THE MONSANTO CANADA INC. li.. SCHMEISER DECISION: WHAT IS ITS PRACTICAL EFFECT ON FARMERS?

Transcription

1 ,. i. i i i I I i i i THE MONSANTO CANADA INC. li.. SCHMEISER DECISION: WHAT IS ITS PRACTICAL EFFECT ON FARMERS? ( i. i i i i. (, I I i. ~ ~ t:~ i~ I i 1.- These materials were prepared by Terry Zakreski, of Stevenson Hood Thornton Beaubier LLP law firm Saskatoon, Saskatchewan for the Saskatchewan Legal Education Society'lnc. seminar, Agriculture Litigation: Monsanto v. Schmeiser & Beyond; December

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3 TABLE OF CONTENTS I. II. III. IV. IV. ----l V. V. INTRODUCTION 1 THE FACTS OF THE CASE: EXPLAINED 1 THE INNOCENT BYSTANDER PROBLEM 4 REMEDIES 8 USING REMEDIES TO SOLVE THE INNOCENT INFRINGER PROBLEM 12 SAMPLING AND TESTING 16 CONCLUSION 19 --j --- ~~

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5 THE MONSANTO CANADA INC. v. SCHMEISER DECISION: WHAT IS ITS PRACTICAL EFFECT ON FARMERS? I. INTRODUCTION Genetically modified ("GM" canola is now a common plant on the prairies. The evidence submitted to the Court at trial in Monsanto Canada Inc. v. Schmeiser, 2001 FCT 256, established that by 2000, Roundup Ready canola accounted for 40% of the canola grown in Canada, on 4.5 to 5 million acres. Monsanto Canada Inc. ("Monsanto" Monsanto claims patent rights over a gene found in "Roundup Ready" canola. In August of 1998 Monsanto commenced legal proceedings in the Federal Court of Canada against Percy Schmeiser and his company, alleging that Mr. Schmeiser had grown a canola crops in 1997 and 1998 that infringed Monsanto's patent. Mr. Schmeiser defended on the basis that the gene spread to his canola through no fault of his own. Thus began one of the more notable agricultural cases in Saskatchewan's history. The case has attracted extensive academic interest in the fields of patent and environmental law, as well as becoming a focal point in the larger political debate over GM food. While the debate continues over the loftier implications of the case, my intent is to write about the practical result of the decision and what it might mean to farmers. II. THE FACTS OF THE CASE: EXPLAINED --,l ~ n Mr. Schmeiser was a seed saver who preferred to save a portion of his canola production each year to serve as seed the following year. The last time Mr. Schmeiser bought canola seed was Through his seed selection practices, he grew was high-yielding and resistant to disease. Mr. Schmeiser was able to continuously crop his canola without loss of yields or increased disease using his farming methods for up to three years in a row. Monsanto acquired its patent rights to the Roundup Ready gene from its parent company, Monsanto Company, a large multinational company based in St. Louis, Missouri. I

