Harvesters working in soybean harvest in the state of Mato Grosso. Photo: Kelvin Helen Haboski

The Brazilian Superior Court of Justice has ruled in favor of global agribusiness conglomerate Monsanto in a landmark class-action lawsuit filed by Brazilian farmers’ unions.

On October 9, a panel of nine justices unanimously decided that farmers cannot save seeds for replanting if the seeds are harvested from Monsanto’s patented Roundup Ready soybeans—genetically engineered to withstand the direct application of the company’s Roundup herbicide.

The Brazilian ruling aligns with similar decisions in the U.S. and Canada. Courts in all three countries determined that, as a product of genetic engineering, Roundup Ready soybeans are protected by domestic patent law.

In a public statement, Monsanto—which was acquired by Bayer in 2018—said the decision will strengthen “agricultural innovation in Brazil.”

How strict patenting of seeds affects innovation, however, is a matter of debate. And the lawsuits challenging Monsanto’s aggressive pursuit of its patent rights raise a vexed legal issue: when intellectual property laws protecting companies conflict with the rights of farmers to plant their fields, who should win?

Monsanto “owns everything”

The Brazilian lawsuit is a sign of growing uneasiness with the control Monsanto has over farmers, shown by my research on biotechnology and seeds.

Founded as a chemical manufacturer in 1901, Monsanto has invested heavily in agricultural biotechnology to become the world’s largest seller of seeds. Its biotech seeds have proved attractive to farmers because they simplify farm management. Monsanto says its genetically modified seeds also increase crop yields, and thus farmer income—but evidence on this subject is not probative.

In the U.S. and Canada, Monsanto requires buyers of its genetically modified seeds to sign extensive licensing contracts that prevent them from saving these seeds. North American farmers who violate those agreements have been sued for patent infringement and compelled to pay tens of thousands of dollars in damages.

In Brazil, Monsanto charges 2-percent royalties on the sale of its patented soybeans, a conventional industry practice. However, less usual is the company’s additional royalty of 3 percent on farmers’ sales when soybeans are grown from saved Roundup Ready seeds.

Soybeans are Brazil’s biggest export. The royalties in dispute in the class action, which is likely to be appealed to the Brazilian Supreme Court, are estimated at USD 7.7 billion.

“I can’t stand it anymore—seeing those Monsanto people showing up at the grain elevator and behaving as if they own everything,” one manager at a grain cooperative told Congress during a special committee on agriculture I attended in December 2017.

“Amoral” royalties

The Superior Court of Justice’s October 9 decision reverses a past ruling establishing the rights of small farmers in Brazil.

In their original petition, farmers’ unions in 2009 asserted that Monsanto’s system of collecting royalties is “arbitrary,” “illegal,” and “abusive.” They argued that it extends Monsanto’s intellectual property rights to their own production and violates farmers’ rights to save seeds for replanting as they see fit, which is guaranteed under Brazil’s Plant Variety Protection Act.

In April 2012, a civil court agreed with the farmers, affirming their rights to save seeds and sell their harvests as food or raw material without paying royalties. Monsanto got this ruling overturned on appeal. The Brazilian farmers’ unions then appealed that decision, leading to the adverse judgment on October 9.

“Monsanto is amoral,” Luiz Fernando Benincá, a soybean producer and interested party in the class action suit told me back in January 2017. “It will do anything for profit.”

Controversial products and practices

Monsanto is accustomed to litigation. Several of its other products—such as Agent Orange, the synthetic chemicals PCBs and, more recently, the glyphosate-based herbicide Roundup—have been embroiled in legal controversies.

For decades, the St. Louis-based company—valued at USD 63 billion last year—used its deep pockets and large teams of lawyers to intimidate farmers and defeat opponents in courts. From 1997 to 2018, Monsanto won every single intellectual property lawsuit that went to trial in the U.S. and Canada.

It has had less success abroad. Courts in Argentina, the European Union, and other countries with stronger farmers’ rights have checked the company’s aggressive use of royalties to profit off the byproducts of patented products.

Judges in these cases confront a tricky legal issue.

In theory, a genetically engineered DNA sequence like the one that gives herbicide resistance to Monsanto’s Roundup Ready soybeans can be protected under patent law. Yet the plant variety in which the genetic sequence is introduced may also be legally protected, as it is under Brazil’s Plant Variety Protection Act.

In practice, however, it is virtually impossible to separate genetically engineered DNA sequences from the rest of the physical plant. So the two laws—one recognizing the rights of farmers to save seeds for replanting in their fields, the other protecting Monsanto’s intellectual property—contradict one another.

Defend farmers? Or protect corporations?

Faced with this conundrum, the Canadian and U.S. Supreme Courts have ruled that the exclusive rights of a patent holder over plant genetic sequences extend to the plants themselves, thereby allowing companies such as Monsanto to prohibit farmers from saving seeds.

Brazil has effectively agreed with this interpretation for the time being. The lawyer for the Brazilian farmers’ unions, Néri Perin, says the ruling “disregards Brazil’s international commitment to guarantee farmers’ rights.”

But more troubles await Bayer-Monsanto.

In a separate lawsuit, Brazilian soybean farmers are challenging the validity of Monsanto’s patent on second-generation Roundup Ready soybeans. In India, the courts have been asked to rule on the validity of Monsanto’s patent for a cotton variety genetically engineered to be insect resistant.

Monsanto has long had the upper hand over the farmers who use its products. But the momentum may be shifting.

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MoneyNov 01, 2019

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