This story was originally published in the November 2017 issue of Marijuana Venture, on sale now.
GQ Magazine published an article by Amanda Chicago Lewis in its September 2017 edition titled “The Great Pot Monopoly Mystery,” which focuses primarily on a company called BioTech Institute, LLC.
I highly recommend it. The article explores the possible legal implications of Monsanto-type seed breeders in the cannabis industry.
According to my research, BioTech has several patents on the cannabis plant, the most recent being issued May 9, 2017, for the invention of composition and methods for the breeding, production, processing and use of specialty cannabis (Patent No. 9642317). The inventors on the patents are Mark Anthony Lewis, Michael D. Backes and Matthew Giese.
Monsanto has been a pioneer in applying the biotechnology industry business model to agriculture. To date, the company has patents on a variety of seeds, including, soy, corn, cotton, alfalfa and canola, to name a few. The patents granted by the federal government give Monsanto the exclusive right to make, use and sell these seeds.
Monsanto seeds are genetically modified to make them resistant to the herbicide Roundup, a Monsanto product. So, when Roundup is sprayed on these genetically modified plants, pests are eliminated, but the plant is unaffected, unlike conventional plants that would be damaged by herbicides. The result is larger yields for farmers planting Roundup Ready crops.
Monsanto licenses its seeds to seed sellers who have the farmer sign a license agreement setting forth terms by which the seeds may be used. Terms include: seeds may only be used for one harvest; the seeds from the harvest may not be replanted (meaning the farmer has to purchase new seeds every year); no research may be done on the seeds; and the purchaser has to pay a technology fee (Monsanto Co. v. Scruggs, 2006).
In the GQ article, Ms. Lewis writes, “a source familiar with the BioTech Institute’s patenting process estimated that the company had spent at least $250,000 and legal fees on each of its patents.” Now, I want to be clear, BioTech does not appear to be doing anything illegal by its seed development and plant research. The spirit of this article is not to condemn BioTech’s research. Instead, it is important for every cannabis cultivator and producer of cannabis-infused products to take notice of the potential movement by large companies to dominate the cannabis seed market.
Observing what has happened to farmers using a Monsanto analogy is only prudent. If you are a cultivator or a product manufacturer, you should discuss this with your lawyer. Monsanto has been very aggressive in protecting its patent rights by pursuing farmers who have gone afoul with the use of their seeds.
In April 2008, Vanity Fair ran an article by Donald L. Barlett and James B. Steele titled “Monsanto’s Harvest of Fear,” that chronicled the ordeal farmers go through due to private investigators hired by Monsanto to police fields in search of farmers engaged in patent infringement. These farmers are forced to defend themselves in costly lawsuits.
Monsanto caselaw is fascinating. Let’s look at three cases, specifically: Monsanto Co. v. Scruggs (2006); Monsanto Co. v. Parr (2008); and Organic Seed Growers & Trade Association v. Monsanto Co. (2013).
Monsanto Co. v Scruggs
Mitchell Scruggs, a farmer, purchased Roundup Ready cotton and soybean seeds from a seed seller, but did not sign a licensing agreement. After the harvest, Scruggs kept some of the seeds to replant them. Monsanto sent an investigator to his farm to take a sample of his crop seeds, which were tested and found to be Monsanto seeds. Monsanto sued. As part of the case, Scruggs’ lawyers argued that Monsanto had an unfair monopoly on the seeds.
However, the court ruled in favor of Monsanto, including awarding attorney fees.
The takeaway is that cultivators need to take heed of the seed. Who are your seed providers? Do they claim any patent rights? Businesses must understand the implications of purchasing seeds like never before. There are companies spending millions of dollars on research and development and patents to make a profit and corner the market on seed genetics.
If you have your own seeds now, or have developed your own strains, consider having them genetically profiled, in the event you ever have to defend your crop.
Monsanto Co. v. Parr
Maurice Parr is the operator of a mobile seed and grain cleaning business. He services farmers, including those that grew Monsanto crops. The farmers were under licensing agreements that did not permit cultivation of seeds after harvest.
Knowing that some of the farmers had harvested Monsanto seeds for him to clean, Parr, when asked, would tell the farmers that the seeds were okay to replant. Monsanto found out about this and sued Parr for inducing patent infringement.
Monsanto prevailed. The court ordered that Parr could not clean Roundup Ready seeds; he was forbidden from telling farmers it was legal or permissible to save and clean Roundup Ready seeds; he had to tell farmers it was illegal to replant Roundup Ready seeds; and his customers had to certify in writing the seeds he was cleaning were not Monsanto.
He also was required to take the certifications and a sample of the seeds and give them to Monsanto for testing. In addition, he was ordered to pay $40,000 to Monsanto. However, Monsanto agreed not to collect, as long as Parr followed the order.
Organic Seed Growers & Trade Association v. Monsanto
This case is interesting because it involved a coalition of more than two dozen seed sellers and agricultural companies suing Monsanto. The association asked the court to compel Monsanto to sign a covenant not to sue for patent infringement in the event that some of the genetically modified seeds got into the association’s seed banks, or for the inadvertent contamination of crops through wind, bee pollination, etc.
These farmers had already begun to take expensive precautions against contamination because of the lawsuits Monsanto had brought against others. For example, the farmers tested seeds and tried to create buffer zones between themselves and their neighbors who grew Roundup Ready crops. The court found that it did not have the authority to issue such an order just because of the association members’ “subjective fear.”
The Monsanto lawyer would not agree to a covenant not to sue, but stated if there were less than 1% of contamination ever found, the company would consider whether or not the contamination was intentional or inadvertent. No legal fees were awarded either party.
There are several lessons from this case.
First, cannabis cultivators and infused product manufacturers need to unite and keep an eye out for the eventual patented seeds from companies that are in the biotechnology sector.
Next, consider lobbying your local legislative body to enact an ordinance making notice of use of genetically modified crops mandatory in the farming community.
Finally, and most important, stay informed and be vigilant.
Michele Brooke’s law practice Brooke Law Group (www.brookelawgroup.com) is a full-service marijuana business law and litigation firm in Los Angeles County, California. As an industry-savvy professional, she strives to assist business owners navigate California’s ever-changing legal and regulatory environment. She is a member of Americans for Safe Access, NORML and the Los Angeles Bar Association.
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