6 2 Monsanto manufactures Roundup herbicide, a glyphosate-based herbicide. The transgene used in Roundup Ready canola confers glyphosate resistance on plants when incorporated into the plant's genome. In other words, rather than making Roundup suitable to canola, Monsanto's approach was to make canola suitable to Roundup. Before authorizing farmers to acquire a Roundup Ready canola variety produced by one of Monsanto's licensees, Monsanto requires the farmer to enter into a Technology User Agreement with Monsanto regarding the use of Monsanto's Roundup Ready gene. Apart from providing various inspection rights, the farmer undertakes not to save any of the seed for replanting and to pay Monsanto a license fee of $15 an acre for using the genetic modification. Mr. Schmeiser never signed Monsanto's Technology User Agreement, nor did he acquire Roundup Ready canola seed from one ofmonsanto's licensed seed companies or licensees. Mr. Schmeiser first discovered roundup-resistant plants on his fields in At that time he was using Roundup as a general weed-killer. Mr. Schmeiser and his hired hand were hand-spraying Roundup around the power poles and in the ditches of four of his fields that were adjacent to a roadway leading into Bruno, Saskatchewan. Mr. Schmeiser later observed that many of the canola plants that had been sprayed with Roundup, approximately 60%, had survived the hand spraying. Mr. Schmeiser wanted to see how far the plants went into his field. Using his spray implement, Mr. Schmeiser conducted an experiment by spraying approximately three acres of one of the fields adjacent to the Bruno roadway. He later observed that 60% of the canola survived. The surviving canola grew in clumps and was thickest near the roadway, and thinned moving into the field. The observation was confirmed by his hired hand who later swathed and combined the canola for Mr. Schmeiser. The hired hand testified that he swathed and combined the field where the experiment had been conducted in his usual way. The harvested seed, including the seed from the acres on which the experiment had been conducted, were augured from the combine into a grain truck. The starter failed on the grain truck. The truck was therefore left in the field and the box covered with tarpaulin. Later that fall Mr. Schmeiser moved the grain truck to his quonset located in Bruno. Mr. Schmeiser's testimony was that he paid no attention to the fact that the grain included seed

7 3 from where he had earlier conducted his experiment. The trial judge was satisfied, however, that Mr. Schmeiser knew or ought to have known that the seed in the grain truck contained seed from the Roundup-resistant plants given that his hired hand was aware of the area from which the seed was harvested. _ When the spring of 1998 rolled around, Mr. Schmeiser decided to use the seed from the grain truck in his quonset to plant his canola crop that year. He testified that his decision was based on seasonal road bans. which precluded him from hauling grain from his granaries outside of Bruno. Mr. Schmeiser tookthe seed from the truck to Humboldt Flour Mills to have it treated (by having a coating applied to protect the seed from pests. He then used that seed, mixed with untreated bin run seed from his granaries, to seed approximately 1,000 acres of canola. Back in 1997 Monsanto had received an anonymous tip that Mr. Schmeiser might be growing their canola. Acting on the tip, it arranged for a private investigator to take roadside samples from two of Mr. Schmeiser's fields. The roadside samples were supposed to have been taken from plants growing in the public rights of way. The R.M. encouraged farmers to crop into the roadways as it had the benefit of controlling weeds. These roadside samples proved positive for the presence of the Roundup Ready gene. When the same result was noted in 1998 on further roadside samples gathered by a private investigator hired by Monsanto, Monsanto commenced legal proceedings against Mr. Schmeiser in the Federal Court, alleging patent infringement. Monsanto alleged that Mr. Schmeiser obtained canola seed from one or more of their licensed users in 1997, used it to plant his 1997 crop, saved seed from that crop and used it to plant his 1998 crop. ---j Shortly before harvest in 1998 Monsanto moved to obtain a court order allowing it to take incrop samples of canola plants in the field. Mr. Schmeiser's counsel consented to the order and a Monsanto representative and a private investigator retained by Monsanto, greeted Mr. Schmeiser on one of his fields to take the court-ordered samples. Mr. Schmeiser did not accompany them when they took samples. Ofthe samples taken, halfwere put in bags intended for Monsanto, and half were put in bags intended for Mr. Schmeiser. The Monsanto representative and private investigator took samples from three random locations on each field (nine in all. When they had completed their sampling they handed a copy of the samples to Mr. Schmeiser and left.

