Monsanto wins legal battle, may lose war

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It's a lesson a few farmers in Ontario are learning the hard way after being found guilty of infringing on Monsanto's patented Roundup Ready technology.

Not only have the courts decided they must repay any profits derived from growing Roundup Ready soybeans without a licence from Monsanto, they must also pay a significant portion of the company's costs for taking them to court -- amounts ranging from $9,000 to $63,000 per individual.

As well, these four farmers are among the first to be confronted with Monsanto's new Violator Exclusion Policy. They will be denied all access to Monsanto's current and future technologies -- forever.

The same will apply to any future violators who refuse to settle out of court.

On one hand, it's hard to be critical of a company for protecting its property. Roundup Ready crops, which are genetically modified so farmers can apply the weed killer glyphosate to their fields, have been available to farmers for a decade and they've proven wildly popular. Fifty-two per cent of Canada's canola crop this year carried the Roundup Ready trait.

It is well known this technology is protected by patent, which means farmers must sign a "technology use agreement" and pay a fee to Monsanto over and above the seed cost.

As well, farmers are forbidden from saving and replanting any of the harvested seed. Other technology suppliers have developed similar patent protection policies.

The courts have upheld Monsanto's efforts to enforce its patents, all the way to the Supreme Court of Canada. So the question "what were they thinking?" comes to mind when considering the plight of these poor saps in Ontario who were apparently trying to do an end-run around Monsanto while hitching a free ride from their neighbours who paid for the technology.

But the scenario is raising questions over whether the company has the moral authority to deny access to something so fundamental as seed.

True, there are alternative sources of soybean seed for these growers to use, but their list of choices has shortened considerably in recent years with all the consolidation in the seed business -- much at the hands of Monsanto.

This case, which is still under appeal, is unfolding just as questions are mounting in the United States about whether Monsanto has amassed too much market power, so much so that it is inhibiting competition and stifling innovation in the seed and crop trait business.

The U.S. government served notice earlier this year it would be reviewing certain sectors of agriculture, including the seed business, for evidence of anti-competitive behaviours. Two troubling indicators are that the cost of seed offering herbicide tolerant or insect resistant traits continues to rise more than a decade since its introduction -- and it's getting harder for competition to get into play.

The American Antitrust Institute (AAI), an independent Washington-based non-profit competition watchdog, has just published a white paper saying a closer look at Monsanto would be a good place to start.

The paper notes Monsanto's "acquisition spree" which saw it buy up nearly 40 seed and ag biotech companies since the late 1990s. It now owns four of the 13 major patented techniques, with the rest owned by seven other companies and universities. Because it licenses its technology out to other seed suppliers as well, it dominates 75 to 95 per cent of the market for specific traits in corn, soybeans and cotton.

The AAI also finds it significant that Monsanto has been involved in about three-quarters of approximately 60 agricultural biotechnology litigations over the last 10 years, a statistic only partially explained by its market dominance.

The institute says the transgenic seed business is an industry in which patent laws designed to foster innovation are at loggerheads with antitrust law designed to promote competition.

"It is indisputable that Monsanto possesses market power in innovation markets, in markets for genetic traits, and traited seed," the AAI says. "What would likely be the centerpiece of any antitrust investigation into Monsanto's practices is whether the agricultural biotechnology giant has exercised its market power to foreclose rivals from market access, thereby slowing innovation and adversely affecting prices, quality, and choice for farmers and ultimate consumers of seed products."

The United States, unlike Canada, tends to take antitrust and competition issues seriously. Maybe the rules of this sandbox are in for a shakeup.

Laura Rance is editor of the Manitoba Co-operator. She can be reached at 792-4382 or by email:

laura@fbcpublishing.com

Republished from the Winnipeg Free Press print edition November 14, 2009 B6