Supreme Court Splits 5-4 and Upholds Patent on Genetically Modified Canola

On May 21, 2004, in a landmark decision, the Supreme Court of Canada ruled that Monsanto's patent for the genes and cells found in its Roundup-Ready canola was valid, and that Percy Schmeiser, a Saskatchewan farmer who had grown the canola without a licence, had infringed the patent. For the background to the case, see an earlier issue of E-TIPSâ„¢ (Vol 2 No 16 January 22, 2004). The three primary issues addressed by the court were the validity of Monsanto's patent, whether Schmeiser's use of Roundup-Ready canola infringed the patent, and the remedies available to Monsanto. Validity The majority of the Court upheld the trial judge's decision that Monsanto's patent is valid. The genes and cells claimed in Monsanto's patent are patentable subject-matter. The Court distinguished this case from its previous decision in Commissioner of Patents v Harvard College (see the E-TIPSâ„¢ issue Vol 1 No 13 December 5, 2002 and an article by Lenni Carreiro, "The Supreme Court of Canada Finds Higher Life Forms Not Patentable Subject Matter", March, 2003). In the so-called "Harvard Mouse" case, the Supreme Court had held that higher life-forms, including animals and plants, were not patentable. In the present case, Monsanto had not claimed a patent monopoly over the genetically modified canola plant itself, but only for the genes and modified cells that make up the plant. Infringement by Use Section 42 of the Patent Act confers on the patent owner "the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used". The Court held that Schmeiser had "used" Monsanto's patented gene and cell, by collecting, saving and planting seeds to grow Roundup-Ready canola. The Court set out seven propositions for determining "use" under the Patent Act:

1. "Use" or, in its French equivalent, "exploiter", in their ordinary dictionary meanings, denote utilization with a view to production or advantage.
2. The basic principle in determining whether the defendant has "used" a patented invention is whether the inventor has been deprived, in whole or in part, directly or indirectly, of the full enjoyment of the monopoly conferred by the patent.
3. If there is a commercial benefit to be derived from the invention, it belongs to the patent holder.
4. It is no bar to a finding of infringement that the patented object or process is a part of or composes a broader unpatented structure or process, provided the patented invention is significant or important to the defendant's activities that involve the unpatented structure.
5. Possession of a patented object or an object incorporating a patented feature may constitute "use" of the object's stand-by or insurance utility, and thus constitute infringement.
6. Possession, at least in commercial circumstances, raises a rebuttable presumption of "use".
7. While intention is generally irrelevant to determining whether there has been "use" and hence infringement, the absence of intention to employ or gain any advantage from the invention may be relevant to rebutting the presumption of use raised by possession.

Chief Justice McLachlin and Justice Fish, writing for the majority, rejected the idea that, because plants are living things that grow naturally by themselves, there could be no "use" by the farmer planting the seeds to grow the plants. They also rejected the argument that Schmeiser was an innocent bystander. By cultivating a plant which contained the patented gene and was composed of the patented cells, without a licence, Schmeiser had used the patented components of the plants and had deprived Monsanto of the full enjoyment of its monopoly. Schmeiser was unable to rebut the presumption of use that arises from the possession of an infringing product, although he maintained steadfastly that the canola seed had blown into his fields or had grown there without his knowledge. Remedy The Patent Act permits two alternative remedies for infringement: damages and an accounting of profits. At trial, Monsanto elected an accounting of profits. Since Schmeiser's profits were no more than what they would have been had he planted and harvested ordinary canola, there was no additional profit that could be attributed to his use of Roundup-Ready canola instead of ordinary canola. The Court set aside the trial judge's award of $19,832. Because of the mixed result, the Court ruled that each party should bear its own costs. Dissent In the dissenting judgment written by Madam Justice Arbour, the minority held that infringement of Monsanto's patent could occur only where a defendant had used the patented genes and cells in their isolated laboratory form. It found that Monsanto should not be allowed to indirectly obtain patent protection over whole plants, which could not be patented directly, as they are "higher life-forms". Therefore, the cultivation of plants containing the patented gene and cell should not constitute an infringement. For the text of the decision, see: http://www.lexum.umontreal.ca/csc-scc/en/rec/html/2004scc034.wpd.html. For further reaction and comment, visit the following sites: http://makeashorterlink.com/?W32E52468; http://www.cbc.ca/stories/2004/05/21/canada/schmeiser_monsanto040521; http://makeashorterlink.com/?C25E42468. Summary by: Jennifer Jannuska and Clare McCurley If you have questions about the wider implications of the Monsanto case for your business, contact Doug Deeth (ddeeth@dww.com) or Gervas Wall (gwall@dww.com).