8 4 Monsanto's portion of the samples was further divided, with half sent to Monsanto's labs in St. Louis, Missouri, for DNA analysis. That analysis showed the presence of Monsanto's gene in the samples, although not the degree of presence. Monsanto's biotechnology manager, later took the remaining portion of the samples and, using the facilities of Prairie Plant Systems in Saskatoon, conducted a grow-out test where the seeds were planted, sprayed with Roundup after they emerged, and the survivors counted. The 95-98% figure quoted frequently by Monsanto and relied upon by the Supreme Court of Canada comes from this grow-out experiment. It should be remembered, however, that Mr. Schmeiser also tested his copy of the samples. He first did his own grow-out test in his garden and determined a variable rate of infiltration by the Roundup Ready gene. The samples were then sent to the University of Manitoba where Lyle Friesen conducted a grow-out test. His test results also showed a variance in the percentage of plants having of the Roundup resistance from 0% to a maximum of 67%. The Supreme Court of Canada did not rely upon this test when it rendered its decision. It should be noted that the difference in test results between the samples that were left with Monsanto and the samples that were left with Mr. Schmeiser raises an issue of potential sample tampering. In that regard it should be noted that Mr. Justice McKay made no finding of tampering against either party. Indeed, there are no credibility findings against anyone in Mr. Justice McKay's judgment. Mr. Justice McKay, furthermore, did not appear to make any final ruling on the percentage of infiltration of the Roundup Ready gene in Mr. Schmeiser's 1998 crop. However, his finding that it was a "Roundup Ready crop" might be taken as an acceptance of Monsanto's grow-out test on its samples. Madam Justice Sharlow, who wrote the judgment on behalf of the Federal Court of Appeal, 2002 FCA 309, did not change the conclusions made by Mr. Justice McKay. Justices McLachlin and Fish in the Supreme Court of Canada, however, adopted the 95-98% figure. III. THE INNOCENT BYSTANDER PROBLEM Monsanto initially alleged that Mr. Schmeiser obtained Roundup Ready canola seed from one or

9 5 more of its licensed users and used that to plant his 1997 crop. Faced with a motion to dismiss the claim, Monsanto withdrew that allegation and any claim that it had in regard to his 1997 crop. Monsanto thereafter proceeded with its action on the basis that it did not matter how Mr. Schmeiser initially came into possession of the Roundup Ready seed, it mattered what he did in 1998, i.e. grow a crop that he knew orought to have known contained its patented gene. The case fundamentally changed after the allegation was withdrawn. Mr. Schmeiser main complaint was that he was being accused of something of which he was clearly innocent - _ obtaining canola seed from one of Monsanto's licensees (brown-bagging. Thereafter, the case shifted to one where Monsanto claimed that it did not matter how Mr. Schmeiser came into possession of canola seed containing their gene. He was not entitled to plant it. While Monsanto withdrew the 1997 claim, it did not accept that Mr. Schmeiser accidentally came into possession of its patented gene. Indeed, Mr. Justice McKay ruled that the sources of potential contamination identified by Mr. Schmeiser were insufficient to explain the degree of Roundup Ready-resistant plants found by him in The trial judge concluded, however, that the source ofthe seed was irrelevant. Nevertheless, the unchallenged evidence was that the area sprayed with Roundup in 1997 showed that the canola was mixed between Roundup-tolerant and Roundup-:-susceptible plants. Monsanto's experts agreed that there would be no commercial advantage to growing a mixed crop of Roundup-tolerant and Roundup-susceptible plants, since the technology requires the crop to be sprayed with Roundup in order for there to be any benefit. In that regard, Mr. Schmeiser appealed to the Federal Court of Appeal that Mr. Justice McKay failed to take into account one important source of contamination in 1997, that being the ] W G uncontroverted evidence that swathes of canola from an adjacent Roundup-Ready field had blown into one of Mr. Schmeiser's fields in 1996, and that seed from those windblown swathes had become mixed with Mr. Schmeiser's seed supply in Madam Justice Sharlow addressed this ground of appeal at paragraph 62 of her Reasons as follows: Counsel for Mr. Schmeiser argued that the Trial Judge erred at paragraph 34 ofhis reasons for judgment when he said that there is no evidence that seed from

