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Time's up for trait patents

Excitement rivaling the start of an Olympic 400- meter dash often accompanies new product introductions by agricultural companies. That was the case when biotech's golden boy, Roundup Ready 1 soybeans, debuted in 1996.

“I can't tell you how nervous I was when I first sprayed Roundup (glyphosate) on Roundup Ready soybeans,” says Ray Gaesser, a Corning, Iowa, farmer and first vice president of the American Soybean Association (ASA). Gaesser's nerves – like those of nearly all other farmers –were calmed when the system proved its convenience, simplicity, and excellent weed control. Sparkling weed control resulted with just two postemergence glyphosate applications.

“The technology worked and transformed agriculture,” he adds. Today, 94% of U.S. soybean plantings contain a herbicide-tolerant trait that is mostly Roundup Ready.

Clock is ticking for biotech patents

Eventually, though, even golden boys lose their luster.

The first glyphosate-resistant weed surfaced in Delaware in 2000. Glyphosate-resistant weeds soon multiplied across the Midsouth and Midwest. Another twist in this scenario begins after the 2014 growing season. That's when the Roundup Ready 1 trait loses patent protection after 20 years.

Monsanto does not intend to enforce varietal patents on Roundup Ready 1 Monsanto-developed products. “We will also not charge a germplasm royalty to our licensees after 2014,” says Mimi Ricketts, Monsanto stewardship and intellectual property manager. Nor will it enforce varietal patents on farmers who save Monsanto-developed Roundup Ready 1 2014 seed for planting on their own farm in 2015. Monsanto officials pledge to maintain global regulatory support for the trait until 2021, and will work with licensees and others if a regulatory extension is needed.

By 2027, an estimated 12 patent portfolios of biotech-enhanced traits will expire, according to data compiled by the Americans for Choice and Competition in Agriculture.

This could prompt the marketing of generic traits in seed that mimics the multitude of generic herbicides now on the market. Patent expiration could also prompt farmers to save commodity seed from the current year for planting the next year. This practice, known as brown bagging, was legally nipped by trait and seed firms in order to protect their investment. A recent Phillips McDougall study found discovery, development, and authorization costs of a new U.S. plant biotechnology trait introduced between 2008 and 2012 tallied $136 million.

If generic traits follow the lead of generic herbicides, seed prices should decrease. When generic agricultural herbicides gained popularity in the mid-2000s, prices of generic herbicides (like glyphosate) dove 30% below those of branded ones.

Seeds have a complicating factor, though. Soybeans with the Roundup Ready 1 trait can contain other patents.

“Today, it is difficult to find a soybean variety sold in the U.S. that does not have a germplasm patent in it,” says Don Schafer, DuPont Pioneer senior marketing manager.

Each DuPont Pioneer soybean variety contains patented native traits that help soybeans resist maladies like white mold, says Randy Schlatter, senior manager for DuPont Pioneer's intellectual property program office. Ditto for patented genetics, breeding technologies, and transgenic traits. Saving and planting this seed violates patents.

“At ASA, we want to remind farmers of plant variety protection patents,” says Gaesser. “In most cases, they won't be able to save Roundup Ready 1 seed, due to patent protection.”

DuPont Pioneer officials began stressing this to farmers last fall. “When the patent on Roundup Ready 1 expires, we want brown bagging to be a nonevent, because we have done a good job of educating customers,” says Schlatter.

More companies may follow suit. “Up to now, Monsanto has been the one enforcing patents, but we will see other seed companies doing it, as well,” say Erika Eckley, staff attorney at the Center for Agricultural Law and Taxation at Iowa State University. “There is a lot at stake if companies don't protect patents.”

Ricketts advises farmers to know what technology stewardship agreements say before buying and planting seed. “There are other companies who will protect their soybean variety patents,” she says.

Price drop? Not exactly

It's not likely the expiration of the Roundup Ready 1 trait patent will slice near-term seed prices.

“It may make a little bit of difference, but not as much as people think,” says Bruce Kettler, Beck's Hybrids director of public relations. “There are still licensing fees associated with Roundup Ready soybeans. A lot of people who think their bills will go away for soybean seed will be disappointed.”

The agricultural pesticide market shows how firms deal with expiring patents, says Charles Benbrook, research professor at the Center for Sustaining Agriculture and Natural Resources at Washington State University.

When the patent for alachlor (marketed as Lasso) expired, Monsanto developed a market replacement called acetochlor that sold under brand names like Harness. Both herbicides were elongase inhibitor herbicides, with similar application times and weed spectrums. Acetochlor's introduction extended another period of a similar patent-protected product, he notes.

“When you look at the product lines of all major pesticide companies, the strategy of replacing older products with something that is new and improved is repeated over and over again,” he says.

Monsanto has followed the same trend with the Roundup Ready 1 gene through its 2009 introduction of the Genuity Roundup Ready 2 Yield trait. Both are glyphosate-tolerant traits, but Monsanto officials say its newer Roundup Ready trait yields better. By 2015, Monsanto's new soybean offerings will consist entirely of the Roundup Ready 2 Yield trait.

