Division Bench of Delhi HC stays restoration of Monsanto license agreements with Nuziveedu Seeds

In the light of the recent order by Division Bench of Delhi High Court, this is an update to author’s prior blog dated April 5 2017 pertaining to the legal dispute between Nuziveedu Seeds and Mosanto.

US-based agro major Monsanto Technology LLC and Hyderabad-based seed manufacturer Nuziveedu seeds had been locked in a long-term licensing agreement whereby Nuziveedu Seeds was entitled to use Monsanto’s patented seed technology – Bollgard II, for which Monsanto received a patent in 2009 (Patent Number- 232681, granted on 20th March 2009) in India, for its ability to modify cotton seeds to include a microbe- Bacillus thuringiensis (Bt), which fortifies cotton plants against bollworms. In lieu of making use of this technology, Nuziveedu Seeds was required to pay trait fees to Monsanto.

However in November 2015, MMBL (Mahyco Monsanto Biotech Ltd), a joint venture through which Monsanto sells cotton seeds in India and has sub-licensed Bt cotton seed technology since 2002 to various domestic seed companies, terminated the license agreements of Nuziveedu Seeds Ltd. and its subsidiaries – Prabhat Agri Biotech Ltd and Pravardhan Seeds Private Ltd on account of what it said continued refusal to pay contractually agreed trait fees amounting to more than $20 million.

Monsanto later sued Nuziveedu Seeds (and its subsidiaries) for continuing to sell cotton seeds using its patented Bt technology, even after the termination of the license agreements in 2015. Dismissing the claim, the single judge (Justice R.K. Gauba) on March 28 had held that the license agreements allowing Nuziveedu Seeds to use Monsanto’s patented seed technology still continued to be in force and binding on both parties.

This decision allowed Nuziveedu to continue to use Monsanto’s genetically modified cotton seed technology and had directed the license agreements between the two companies to be modified as per the GM Technology Licensing Agreement found in the Licensing and Formats for GM Technology Agreement Guidelines, 2016.

The court had also held that all future royalty payments for the use of Monsanto’s patents were to be made as per the cotton seed price control order issued by the central government. The 2015 price control order reduces the cost of cotton seeds by 74 per cent, from Rs 163 to Rs 43 per packet (exclusive of taxes)[1].

Monsanto appealed against this single-judge order passed on March 28 which had held that the termination of its license agreements with Nuziveedu was illegal and arbitrary in nature.

Senior advocate Kapil Sibal, counsel for Monsanto, argued that the single judge could not pass a direction to restore inter-party contracts that had been terminated by one of the companies[2].

The Division bench of Hon’ble Delhi High Court granting interim relief to Monsanto, stayed its single judge’s order reinstating a sub-licence between US-based agro major Monsanto Technology and three Indian seed companies, which the foreign entity had terminated.

ABOUT THE AUTHOR:

Tanu Goyal, Patent Associate at IIPRD and can be reached at: tanu@khuranaandkhurana.com.

[1]http://www.business-standard.com/article/companies/high-court-stays-restoration-of-monsanto-agreements-with-nuziveedu-seeds-117041000803_1.html

[2]http://www.livemint.com/Companies/DvBDJEMcG9GXATm9JADOLL/Delhi-HC-stays-restoration-of-Monsantos-sublicence-pact-wi.html