10 6 Schmeiser field 6 was saved in 1996 to be used as seed for his 1997 crop. Mr. Schmeiser had testified to this fact, and so there was some evidence of it. However, in my view this error is inconsequential because, for the reasons stated above, the source of the seed for the 1997 crop is irrelevant. Chief Justice McLachlin and Justice Fish, however, focused solely on the 1998 crop year and made it clear at the outset (at paragraph 2 "that we are not concerned here with the innocent discovery by farmers of "blow-by" patented plants on their land or in their cultivated fields." Nevertheless, it is somewhat amusing to see how the various courts grappled with the "innocent bystander" problem. Mr. Justice McKay made it clear that there were to be no concessions for innocent infringers: [91]... While I acknowledge that the seed or plant containing the plaintiffs' patented gene and cell may be owned in a legal sense by the farmer who has acquired the seed or plant, that "owner's" interest in the seed or plant is subject to the plaintiffs' patent rights, including the exclusive right to use or sell its gene or cell, and they alone may license others to use the invention. [92] Thus a farmer whose field contains seed or plants originating from seed spilled into them, or blown as seed, in swaths from a neighbour's land or even growing from germination by pollen carried into his field from elsewhere by insects, birds, or by the wind, may own the seed or plants on his land even if he did not set about to plant them. He does not, however, own the right to the use of the patented gene, orofthe seed orplantcontaining the patented gene or cell. Madam Justice Sharlow, who wrote the judgment on behalf of the Federal Court of Appeal, mitigated the harshness of Mr. Justice McKay's words somewhat by suggesting that the innocent infringer could be accommodated at the remedies stage of the inquiry: [56] There is considerable force to the argument that it would be unfair to grant Monsanto a remedy for infringement where volunteer Roundup Ready Canola grows in a farmer's field but its resistance to glyphosate remains unknown, or if that characteristic becomes apparent but the seeds of the volunteer plants are not retained for cultivation.... [57] However, it seems to me arguable that the patented Monsanto gene falls into a novel category. It is a patented invention found within a living plant that may, without human intervention, produce progeny containing the same invention. It is undisputed that a plant containing the Monsanto gene may come fortuitously onto the property of a person who has no reason to be aware of the presence of the characteristic created by the patented gene. It is also reasonable to suppose that the / --'

11 7 person could become aware that the plant has that characteristic but may tolerate the continued presence of the plant without doing anything to cause or promote the propagation of the plant or its progeny (by saving and planting seeds, for example. In my view, it is an open question whether Monsanto could, in such circumstances, obtain a remedy for infringement on the basis that the intention of the alleged infringer is irrelevant. However, that question does not need to be resolved in this case. - [58]... Although the Trial Judge did not find that Mr. Schmeiser played any part initially in causing those glyphosate resistant canola plants to grow in 1997, the Trial Judge found as a fact, on the basis of ample evidence, that Mr. Schmeiser knew or should have known that those plants were glyphosate resistant when he saved their seeds in 1997 and planted those seeds the following year. It was the cultivation, harvest and sale of the 1998 crop in those circumstances that made Mr. Schmeiservulnerable to Monsanto's infringementclaim. Madam Chief Justice McLachlin and Justice Fish for the majority in the Supreme Court recognized that farmers who are innocent possessors may not be infringers depending on the degree of presence and what they do upon discovering the patented material in their fields. In their judgment: 56 Thus, a defendant in possession of a patented invention in commercial circumstances may rebut the presumption of use by bringing credible evidence that the invention was neither used, nor intended to be used, even by exploiting its stand-by utility The defendant's benefit or profit from the activity may be relevant at the stage of remedy, but not in determining infringement. ----J q F~ 86 Further, the appellants did not provide sufficient evidence to rebut the presumption of use. It may well be that defendant farmers could rebut the presumption by showing that they never intended to cultivate plants containing the patented genes and cells. They might perhaps prove that the continued presence of the patented gene on their land was accidental and unwelcome, for example, by showing that they acted quickly to arrange for its removal, and that its concentration was consistent with that to be expected from unsolicited "blow-by" canola. Knowledge of infringement is never a necessary component of infringement. However, a defendant's conduct on becoming aware of the presence of the patented invention may assist in rebutting the presumption of use arising from possession. The words - "[t]hey acted quickly to arrange for its removal" - may raise eyebrows in

