The Famous Monsanto Judgment: An Analysis

Facts of the Monsanto Judgment

Monsanto Technology LLC (“the first plaintiff”), Monsanto Holdings Private Limited (“the second plaintiff”) and Mahyco Monsanto Biotech (India) Pvt. Ltd. (“the third plaintiff”) impleading three defendants, they being Nuziveedu Seeds Limited (“the first defendant”), PrabhatAgri Biotech Limited (“the second defendant in Monsanto Judgment”) and Pravardhan Seeds Private Ltd. (“the third defendant”), claiming cause of action to have arisen on account of defendants continuing to “market and sell” Genetically Modified Hybrid Cotton Planting Seeds inspite of termination of the sub-license agreements including trademark sub-license agreements, alleging violation of their intellectual property rights vis-Ă -vis the registered patent (IA 214436), hereinafter referred to as “the suit patent”, and trademarks BOLLGARD and BOLLGARD II, the acts of commission or omission indulged in by the defendants being such as amount to infringement or passing off of the defendants “illegally” manufactured products sold or offered to be sold in such packing or under labels (BOLLGARD) bearing such marks as are identical or deceptively or confusingly similar to that of the plaintiffs, the prayers in the suit primarily being for permanent prohibitory injunction against such infringement of registered patent and trademarks, or passing off, besides mandatory injunction for requisite disclosures, recall of infringing products or material and delivering up in addition to rendition of accounts, leading to award of damages (including penal) etc. The application under Order XXXIX Rules 1 and 2 CPC makes an identical prayer in the form of ad-interim orders.

Common ground

A perusal of the pleadings in the main suit and those concerning various applications (including counterclaims) reveals that factual matrix forming the core of the cause of action alleged here is substantially undisputed, even to the event of facts forming the core of the circumstances leading the parties on both sides of the divide having run afoul of each other, the arguments raised on the prime application (under Order XXXIX Rules 1 and 2 CPC) essentially raising questions of law rather than questions of fact. In that view of the matter, the court had asked the parties, mid-way the hearing on the interlocutory applications, to explain as to why the questions of law should be addressed twice in the same proceedings once in the context of the interim reliefs – where they would be based on prima facie assessment and consequently tentatively – and then again at the final adjudication, which may not be in sync with the letter and spirit of the Commercial Courts, Commercial Division And Commercial Appellate Division of High Courts Act, 2015 (hereinafter to as “the Commercial Courts Act”), jurisdiction where under has been invoked. Both sides, however, were lukewarm to the suggestion for expeditious disposal of the main suit, upon questions of law being addressed and adjudicated by recourse to the process of special procedure of “summary judgment” under Order XIIIA CPC, as legislated by the Commercial Courts Act. The plaintiffs referred, in such context, to the counterclaim (CC 51/2016) which has been pressed by the defendants as justification for such disinclination.

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The undisputed, or indisputable, territory in the factual narrative on which the parties stand, as culled out from their pleadings or such documents as are common or of unimpeachable character, shorn of superfluous details, may be taken note of at this stage as this would be advantageous to bring in sharp focus the areas of dispute.

Suit Patent

The defendants in Monsanto Judgment do not contest that Monsanto Group of Companies are agricultural biotechnology corporation, having their presence in innumerable locations across the globe including in India, their activities being supported by manufacturing plants, seeds protection facilities, research centers, et al, the business undertaken essentially being to apply innovation and technology to the farming sector to sustainably increase, inter alia, crop yields, maximizing the potential by developing, amongst others, crop protection chemicals and plant biotechnology traits, the focal area being research and development (R&D) efforts towards elite germplasm, breeding, new variety, and hybrid development, genomics research, etc., the proprietary rights asserted here by the suit patent being in respect of “methods for transforming plants to express Bacillus thuringiensis Delta-endotoxins”.

Judgment

The State government legislations or notifications issued on the subject in the exercise of powers conferred upon them by such law, as indeed the Cotton Seeds Price (Control) Order, 2015 promulgated by the Central Government, again in the exercise of its statutory powers conferred by Essential Commodities Act, 1955 provide not only the “law” but also reflect the “public policy” of the State and, thus, the “consideration” of the agreement between the parties in order to be lawful, within the meaning of Section 23 of the Contract Act must be in accord with such law and public policy and not be opposed or in derogation thereof. Thus, in the opinion of this court, the plaintiffs were duty-bound to consider the request of the defendants as made by the communications beginning July 2015, for modification of the terms as to the rate of trait fee payable under the 2015 sub-license agreements for which the mechanism had earlier been agreed upon in the form of Article 11.03. Since the plaintiffs in Monsanto Judgment did not adhere to their obligation under the contract, the demand of payment under the contract terms is not lawful, it apparently being higher than the trait fee permitted by the law in force, the defendants in Monsanto Judgment could not have been found to be in default or to have breached their obligations within the meaning of Article 9.02 As a sequitur, the termination of the sub-license agreements by communications dated 14.11.2015 appears prima facie to be illegal and arbitrary.

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