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Harvesting Royalties for Sowing Dissent? Monsanto's Campaign against Argentina's Patent Policy
by Rachel Nellen-Stucky and François
Meienberg
Berne Declaration
(translation by Maja Ruef)
October 2006
http://www.evb.ch/cm_data/Artikel_Monsanto_Soya_Arg-EU_E_fi
nal.pdf
“Monsanto has
shown that it continues to be a national
embarrassment,”
Argentine Agriculture Secretary
Miguel Campos declared at a press conference in
Buenos
Aires in June 2005. The reason of his anger were the
lawsuits which US
seed selling company Monsanto had
filed against European soy importers in the
Netherlands and in Denmark a few days ago. Therein,
Monsanto accuses the
Dutch firm Cefetra, the Danish
company Danish Lokale Andel as well as the
American
global company Cargill of illegally importing from
Argentina
genetically modified Roundup Ready soy which
is resistant against the herbicide
Roundup
(glyphosate) owned by Monsanto. The multinational has a
patent on
this genetic resistance in Europe and now
insists on its right to control the
production,
processing, sale, and import of the patented gene within
European
borders. By taking legal action, it claims
compensation from the accused soy
importers –
apparently in recompense for the loss of royalties in the
export
country Argentina, where the RR gene could not
be patented. In doing so,
Monsanto is bringing a
long-smouldering conflict about patent rights between
the
company and the Argentine government to
international public attention.
NGOs fear that
this procedure will now enable Monsanto to assert rights
of
property not only to RR seeds but also to products
derived from those seeds. And
in addition to
fundamental concerns about the social and environmental
consequences of industrialised soy monocultures in Latin
America as well as
about their significance for these
countries’ food sovereignty, critical observers
now increasingly address the changes in commercial policy
that may result from a
patent-based monopoly status of
a company. Does the granted patent license
Monsanto to
control the import of soy beans, soymeal, or soy pellets
into Europe?
Are deregulation tendencies in the state
faced with the increasing power of the
patentees? What
impact does Monsanto’s Roundup Ready patent have on
the
political sovereignty of a developing or
industrialising country whose main
export product is
directly affected by this patent? Observers, however, are
faced
with processes running behind closed doors and
not being laid open to the public
– be it for
protection of the accused or due to the firm’s own
order of prohibition.
The present article therefore
aims at throwing further light on the pending lawsuit
and at exploring its possible outcomes in their political
consequences.
Argentina’s Agricultural
Export Industry and Roundup Ready Soy
Roundup
Ready soy is a key factor in Argentina’s economic
policy as well as in
its discharge of debts policy.
25% of its export income are made from overseas
sales
of soy and the same percentage of its debt service charges
is paid off with tax
revenues from the export sector.1
Soy production thus appears today as an
important
vehicle to find a way out of the economic crisis. Critics,
however,
vehemently point to the obvious environmental
and social damages resulting
from this forced
production. “You can hear no more birds on the fields
today,
there is deathly silence. And it shows how much
Argentina’s landscape has
changed during the
last years,” reported, for instance, Adolfo Boy,
professor of
agronomy from Rosario and member of the
NGO Grupo de Reflexion Rural, on his
last lobbying
tour through Europe. Capital-intensive but labour-extensive
soy
production has exhausted the soils and driven tens
of thousands of farmers from
the land. The statistics
reflect these negative developments: 15.2 million
hectares
of acreage, more than half of the
agriculturally used area, are already planted in
genetically modified soy, another 4 million hectares
shall be added by 2010,
according to government
plans.2
Today, soy plays the same role in
Argentina as bananas in Ecuador, oil in
Venezuela, or
coffee in Nicaragua. Conspicuous, however, is the
predominant
cultivation of genetically modified
varieties. In the context of the structural
reforms in
Argentine agriculture and the high world market prices on
agricultural
products during the 1990s, the
introduction of GM seeds fell on fertile ground. In
1996, the Secretaria de Agricultura, Ganaderia y Pesca
(SAGPyA) granted
Monsanto the commercial cultivation
of RR soy. The sale was effected by various
licensees,
above all by the trading company Nidera which is
established in the
Netherlands. Soy appeared to be
attractive not merely because of the prospering
world
market prices but also because Monsanto offered the seeds
to farmers free
of charge and at a slightly higher
sales price compared to conventional seeds. The
corresponding glyphosate also could be purchased cheaper
than, for example, on
the North American market.