12 8 agricultural and environmental sectors. Should the onus be on the farmer to arrange for the removal of unsolicited patented genetic material? The decision at least leaves it open to farmers sustaining lower levels of concentration of GM contamination to attempt to rebut the presumption of infringement. Farmers who normally hold back a portion of their canola production to serve as seed for the following year should be warned that they could become patent infringers if they become aware of patented genetic material in their seed supply. Indeed, in the modern era ofbiotechnological farming farmers will need to consider whether they have the appropriate licenses for the various plants growing on their fields. In this new era, "[n]o longer does a farmer buy a quantity of seed outright, which he then owns and can deal with as he wishes." (Intervener factum of Ag-West Biotech at para. 36 Whether a company such as Monsanto can be held legally liable for interfering with a farmer's ability to save and reuse his canola seed by reason of the proliferation of patented genetic material has yet to be tested. IV. REMEDIES Most farmers will want to know what damages they will have to pay to Monsanto if they are found to be a patent infringer. Mr. Schmeiser's situation dealt with the remedies to which Monsanto was entitled stemming from the infringement of Monsanto's patent. Mr. Schmeiser did not sign a Technology User Agreement. Where the farmer has signed a Technology User Agreement, the Technology User Agreement needs to be consulted in order to ascertain the damages to which Monsanto is entitled upon breach of the Agreement. The penalties claimed by Monsanto in its Technology User Agreement are harsh. I will focus on the remedies to which Monsanto may be entitled for patent infringement, assuming that thefarmer did not sign a Technology User Agreement. Chief Justice McLachlin and Justice Fish summarize the remedies generally available to a patent \ -'

13 9 holder upon finding ofpatent infringement at paragraph 100 oftheirjudgment: The Patent Act permits two alternative types of remedy: damages and an accounting of profits. Damages represent the inventor's loss, which may include the patent holder's lost profits from sales or lost royalty payments. An accounting of profits, by contrast, is measured by the profits made by the infringer, rather than the amount lost by the inventor. Here, damages are not available, in view of Monsanto's election to seek an accounting of profits. It is noteworthy that at trial Monsanto attempted to claim both damages and an accounting of profits. Because both Monsanto Canada Inc. and Monsanto Company (the U.S. parent company were both plaintiffs, Monsanto submitted that Monsanto Canada Inc. could claim an accounting of profits and Monsanto Company could claim damages. Mr. Justice McKay would not allow Monsanto to claim both remedies using the two companies. Monsanto therefore elected an accounting of profits. Had Monsanto elected damages, its claim was $15 per acre, based upon the normal license fee it charges in its Technology User Agreements. Monsanto claimed Mr. Schmeiser's entire profit from his 1998 crop, which it asserted was $105,000. Mr. Justice McKay did not accept that amount and he ultimately awarded $19,832 as the profit made by Mr. Schmeiser from the sale of his 1998 canola crop. While the amount does not appear to be overly significant, Mr. Justice McKay later awarded Monsanto up to $153,000 in costs, considering that it had paid over $750,000 to prosecute the action. In the trenches this represented a significant victory for Monsanto as it could claim that it recovered approximately $200 an acre from Mr. Schmeiser's violation of its patent. The precedentcouldbe used as a strong precedent against farmers contemplating growing canola with Monsanto's patented gene without a license. Mr. Schmeiser argued at trial that it was inappropriate to order that he pay his entire profit from --- q C~ the 1998 canola crop when he did not benefit from the presence of the gene in that crop. Mr. Schmeiser sold the entire crop as a grain commodity. At that point he received nothing extra for it because it might contain Monsanto's patented gene. There was no evidence of a price premium paid for canola containing the gene sold as a commodity and, indeed, the evidence was to the effect that some markets would not accept canola containing the gene. Mr. Schmeiser further argued that, as he did not spray his crops with Roundup, he did not profit from having a

