India
3. The government further hopes that the cumulative result of 1 and 2 above, would be that farmers (especially small and medium land owning farmers, which constitute more than 80% of India’s farming community), will become economically better off.

In relation to (ii) above (i.e. the specific policy objectives vis-à-vis cotton cultivation), I admit I am still uncertain. But here is what might pop into the mind of a common man looking at the dispute:

1. The government would like to make the Bt technology more affordable to private sector seed company-licensees of the technology (in India), to permit them to:
   • either sell the seeds incorporating the technology at a cheaper rate, OR
   • engage in more R&D with this technology to produce seeds that are suitable for Indian climatic/geographic conditions.
2. More specifically, in relation to the ‘FRAND’ attempts, one might presume that the government either wants to make the Bt technology a ‘standard’ for cotton cultivation in India or thinks that it has already become the standard.
3. The government is of the view that the area under cotton cultivation needs to be expanded (further) and this is possible only if the Bt cotton seeds become more affordable.
4. The government is of the view that cotton yields per hectare need to be increased and that Bt cotton is the only way this can be accomplished.
5. The government is of the view that Bt cotton is the seed of choice of cotton cultivating farmers (or at least ought to be the seed of choice) and would like to support this choice by making these seeds more affordable.

Let’s analyze the above cotton-specific points more closely:

Making Bt Technology more ‘Affordable’: Treating the Symptom or the Disease?

It has been clear from the get go that the governmental initiatives relating to Bt licensing are supporting the Indian seed companies’ position in the Bt dispute with Monsanto. However, the Bt dispute arose in the first place because the government thought it necessary to reduce the price of cotton seeds, especially seeds incorporating GM/Bt technology. Being engaged in fundamental and policy research at MPI, the question that arose in me was ‘why?’

It is important to remember that the Indian Protection of Plant Variety and Farmers’ Rights Act, 2001 (PVP Act) permits farmers to save and re-use seeds as they have for millennia. Technically, therefore, once a farmer has purchased Bt seeds from the industry ONCE, he/she can save and re-use seeds for several generations. One can argue on (from emotional as well as legal perspectives) whether Monsanto can claim license fee from farmers who have so saved seeds incorporating their proprietary technology. However, the fact remains that (i) the PVP Act clearly permits farmers to save seeds and (ii) it is next to impossible, in a country like India, to monitor every act of ‘infringement’ even if Monsanto were to go on a rampage of farmer to farmer license fee collection.

Recognizing these facts, and being highly pragmatic, Monsanto does not license its technology to every company seeking to create Bt cotton seeds. It only licenses its technology to seed companies that are engaged in creating F1 Hybrids.

Why is this relevant? As clarified in an earlier guest post, F1 hybrids are so engineered and promoted that farmers cannot save seeds from the first harvest, for use in the next sowing season (doing so would, at least allegedly, significantly reduce their yields). To this extent, F1 hybrid seeds are not too different from terminator seeds vis-à-vis their tendency to severely limit farmers’ privileges and place control of genetic resources in the hands of a few corporations. (Creating F1 hybrids, therefore, also cleverly avoids legal issues of the type discussed by Prashant here. The trait value applies to the trait being introgressed, and not on the plant into which it is introgressed. But more on that in a later post perhaps.)

These facts pertaining to F1 hybrids explain why more than 87% of Plant Variety Protection (PVP) applications filed by the private sector seed industry in India are for hybrids, transgenic hybrids and associated parental lines. See Table 1, which gives a bird’s eye view of the PVP application trends from the year 2007 (i.e. the year when the PVP registration process started in India) to 2014 (during which time the larger research available here was conducted).

Table 1

Note: Percentages are by row total

It is noteworthy, however, that Bt technology does not (from a technological perspective) have to be introgressed into hybrids. In fact, the creation of F1 hybrids of Bt cotton are not primarily dictated by science, but by commercial interests of companies like Monsanto, as well as commercial interests of Indian seed companies as it ensures that they have a huge market for their seeds every season.

In a fantastic article that discusses the science underlying Bt cotton and its roll out in India, KR Kranthi, the Director of the Central Institute for Cotton Research, Nagpur, states that “India’s average yield is low mainly due to unsuitability of hybrids for rain-fed regions which constitute 60 per cent of India’s cotton area.” The article further points out that although the Bt-II technology allegedly took care of the resistance the ‘nasty’ Bollworms had developed to seeds incorporating the Bt-I technology, “insecticide usage has (nonetheless) gone up by 92 per cent, because of increased sap-sucking insect pest attacks.” The incredibly well-written and clear article by Mr. Kranthi not only confirms earlier scientific findings that Bt technology increases the risk of attacks from secondary pests , but also seems to be recommending that if Bt-II technology is to be rolled out into India (at all or anymore) it ought to be incorporated not into hybrids, but also into ‘straight’ varieties (typical varieties) that, unlike hybrids, reproduce true to type and whose seeds can be saved by farmers from generation to generation for re-sowing. These straight varieties also have shorter crop duration, require less water and are more appropriate for local climates/soil conditions.  This recommendation goes right to the root of the ‘price’ issue, suggesting a treatment for the disease itself (namely, control of genetic resources by few corporations), and not just of the symptom (namely, high prices).

I would not, however, immediately recommend incorporating Bt technology into all cotton seeds (typical or hybrid) in India. In fact, I would recommend quite the opposite (including minimum regulation of Bt technology prices in India) and urge that all concerned place their regulatory efforts elsewhere, for reasons discussed in Part II of this post.

Image from here