Monsanto’s effort to obtain a patent on
Roundup Ready soy in Argentina
remained unsuccessful.
The official reason given by the Argentine government
refers to national and international legislation
according to which the company
filed its patent
application extemporaneously, i.e., after the legally set
one-year
period following the first filed application
world-wide had expired. In its fight for
the patent,
Monsanto went as far as to Supreme Court where, however, in
2001 it
had to admit defeat. So finally, the
multinational took recourse to the existing
plant
variety protection law whose tradition allows farmers to
cull seeds for their
own use. On an international
level, Argentina signed the 1978 Act of the
Convention
for the Protection of New Varieties of Plants (UPOV) which
provides
limited protection of varieties of plants and
allows free re-use of seeds for
replanting. Yet it was
precisely this patent-free situation which truly
accelerated
the victorious march of the GM crop: While
farmers in North America had to pay with genetically
modified seeds.3 From Argentina, finally, GM soy illegally
entered Brazil, Paraguay, and Bolivia – countries
that have only recently legalised the commercial
cultivation of GM soy.
The Hunt for
Royalties
Even after years of lobbying,
Monsanto has not managed to move the Argentine
government to a patent law modification in favour of the
multinational company.
It was not least under the
pressure of US farmers that Monsanto has made
repeated
efforts to collect royalties on GM soy. In 1999, the
company began to sell
the seeds by means of contracts
which charge “extended royalties”. Under
this
system, Argentine farmers are obliged to pay 2
dollar plus taxes for every 50 kgbag
of seeds saved
for replanting. Although this practice contravenes the Seed
law
the Argentine government does not intervene.
Monsanto itself defends the system
on the grounds that
it helps cover the company’s investments into
research and
development.
In 2001,
Monsanto’s patent on glyphosate finally expired, and
the company saw
itself confronted with cheap
derivatives from China. With concern it further
observed the spread of illegal seed sale, known in
Argentina as the practice of
“bolsas
blancas”. According to estimates by the SAGPyA, only
20% of the
soybeans cultivated in Argentina are grown
with seeds purchased from authorised
dealers. Almost a
third of the seeds is saved by farmers for replanting,
while over
half is bought on the black market.4 In
January 2004, therefore, Monsanto
announced that the
firm would withdraw from the soy business in Argentina;
the
sale of GM soy seeds and a country-specific
research and development program
were stopped. The
Argentine Secretariat of Agriculture responded by
publishing a
legal draft, on the basis of which a
technology compensation fund should be
initiated. For
the financing of the fund, a sales tax per bag was proposed
which
would flow back to the seed selling companies
– in recognition of their rights of
invention.5
Leftist NGOs denounced the proposal as a masked
“farmer tax” in
favour of Monsanto. The
farmers, in turn, regarded it as yet another mechanism
designed to curtail their rights to save seeds for
replanting. They received support
from the industry
and from the office of state revenues, both of which
rejected the
draft on the grounds that this new tax
would hamper the development of
Argentina’s
agricultural production for years. The proposal of a
technology fund
was dropped.6
As Monsanto
had not achieved the desired success by exerting pressure
on the
soy exporting companies, nor by negotiating
with Argentinian farmers
organisations in the
provinces of Santa Fé, Cordoba, and Buenos Aires,
the
conflict escalated in summer 2005. Since the
beginning of the year already,
Monsanto had had
freighters with Argentine soymeal cargo detained in the
ports
of Denmark, the Netherlands, England, and Spain
in order to control their goods.
In Italy, the same
enterprise remained unsuccessful as the state denied
Monsanto
the right to detain freighters.
Monsanto’s purpose was to prove that the
freighters
carried Roundup Ready soy and that the
shipment to Europe, where the examined
goods are
protected by patent, was thus equivalent to illegal import.
In June 2005,
the company struck another blow and sued
the two import enterprises Danish
Lokale Andel (DK)
and Cargill (USA/DK) at the Danish High Court and the
firm
Cefetra (NL) at the Dutch Rechtbank s’
Gravenhage. In the meantime, there have
been six
further cases of import companies being taken to court.7
Monsanto
explained its strained recourse to legal
action as follows: “Monsanto reserves the
right
to begin legal actions on the assumption of uncovering
imports from Latin
America of unlicensed Roundup Ready
soy in countries where the said
technology is
protected by intellectual property rights.”8 At the
same time,
however, the company makes clear that it
would prefer a local agreement in
Argentina to a legal
process.
