In a 5:4 split decision released today, the Supreme Court of Canada has dismissed, in part, the appeal from the Federal Court of Appeal ruling in Monsanto v. Schmeiser. A. David Morrow, and Colin B. Ingram of Smart & Biggar represented the Canadian Seed Trade Association, an intervener in this landmark case.
In the proceeding, Saskatchewan farmer Percy Schmeiser, and the corporation of which Schmeiser and his wife are principals, were accused by Monsanto of growing genetically modified canola in violation of Monsanto’s Canadian patent. The genetic modification renders the canola tolerant to spraying with the herbicide “Roundup,” and the canola is marketed as “Roundup Ready Canola.” The claims in issue were directed to modified genes and plant cells containing the modified genes, but the patent did not include claims to whole plants. Schmeiser was found to have infringed the Monsanto patent following a trial held in June of 2000. The trial decision was upheld on appeal to the Federal Court of Appeal in 2002.
The Majority decision, written by Chief Justice McLachlin and Justice Fish, upholds the findings of the Courts below in respect of the validity and infringement of the patent claims in issue, but reverses the award of an accounting of profits.
On the issue of validity, the Majority rejects the argument advanced by Schmeiser that the subject matter of the patent was invalid in view of the Court’s prior holding in Harvard College v. Canada. In Harvard, the Court had found that patent claims to a genetically modified mouse, which the Court described as a “higher life form,” were invalid as covering non-patentable subject matter. Schmeiser argued that the patent claims, having been enforced against a farmer using canola plants and seed, were being extended to non-patentable subject matter. The Majority acknowledges that the Court in Harvard had found that plants and seeds were also unpatentable “higher life forms.” Nevertheless, the Majority holds that “whether or not patent protection for the gene and the cell extends to activities involving the plant is not relevant to the patent’s validity.” The Majority concludes that the patent claims in issue are valid.
On the issue of infringement, the Majority concludes that Schmeiser “used” Monsanto’s patented invention when he cultivated his canola plants containing the patented gene and composed of patented cells. The Majority specifically rejects the argument that Schmeiser had not used the invention because he did not spray his crop with Roundup. In this regard, the Majority accepts that the crop had “stand-by” or “insurance” utility in view of its herbicide-resistant properties. The Court leaves open the possibility that a farmer could avoid a finding of use based on mere possession by showing that he or she never intended to cultivate plants containing the patented genes and cells. However, on the facts, Schmeiser could not avoid liability on this basis.
Finally, the Majority finds that the accounting of profits remedy granted by the Courts below was inappropriate. The Majority finds that the profits made by Schmeiser were the same as he would have made had he grown and harvested ordinary (non-patented) canola, and there was thus no causal connection between the profits awarded to Monsanto, and the invention.
The Minority judgment, written by Justice Arbour, construes the claims in issue as being limited to modified genes and cells in the laboratory prior to regeneration. In the view of the Minority, Schmeiser did not use the claims so construed through the cultivation of plants containing the patented genes and cells. However, it is the Majority judgment which now represents the law in Canada.
With the decision in Monsanto, it now seems clear that patents may be sought and obtained in Canada with claims covering genes and cells (provided that such claims meet the other standard requirements of patentability, including novelty and non-obviousness), and that such claims may be enforced against infringers which are cultivating or breeding plants and animals incorporating the patented genes and cells.
A. David Morrow and Colin B. Ingram, Ottawa