14 10 crop with the Roundup Ready gene. The utility of the gene was that it facilitated the in-crop spraying of Roundup, a relatively inexpensive herbicide compared to alternative herbicides suitable to canola. Both Mr. Justice McKay and Madam Justice Sharlow rejected Schmeiser's argument with little analysis. Mr. Justice McKay had this to say about it. [135] For the defendants it is urged there were no measurable profits earned from sale of the 1998 crop even if it did include the plaintiffs' patented gene. The argument is based on the assumption that the defendants would have earned the same profits on sale of a canola crop that did not contain the gene. That is no answer to the issue of profits from sale of the crop which I have found contained the plaintiffs' patented gene and cells. It is the profit from sale of that crop that plaintiffs may claim, not the difference between sale of that crop and sale of an alternative crop that was not grown. Madam Justice Sharlow said: [78] It was argued for Mr. Schmeiser that he realized no financial benefit, and therefore no profit, from the fact that his 1998 crop included glyphosate resistant canola. He did not sell his 1998 crop to another farmer to be used as glyphosate resistant canola seed, but sold it to a commercial crushing plant to whom the presence of the Monsanto gene represented no value. Thus, the sale price of the 1998 Schmeiser crop would have been the same even it (sic it had contained no glyphosate resistant seeds. [79] The Trial Judge rejected this argument because, as he said at paragraph 135 of his reasons, it is the profit from the sale of the infringing crop that Monsanto may claim, not the difference between that profit and the profit from the sale of an alternative crop that was not grown. [80] In my view the Trial Judge was correct on this point. A somewhat similar question was considered in Reading & Bates Construction Co. v. Baker Energy Resources Corp. (CA., [1995] 1 F.e. 483 (e.a., and was answered as follows bymr. Justice Utourneau (at page 496: On this accounting procedure, I believe one has to look at the profits that the appellant actually made through the infringing acts, not the profit that he could have made had he used a non-infringing method... On appeal before the Supreme Court of Canada Mr. Schmeiser argued that Monsanto was entitled only to those profits caused by Mr. Schmeiser's infringement. He citedlubrizol Corp. v.

15 11 Imperial Oil Ltd. (1996, 71 c.p.r. (3d 26 (F.c.A.. As the Federal Court of Appeal stated in that case: The remedy of an account of profits is an equitable one. Its purpose is not to punish the defendant but simply to have him surrender the actual profits he has made at the plaintiff's expense. But if some part of hnperial's profit on the infringing sales can be shown to have been due not to the appropriation of the Lubrizol invention but to some other factor where is the equity? We were told that Lubrizol contends that hnperial's motor oil infringes another of its patents and has sued in respect thereof. May the same profits be claimed a second time? And if not by Lubrizol what of some third party patentee who likewise claims infringement? And even if no other patents were involved, to allow Lubrizol to take profits which hnperial succeeds in showing were attributable to some noninfringing feature of its motor oil would be to judicially sanction Lubrizol's unjust enrichment at hnperial's expense. Mr. Schmeiser argued that the same question might have been asked about his canola. What if, in addition to having Monsanto's gene, Mr. Schmeiser's canola also contained a gene patented by another biotechnology company? Would a court award the same profits a second time, or even a third? There was an example given of such "gene stacking" at Percy's trial. An Alberta farmer planted three different varieties of herbicide-tolerant canola, Roundup Ready (Monsanto, Liberty Link (Aventis and Pursuit Smart (Pioneer, in three separate fields. In 1998 he decided to chemfallow one of his fields using Roundup herbicide and discovered a substantial amount of canola survived. A subsequent investigation determined that gene stacking had occurred, making some volunteer canola resistant to all three herbicides. If the lower court's decisions held sway, such a farmer might be faced with a triple profits claim. ~ -j ~~ Mr. Schmeiser also relied upon an article by Professor Norman Siebrasse, "A Remedial Benefit Based Approach to the Innocent User Problem in the Patenting of Higher Life Forms, with Reference to Accounting of Profits and Monsanto Canada Inc. v. Schmeiser" ( C.I.P.R. 79. Professor Siebrasse argued that profits remedy in Percy's case should have been zero. On this point the Supreme Court agreed with Professor Siebrasse: 103 The difficulty with the trial judge's award is thatit does not identify any causal connection between the profits the appellants were found to have earned through growing Roundup Ready Canola and the invention. On the facts found, the appellants made no profits as a result ofthe invention.