The two lawsuits are, to our knowledge,
the first instances to document a
patentee’s
attempt at controlling the import of agricultural products
at the
borders, i.e., its attempts, based on its
monopoly rights, at regulatively intervening
in the
trade of raw materials. For this reason, it is worth
examining more closely
the lines of reasoning
introduced in these processes: What are the arguments
given by the parties involved? What fundamental
considerations are they based
on? And what are the
possible effects of this case on the interconnection
between
trade and patent rights?
Patents on Plant Genes and the Question of Their Scope
Monsanto’s charge foots on patent EP
546090 granted by the European Patent
Office in 1996
which encompasses genetically modified plants that have
been
made resistant to the company-owned herbicide
glyphosate. If the company
succeeds at the European
courts in obliging the soy importers to compensation
payments,9 this would have crucial consequences for
Argentina’s soy economy.
Thus the costs incurred
for the importers would probably be passed on to the
Argentine farmers. There would further be the risk of
sales problems and of a
sudden drop in prices.
Argentine Secretary of Economy, Felisa Miceli, recently
estimated that soy sales in the amount of 3.6 billion
dollar were in danger.10 The
agricultural association
Sociedad Rural Argentina (SRA) therefore believes that
the soy farmers have hardly any choice but to give in.
The Argentine government,
however, took the offensive
and at the end of January 2006 petitioned the
involved
European courts to be acknowledged as a third party in the
processes.
“The lawsuits,” Argentine
Agricultural Secretary Campos said, “endanger fair
trade and call into question Argentina’s ability to
exercise its sovereign rights.”11
In March,
moreover, the Argentine government applied to the
European
Commission for support in the lawsuit as well
as for an examination of the
legality of
Monsanto’s practices. The Commission was asked to
clarify in
particular whether the company’s
legal action could be considered an abuse of its
monopoly-based dominant market position. 12 A month
later, the Ambassador of
Argentina in Brussels
presented to the EU Commissioner of Agriculture his
government’s legal argumentation for
Argentina’s defence in the process against
Monsanto.13 In this, the following consideration is of
central importance: The
patent right which the company
owns on the RR gene does not cover either soy
beans as
an export good or products derived from the soy bean, such
as soymeal.
The argument is based on a formulation in
the EU-Biotech Directive (Art. 9)
according to which
the protection by patent extends “to all material
[…] in which
the product is incorporated and in
which the genetic information is contained
and
performs its function.”14 The goods controlled by the
customs officers in
Denmark and the Netherlands was
soymeal, i.e., a product obtained from RR soy
seeds.
These exported by-products however, including the soy beans
themselves,
are shipped to Europe not for cultivation
purposes but for consumption and
industrialisation
purposes. The RR gene can develop and perform its
genetic
function (the resistance to glyphosate) only
when the soy seed is cultivated and
treated with the
herbicide, which is in the varieties cultivated in
Argentina. The
claim to patent rights to the products
exported to Europe is therefore untenable –
thus
Argentina’s argumentation. The crucial point of the
statement is the
following: The patent right merely
includes the function of the resistance to
glyphosate
and does not encompass the gene per se. Claiming rights of
property to
the products that are exported to Europe
would mean illegally extending the
patent right from
RR seeds used for multiplication purposes to products
obtained
from RR seeds. In the case of soy this would
include a tremendous range of foods.
The claims of the
Monsanto patent refer not only to the gene but also to
the
method by which the plants are produced. According
to Article 8 of the Biotech
Directive, such protection
rights on processes extend “to biological material
directly obtained through that process and to any other
biological material
derived from the directly obtained
biological material through propagation or
multiplication […]”. The crux here:
“Biological material”, by definition of
Article
2 of the Biotech Directive, only refers to
material “capable of reproducing itself or
being
reproduced in a biological system.” Soymeal obviously
cannot reproduce
itself. Monsanto’s claims to
extend protection on processes to soymeal are thus
untenable.
