Monsanto Technology LLC v. Nuziveedu Seeds Limited

On 08 January 2019, the Supreme Court (Rohinton Nariman, Navin Sinha, JJ.) passed judgment in Monsanto Technology LLC v. Nuziveedu Seeds Limited , Civil Appeal Nos. 4616-4617/2018 (and connected matters). Facts The Appellants / Plaintiffs, claiming patents in certain technology that could be incorporated into seeds, entered into a sub­-license agreement dated 21 February 2004 (“Agreement”) with the Respondents / Defendants for an initial period of 10 years, granting licenses to utilize the said patents to the Respondents. The Agreement entitled the Respondents to develop “Genetically Modified Hybrid Cotton Planting Seeds” with the help of the Appellant’s technology and to commercially exploit the same, subject to limitations prescribed in the Agreement. The Agreement also stipulated payment of a licence fee/trait value by the Respondents, for use of the Appellant’s patented technology. The Agreement was terminated by the Appellants on 14 November 2015, on account of disputes relating to payment of licence fee to the Appellant. The said disputes had arisen since the Respondents claimed the introduction of a price-control regime by the Government, in respect of the technology, exempted the Respondents from payment of the contractual price. The Appellants, pursuant to termination of the Agreement, filed an application for injunction under Order 39, Rule 1 and 2 of the Code of Civil Procedure, to restrain the Respondents from (a) using their registered trade mark “BOLGARD” and “BOLGARD II” brand cotton technology, in violation of the registered patent during pendency of the suit; and (b) selling and / or using seeds / hybrid seeds bearing the patented technology, infringing the registered patent of the Appellants, and also sought rendition of accounts. The Respondents filed a counter claim against the Appellants seeking revocation of the patent under Section 64 of the Indian Patents Act, 1970 (“Patents Act”). The Respondents contended that (a) the registered patent in respect of plants and seeds that contained DNA sequences was in violation of Section 3(j) of the Patents Act, which stipulates that “plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals”are not “inventions” under the Patents Act; (b) the rights of the Respondents were protected under the Protection of Plant Varieties and Farmers’ Rights Act, 2001. Outcome Before the Single Judge A Single Judge of the High Court of Delhi, while deciding the Appellant’s application for injunction held, inter alia, that during the pendency of the suit, the parties would remain bound by their respective obligations under the Agremeent and the license fee payable by the Respondents would be governed by the laws in force. The counter claim of the Respondents was not considered and it was prima facie observed that (a) the Respondents having had the advantage of a sub-license under the Agreement, appeared to be not justified in contending that they, on the statutory basis urged by them, were not bound by the terms of the Agreement; and (b) the terminaton of the Agreement by the Appellants was invalid . Outcome Before the Division Bench Aggrieved by the order of the Single Judge, both parties preferred appeals before a Division Bench. The Division Bench dismissed the Appellant’s appeal by upholding the Respondents’ contention with respect to patent exclusion under Section 3(j) of the Patents Act. The Bench further held that the Appellants were at liberty to claim registration under the Protection of Plant Varieties and Farmers’ Rights Act, 2001. Consequently, the Respondents’ counter claim was allowed by the Division Bench. The Bench, however, directed that the suit continue in respect of the claim for damages and other reliefs. Observations and holdings of the Supreme Court The Supreme Court set aside the decision of the Division Bench thereby holding that the Appellants’s patent in respect of BT cotton seeds is inapplicable in India. In view of the fact that the counter-claim of the Respondents was never considered by the Single Judge, the Supreme Court observed “We see no reason to reject the submission that it stands to reason why the plaintiffs would have consented to a summary adjudication of an existing patent and risk losing the same without any merit adjudication. The defendants themselves had contended in their appeal that the issues were complicated requiring expert evidence to be considered in a full­-fledged trial. The Division Bench therefore ought to have confined its adjudication to the question whether grant of injunction was justified or unjustified in the facts and circumstances of the case. The Division Bench ought not to have examined the counter claim [seeking revocation of the patent under Section 64 of the Patent Act, as being in violation of its Section 3(j) of in respect of plants and seeds that contained DNA sequences] itself usurping the jurisdiction of the Single Judge to decide unpatentability of the process claims also in the summary manner done. Summary adjudication of a technically complex suit requiring expert evidence also, at the stage of injunction in the manner done, was certainly neither desirable or permissible in the law. The suit involved complicated mixed questions of law and facts with regard to patentability and exclusion of patent which could be examined in the suit on basis of evidence”. Therefore, while observing that Section 64 of the Patents Act provides for revocation of patent based on a counter claim in a suit, the Supreme Court held that the provision necessarily presupposes a valid and detailed consideration of the claims in the suit and the counter claim in accordance with law and not summary adjudication sans evidence. In view of this, the Supreme Court, inter alia, found / held that the nature of the injunctive reliefs granted by the Single Judge was in order and merits no interference during the pendency of the suit. The Supreme Court set aside the order of the Division Bench.