16 Their profits were precisely what they would have been had they planted and harvested ordinary canola. They sold the Roundup Ready Canola they grew in 1998 for feed, and thus obtained no premium for the fact that it was Roundup Ready Canola. Nor did they gain any agricultural advantage from the herbicide resistant nature of the canola, since no finding was made that they sprayed with Roundup herbicide to reduce weeds. The appellants' profits arose solely from qualities of their crop that cannot be attributed to the invention. 105 On this evidence, the appellants earned no profit from the invention and Monsanto is entitled to nothing on their claim of account. The Court went on to hold that each party would bear their own costs throughout the proceedings. The result in the case leads to the question of what would have happened had Monsanto elected damages instead of an accounting of profits. Some guidance on this issue can be gathered from Professor Siebrasse's article which the Supreme Court appeared to favor. Professor Siebrasse argues that the result would not automatically be Monsanto's foregone licensing fee, Le. $15 per acre. To Professor Siebrasse, when ascertaining an appropriate license fee, the license fee should not necessarily be what Monsanto would insist upon, but a fee that a farmer would reasonably accept. A farmer who has not benefited from the presence of the patented genetic material, and would rather it not be mixed with his property, reasonably would not agree to pay anything to Monsanto for a license fee. It remains to be seen whether Professor Siebrasse's approach will prevail. IV. USING REMEDIES TO SOLVE THEINNOCENT INFRINGER PROBLEM Professor Siebrasse's approach, using remedies as a solution to the innocent infringer problem, leaves, in my view, something to be desired. He argues: In conclusion, I suggest that while the innocent infringer of patents related to higher life forms has garnered considerable attention and sympathy, in fact existing law protects such an infringer quite well. If she does not benefit from the patent, she will not be substantially liable, and even if she does benefit, she will only be liable to give up gains caused by the use of the patent. An innocent infringer will not be placed in a position which is worse than that she would have

17 13 been in had she not infringed. In this sense the benefit-based approach is much preferable to the approach adopted in Schmeiser. -! Such an approach works well for the type of genetic invention at issue in Schmeiser's case, namely a gene that facilitates the spraying of a herbicide. Whether a farmer benefits from the technology hinges upon whether he or she in-crop sprays with a herbicide ordinarily unsuitable to the crop. The farmer must do something deliberate to benefit. Future genetic modifications, however, may provide passive or intrinsic benefits such as increased yeilds. Say, for example, that Monsanto's gene doubled the yield of canola rather than simply conferring herbicide resistance. Assume further that Monsanto released its gene into the environment to such an extent that it spread everywhere. Would Monsanto have an increased yield claim against every farmer on whose land such plants may be found? Such a "seeding" case actually arose in the American case of SmithKline Beecham Corp. et al. v. Apotex Corp. et ai., 193 F.R.D. 530 (N.D. TIL SmithKline sells the drug Paxil using its patented substance, a hemihydrate of paroxetine hydrochloride. Apotex sought to manufacture generic "Paxil" using an anhydrate form of paroxetine hydrochloride. What makes the case interesting is that once thehemihydrate form had been produced by SmithKline, apparently the new form of the substance "seeds" the world making it inevitable that any future anhydrate compound would contain trace amounts of the patented hemihydrate compound. Justice Posner, an appeal judge who was sitting on the United States District Court for the trial, maintained that there would be an equitable defence to such inevitable patent infringement. He stated: Although I cannot find any statutory language or case law that bears on the question, I believe that as a matter offundamental principle it must be a defense to a charge of patent infringement that the patentee caused the infringement. There are many analogies, but one will suffice: it is a completely orthodox defense to a suit for breach of contract that the plaintiff prevented the defendant from performing his contractual duty. See, e.g., Zobel & Dahl Construction v. Crotty, 356 N.W.2d 42,45 (Minn. 1984; Pfaffv. Petrie, 71 N.E.2d 345, 351 (lli. 1947; Chicago Title & Trust Co. v. Hedges Mfg. Co., 414 N.E.2d 232, (lll.app Had SmithKline snuck into BCl's plant and scattered hemihydrate seeds, I do not think that even SmithKline would deny that Apotex would have a good defense to a claim ofinfringement ofpatent 723. The case was appealed to the United States Federal Circuit, (SmithKline Beecham Corporation et