This position taken by the
Argentine government is also being put forward by
well-known patent law specialists both from Latin America
and Europe. 15 Carlos
Correa, lecturer at the Centro
de Estudios Interdisciplinarios de Derecho
Industrial
y Económico in Buenos Aires, even considers the
process as a purely
strategic operation, as a means
for Monsanto of exerting pressure on the Argentine
government to make it succumb and change the law to the
multinational’s taste.16
In his view, the
European import enterprises are not much more than
subsidiary
victims. More importantly, he points out,
the case will demonstrate in what ways
conflicts
between multinational companies and the nation states where
they
operate will be solved in the future.
In addition, the Argentine government has recently
received an appraisal from the
Internal Market and
Services Directorate General of the European Commission
wherein the responsible legal experts support the
arguments of the Argentine
government and reject the
claim to patent rights on the imported soy derivatives.
This appraisal is currently being sent to all European
customs offices. The
company Monsanto, on the other
hand, is far from abandoning its campaign
against
Argentina’s patent policy and instead plays down the
significance of the
appraisal: "We are not aware
of any official document, but even if it is confirmed,
the development of the present cases should not be
effected."17 Such composure is
understandable:
The appraisal has no binding effect on the national courts,
nor
has the European Commission been involved in the
lawsuit cases up to now.
The
Consequences of the Lawsuit
Should
Monsanto win the case contrary to expectations, this will
have farreaching
effects on the agricultural market.
To the Berne Declaration, the
spokeswoman of Cargill
said that the outcome of the case “significantly
can
impact trade.” To date, legal conflicts
concerning patent rights have never been to
the fore
in the agricultural market – quite contrary, for
instance, to the trade in
pharmaceutical products.
This can be put down to the fact that in most countries,
genetically produced useful plants have been patentable
only for a few years and
that their cultivation and
trade has assumed international dimensions only within
the last few years. So this concerns a legal field where
there are yet hardly any
landmark verdicts pointing
the way. Monsanto’s lawsuit against the soy
importers
constitutes a precedent which lays new
foundations for the interpretation of the
Biotech
Directive as well as for the international agricultural
market. Should
Monsanto win, this might provoke a
similar situation in the food sector as in the
medication sector where patents on pharmaceutical
products have forced up
prices and rendered products
almost inaccessible for the poorer classes.
Within the WTO there have been efforts in recent years to
remove or at least
reduce tariff and non-tariff trade
barriers. If, however, the patentee’s protection
rights extends from useful plants to derived products
(like soymeal, for instance),
private companies will
thereby be entitled to establish new trade barriers. As
we
know, the patentee has the explicit privilege to
control or to prohibit the import of
patented products
(in case he has obtained a patent in the country of
import). By
effect of the WTO agreements, the state
has accordingly lost the possibility of
prohibiting
imports of, say, apples in order to protect the internal
industry. The
patentee of a patented apple, on the
other hand, is now free to prohibit import for
the
assertion of his monopoly rights. Control of trade thus
passes from states to
patentees.
One might
well reply by saying that it will never come to all that as
Monsanto’s
chances of winning the case are,
according to juridical appraisals, not very big.
But
the problem of seed selling companies gaining increasing
control over the
international market remains an issue
of general concern – for the following
reasons:
1. With the present lack of legal
clarity before a verdict has been reached,
Monsanto’s lawsuit even now creates a negative
environment for the export
of soy from Argentina. With
the uncertainty of the soy importers that have
been
taken to court, Monsanto has already achieved one first
goal. The
company will probably make every effort to
protract the processes, in the
hope of wearing down
both the state of Argentina and the traders. These
tactics can be successful even if Monsanto in the end
loses the case. It is
the same system as a
“bluff” in playing poker: Monsanto gives the
impression of having a good hand and so forces the others
to surrender.
2. To assume Monsanto’s
defeat before court in this case does not mean that
other cases are equally bound to fail. Each case needs to
be considered
separately regarding the claims made in
the patent as well as the traded
products. Thus there
are patents which explicitly include derived
products.
In its patent on maize with a high oil content (EP0744888),
the
concern Du Pont has expressly included in the
claims the oil obtained from
the maize as well as its
use for feed, cooking or industrial uses. After a
protest from Greenpeace and Misereor, the patent was
rejected in its
entirety in 2003; but the concern will
continue trying to extend their claims
in this
direction. Also, a case may take a different turn if the
imported
product might be used not only for food and
as animal feed but also as
seeds.
3.
