Intellectual Property and Agriculture: The Case on Soybeans and Monsanto

Abstract

Developing countries had to implement Intellectual Property Rights on Agriculture after the creation of the World Trade Organization (WTO), in 1995. The Trade Related Aspects of Intellectual Property Rights agreement (TRIPS agreement), one of the WTO treaties, requires members to adopt an effective mechanism to protect plants, either by patents or a sui generis system. I intend to show that developing countries have institutional weaknesses that make it possible for multinational companies to dominate their markets, using Intellectual Property Rights, even when these countries do not accept their patents. The complexity of patent law, mainly in new legal areas, such as Agriculture; the lack of knowledge among actors within the production chain and/or of judges deciding hard cases; and the long timeline to conclude court cases in developing countries increase the legal possibilities of companies to extend their market share through legal strategies. I outline, as well, how IPR applied to seeds, conceived to stimulate innovation in some cases, results in controlling the international market by some of the seed companies. This observation is true, whatever legal system is chosen to ensure the protection – patent or protection of varieties of plants (UPOV) – although the latter is less extensive.

Indeed, in some cases, the control exerted by IPR is sufficient to dominate the national exportation market; and, therefore, affects the world market. This is clear, particularly in some markets such as genetically modified (GM) soybeans, characterized by the existence of an international debate on consumers’ rights to choose their food. In this case, the domination of productive markets results in considerably restraining the production and, therefore, the export of soybeans that are not genetically modified, thus, eliminating the possibility of choice for consumers and agents of the importing countries.

I intend to demonstrate these assertions through a case study. I demonstrate how one enterprise (Monsanto) could increase its market share of the Brazilian production of soybeans, and then dominate it for more than ten years, using arguments of Intellectual Property Rights in national Courts. The enterprise filed patents on genes related to soya beans. The Brazilian National Institute of Intellectual Property (INPI) denied these patents or other companies contested them in the Courts. Since most national courts do not dominate Intellectual Property Law, the lawsuit took many years to finish.

During this period, it was possible to create a complex network of contracts, based on legally disputed patents and the protection of varieties of plants. Since the national Judiciary and actors within the production chain in developing countries (Brazil) do not dominate the technicalities of Intellectual Property Law, this prolonged the domination of the national market.

However, as we shall see in some cases, it has backfired. I intend to criticize this strategy and show its limitations over time. After ten years and many legal decisions, Monsanto could lose the case. This is probably the most important case in Intellectual Property Rights today. The case between Apple and Samsung, ruled in 2012, for example, resulted in compensations of US $1.05 billion. Here compensations could reach US $3.5 billion. Since Brazil is the one of the biggest exporters of soybeans in the world, it is also an important market to study Intellectual Property Rights on seeds.

The article is divided in various parts: First, a summary of the international legal framework related to intellectual property and seeds. Second, the main legal and economic differences between the State’s two main legal possibilities: plant variety protection and patents. Third, a presentation of the Brazilian legal framework. Fourth, the Monsanto legal strategy making Brazil accept patents on plants and genes. Fifth, the top-to-bottom agreements with traders based on Intellectual Property Rights. Sixth, the agreements with competent seed companies. Seventh, the agreements with warehouses, cooperatives, and individual farmers based on the creation of an effective database and the presumption of the validity of those Intellectual Property Rights. Eighth, the farmers’ reactions on European and Brazilian Courts, which demonstrated how fragile this strategy could be, based on the decision that resulted in billions of dollars in compensations against Monsanto.

Keywords: Patents, Agricuture, Soybeans, Intellectual Property Rights, Brazil

JEL Classification: K00, O34, O50