A mix of patented and generic characteristics in a soybean variety, in effect, creates a patented variety, says Benbrook.

“By doing this, seed companies can ensure there is never any generic old-trait seed available,” says Benbrook. “All this opens up the question of whether new players might get involved in the seed industry and purposely and strategically introduce the off-patent traits into otherwise clean (patent-free) germplasm. Given the degree to which the major (seed and chemical) companies control most germplasm and breeding stock, there isn't a lot of capacity in the system to do this.”

Export Approval

The new age of trait patent expiration also raises the specter of off-patent trait approval in overseas markets. Foreign markets for U.S. grains could evaporate if approvals are not adjusted to reflect the switch from patented to generic traits.

“There would be an incredible cost if grain is refused,” says Erika Eckley, staff attorney at the Center for Agricultural Law and Taxation at Iowa State University.

The American Seed Trade Association and the Biotechnology Industry Organization (BIO) are developing two agreements to incorporate these changes.

The goal of the Generic Event Marketability and Access Agreement is to assure continued maintenance of regulatory approvals and stewardship of postpatent products, says Christy Toedebusch, Monsanto product communications lead. Monsanto, BASF Plant Science, Bayer CropScience, Dow AgroSciences, and DuPont Pioneer have signed it thus far. The Data Use and Compensation Agreement now being negotiated provides a way for companies to share regulatory data to support trait stacks when trait patents expire.

“Ultimately, what we want to accomplish is that if farmers choose a product with a generic event, they have the confidence to plant it and have export authorization into key markets,” says Matt O'Mara, BIO director of international affairs. 

Patent Checks

DuPont Pioneer is gearing up to send inspectors into your soybean fields to ensure patent compliance.

U.S. farmers who now buy DuPont Pioneer soybean seed must agree to random patent compliance checks by Agro Protection, a Canadian intellectual property protection company. Agro Protection started inspecting Canadian soybean fields when the Roundup Ready 1 patent expired in Canada in 2011.

“We will start a product compliance check program, where we go out and sit down and talk with farmers, making sure their production records match their purchase records and verify that through leaf samples,” says Randy Schlatter, senior manager for DuPont Pioneer's intellectual property program office.

No penalties for patent violators have been established yet.

“We want do a good job of education before we start any type of enforcement program,” says Schlatter. “We want to maintain our relationships. It doesn't do us any good to anger our customers.”

Before the 2011 Canadian Roundup Ready 1 trait expiration, Schlatter notes that one of the top conversations in Canadian agriculture was about what would happen when the patent expired.
“Everyone thought it would be the Wild West, where everyone brown bagged,” he says.

That wasn't the case. Once varietal patent protection occurred, DuPont Pioneer established an education and enforcement program.

“Unless someone brings the topic up, no one talks about it now,” says Schlatter. “It has been accepted. We were granted varietal improvement patents in Canada that gave us the same protection as in the U.S. The Canadians understood that if they wanted to be globally competitive (in soybeans), they had to do something. Otherwise, the U.S. would outpace them on the global scale.”

Patty Townsend, chief executive officer of the Canadian Seed Trade Association, concurs.

“Farmers understand intellectual protection tools and rules, and they generally respect them, because they understand the role they play to generate investment in research and plant breeding,” she says. 

Supreme Seed Test

Monsanto's successful lawsuit rate against farmers who violate its seed patents mimics the winning streak the Harlem Globetrotters have against the hapless Washington Generals.

A lawsuit the U.S. Supreme Court is hearing this month, though, will test this success. The case, which Monsanto has won in lower courts, involves a lawsuit it filed against 75-year-old Vernon Bowman, a Sandborn, Indiana, farmer.

“The argument is over how far a seed patent can extend,” says Erika Eckley, staff attorney for the Center for Agricultural Law and Taxation at Iowa State University.

In 2007, Bowman double-cropped soybeans in early summer with commodity soybeans he purchased from a grain elevator. “The second-season seeds ended up having the (Roundup Ready) technology in them, and he reused them,” says Eckley. “Monsanto sued him for planting commodity seed for the second crop.”

Monsanto has sued 145 farmers for patent infringement since 1997, winning all 11 cases that went to trial.

“In all other cases, farmers purposely saved their own seed after planting the Roundup Ready seed,” says Eckley. “In this case, the farmer went to the grain elevator to buy some generic commodity soybeans for seed because he didn't want to invest much money in a second (double) crop. The Bowman side is making the argument that seed companies can't control the patent beyond the initial sale.”
This argument has precedence in Quanta v. LG Electronic. The Supreme Court ruled that although patent owners can place sales conditions on a product, patent rights end once the sale occurs.

Monsanto argues this case does not apply to Bowman v. Monsanto, since the patent in a seed is replicated in future plantings. If the Supreme Court rules in favor of Bowman, seed companies are concerned they will be unable to protect their patents, says Eckley.

“This case will examine how far patent protection extends for life forms that continue to propagate the same technology over and over,” she says.

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