Theoretically, control of the import of agricultural
products is an option
open not only to patentees but
also to owners of varieties protection rights
according to the 1991 International Convention for the
Protection of New
Varieties of Plants (UPOV). This
Convention also includes into the
breeder’s
rights the authorisation of the export or import of
protected
varieties. Each contracting party can here
extend this authorisation to
products obtained through
the unauthorised use of harvesting material of
the
protected variety (Art. 14.3).
4. This case also
highlights how attractive the terminator technology
might
turn out to be for those concerns that cannot
obtain their patent rights as
globally as they desire.
If they succeed in only handing out sterile seeds
and
if farmers thus have to buy new seeds every year, then seed
selling
companies will no more depend on patent rights
to assert their claims with
the farmers. This
demonstrates the ways in which a politically authorised
right (like the right to replanting) can be undermined by
a new technology.
Such technologies therefore need to
be examined in terms not only of their
environmental
effects but also of their socio-economic consequences
before
they are authorised.
The case of
Monsanto vs. Argentina constitutes a model case of a
multinational
concern trying with various actions to
form the existing law of a state to suit its
own
interests. It goes without saying that a patent law which
meets Argentina’s
needs is not the kind of
patent law which Monsanto desires. And it is very much
to Argentina’s credit that the state has to date
persevered in its position and is
willing to fight for
its concerns even at the European courts. It is a struggle
both
for food sovereignty and for political
sovereignty.
-----------
1 Cf.
Liliane Joensen et al. Argentina: A Case Study on the
Impact of Genetically Engineered
Soya. London 2005, p.
10
2 Cf. Miguel Altieri/Walter Pengue. Genetically
Engineered Soybeans: Latin America’s New
Colonizer. The Seedling, 2006, p. 1
3 Cf. Soja, Soja
und nochmals Soja...: Interview mit Liliane Joensen (see
www.gen-ethischesnetzwerk.
de/gid/TEXTE/ARCHIV/PRESSEDIENST_GID164/LANDWIRTSCHAFT164
.HTML)
4 Cf. Taos Turner. Argentina to Fight Monsanto
in Court. Dow Jones, USA from 1.7.2005 (see
http://money.cnn.com/services/tickerheadlines/for5/20050701
1624DOWJONESDJONLINE0
01149_FORTUNE5.htm)
5 Cf. Marcela Valente.
Argentina: Monsanto and farmers battle over GM seeds. Inter
Press
Service from 10.2.2004
6 Cf.
Monsanto’s royalty grab in Argentina. Grain, 2004
(see www.grain.org/articles/?id=4)
7 Cf. European
Commission supports Argentina in Monsanto battle.
MarketWatch (DowJones)
vom 10.08.2006 (see
www.marketwatch.com ; search: soy, Argentina)
8 Seeds
of dispute. The Guardian, UK from 22.2.2006
(see
business.guardian.co.uk/story/0,,1715329,00.html)
9
Monsanto demands a fee between 15$ and 18.75$ per ton (the
current trade price being at
178$ per ton). Cf.
ibd.
10 Cf. European Commission supports Argentina in
Monsanto battle. MarketWatch (DowJones)
from
10.08.2006 (see www.marketwatch.com ; cf. footnote 7)
11 Monsanto stops more Argentine soy in Europe. Reuters
from 8.2.2006
(see www.genet-info.org)
12 Cf.
Argentina asks EU to intervene in dispute with Monsanto.
Reuters from 8.3.2006 (see
www.genet-info.org)
13
Cf. Legal Grounds for the Submission of the Argentine
Government in the Ongoing Lawsuits
over the Exports of
RR Soybeans to Denmark and Netherland. Unpublished
Argumentation
Paper by the Argentine government. April
2006
14 Art. 9, Directive 98/44/EC of the European
Parliament and of the Council from July 6 1998,
on the
Legal Protection of Biotechnological Inventions
15
E.g. by Carlos M. Correa: cf. Correa. La disputa Monsanto
vs. Argentina sobre soja
transgénica, in: Le
Monde Diplomatique from August 2006
16 Correa. La
disputa, p. 6
17 Monsanto-spokesman Federico Ovejero
in: European Commission supports Argentina in
Monsanto
battle, MarketWatch (DowJones) from 10.08.2006 (see
www.marketwatch.com ;
cf. footnote 7)
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