Financial Times / Tuesday July 13 1999
A landmark trial in Canada will set a precedent for Monsanto's ability to protect its patents on genetically modified crops, says Scott Morrison.
Monsanto, the US life sciences group, has been having a trying time of late. Efforts to promote genetically modified foods in Europe have backfired. In England, environmentalists have sabotaged a test site. French farmers have staged protests against the import of GM crops.
Back in North America, where the use of GM seeds is more widespread, Monsanto is battling an altogether different threat: how to prevent farmers from obtaining its patented seeds illegally. The company says that unless patent protection laws are enforced, it will have thrown billions of dollars of investment down the drain.
In a landmark case, due to be heard by a Canadian judge next month, Monsanto is taking a 68-year-old farmer to court after he was discovered to be growing a variety of Monsanto's genetically modified canola (rapeseed) without its consent.
The last thing Percy Schmeiser expected after a lifetime of farming was to be caught in a legal battle with one of the world's leading proponents of agricultural biotechnology. To hear Mr Schmeiser tell it, the case is about privacy and a farmer's right to choose.
He says the wind blew Monsanto seed into his fields, which are planted with conventional canola. Because it is impossible -- other than by genetic testing -- to tell the difference between a normal and a GM canola plant, Mr Schmeiser says he was not even aware that GM canola was growing in his property. He does not see why he should be penalised for an accident of "mother nature".
The Canadian press has been largely sympathetic to Mr Schmeiser's defence, often portraying him as an ageing David battling a Goliath of the agribusiness industry. And while Monsanto may be big, it is vulnerable. The trial could set a precedent for the degree of control Monsanto and other biotechnology companies exercise over how their products are used by customers and others.
Monsanto says the dispute is a simple case of patent infringement, although the stakes are extraordinarily high. The company says it must maintain strict control over the use of its technology in order to recoup its multi-billion dollar research and development budget.
Monsanto also argues it must level the playing field for farmers who pay the company's technology fee when they purchase GM seeds from licensed dealers. These farmers sign a "Technology Use Agreement" that requires them to pay a fee to Monsanto based on the acreage they have planted.
Moreover, farmers cannot save seed in order to plant the following year's crop. In order to ensure compliance, the agreement gives Monsanto the right to audit farmers' fields, or take samples, for three years after the seeds are bought.
Mr Schmeiser is one of about 600 farmers in Canada and the US accused by Monsanto of infringing the agreement. Most of these farmers purchased Monsanto's seeds and signed the agreement, but Mr Schmeiser's case is different because he never bought Monsanto's GM seeds and says the company has no right to his property.
The Schmeiser dispute is therefore an important test of whether Monsanto will be able to secure patent protection for its seeds beyond its immediate circle of agricultural customers.
Mr Schmeiser says the seeds of the dispute were blown into his field in 1997. As farmers customarily do, Mr Schmeiser saved a portion of his 1997 crop to use as seed in 1998. He argues that if he was in fact growing genetically modified GM canola in 1998, it was accidentally recycled.
A key part of the trial, therefore, will hinge on how much of Mr Schmeiser's crop was genetically modified, and whether that proportion could be explained by wind-borne contamination or cross-pollination.
Monsanto acknowledges that cross-pollination does occur, but it alleges Mr Schmeiser "obtained" seeds. The company is demanding that Mr Schmeiser give up all GM seeds or crops in his possession. Monsanto also wants a federal judge in Canada to impose unspecified punitive and exemplary damages.
But with billions of dollars in research and development at stake, Monsanto has also been prepared to employ some tough tactics to track down farmers who violate its agreement.
A lot of controversy has focused on the company's toll-free "tip line" set up to enable farmers to report on others who violate Monsanto's usage terms. Mr Schmeiser also alleges that investigators working for Monsanto trespassed in his field to collect samples of his crop. "Monsanto has put the fear of the Lord into people here," he says.
Monsanto acknowledges that "some questions exist around one incident," but maintains that it does not condone any illegal practices and that all evidence collected to support its case against Mr Schmeiser was obtained legally.
Monsanto could do without the adverse publicity. Already, it is under fire for requiring farmers to buy their seed from the company every year. Farmers around the world have traditionally saved a portion of their harvest in order to plant the following year's crop -- and an estimated three quarters of the world's farmers still do so. Mr Schmeiser accuses Monsanto of wanting nothing less than to dominate farmers and the industry. "They want control of the seed supply," he says.
Ray Mowling, a vice-president for Monsanto Canada, acknowledges that his firm's practices have introduced a change in farming culture, but he says the company must recoup its investment and that farmers are free to choose whether they want to abide by Monsanto's terms.
An estimated 70 per cent of the canola grown in Canada this year will be genetically modified, as will some 50 per cent of the soybean and cotton crops grown in the US. Mr Schmeiser's case, however, raises concern that farmers might not always have those options, either because their crops could be cross-pollinated or because there could eventually be fewer seed suppliers.
"There is growing nervousness that there may not always be a choice," says Sally Rutherford, executive director of the Canadian Federation of Agriculture, which represents more than 200,000 Canadian farmers.
At Monsanto, Mr Mowling says the company is working harder to demonstrate that its technology works, resulting in better crops and better food. But unless it can defend its patents, it will be out of business. However unpopular, the case against Mr Schmeiser is seen as critical to the company's future.