18 14 al. v. Aptoex Corp. et al., 365 F. 3d 1306 (Fed. Cir While the court found that the patent claims had been infringed, the Court declined to rule on Justice Posner's proposed equitable defence. The Court instead invalidated the patent on a "technicality" because the clinical trials of the drug took place more than a year before the patent application. Justice Gajarsa, however, who wrote a concurring judgment, was not content to leave the matter open: We do no one any favors by allowing this important question to remain open. We should announce, as a court, that the patent law does not sanction the concept of inevitable infringement-lest someone mistakenly believe that it does. Mr. Justice Gajarsa's treatment of the issue of inevitable infringement is apposite to the matter at hand. He uses this pertinent analogy: This crystalline compound raises a question similar to one that might arise when considering the invention of a fertile plant or a genetically engineered organism, capable of reproduction, released into the wild. Consider, for example, what might happen if the wind blew fertile, genetically modified blue corn protected by a patent, from the field of a single farmer into neighboring cornfields. The harvest from those fields would soon contain at least some patented blue corn mixed in with the traditional public domain yellow corn-thereby infringing the patent. The wind would continue to blow, and the patented crops would spread throughout the continent, thereby turning most (if not all North American corn farmers into unintentional, yet inevitable, infringers. The implication-that the patent owner would be entitled to collect royalties from every farmer whose cornfields contained even a few patented blue stalks-cannot possibly be correct. The underlying question that engaged the district court, and that led it to develop numerous alternative holdings, is why this implication is incorrect. In oral argument, when faced with this hypothetical, SKB expressed its belief that such a blue-com patent would be "very strong." Such a belief is misplaced. The implicit concept of "inevitable infringement" stems from the inevitable failure of the patent to provide public notice-which, in turn, stems from the inherently unpatentable nature of the claimed subject matter. This Section 101 problem therefore brings us full circle, back to the impossibility of public notice. Under normal circumstances, inventors other than the patentee will understand how to avoid infringing a patent by avoiding the claimed product. Because products such as our hypothetical blue com or SKB's paroxetine hemihydrate, that can be "made" through a natural process of spontaneous conversion imply inevitable infringement, no combination of claim language and I

19 15 written description could possibly teach even one skilled in the art how to avoid infringement. It is unsurprising that a requirement considered so trivial for most patentable products that we are content to let it remain implicit, namely a lesson in infringement avoidance, is effectively impossible for subject matter unpatentable under Section 101. In short, patent claims drawn broadly enough to encompass products that spread, appear, and "reproduce" through natural processes cover subject matter unpatentable under Section 101and are therefore invalid. Justice Gajarsa's conclusion that patent law cannot support such inventions fits with what the majority of the Supreme Court of Canada determined in Harvard College v. Canada (Commissioner ofpatents, 2002 SCC 76. As Justice Bastarache writes: 170 Two of the issues addressed by the CBAC (farmers' privilege and innocent bystanders arise out of the unique ability of higher life forms to self-replicate. Because higher life forms reproduce by themselves, the grant of a patent covers not only the particular plant, seed or animal sold, but also all of its progeny containing the patented invention. In the CBAC's view, this represents a significant increase in the scope of rights offered to patent holders that is not in line with the scope of patent rights provided in other fields (Patenting ofhigher Life Forms and Related Issues, at p One significant concern arismg out of the increased scope of patent protection is the impact that it will have on Canada's agricultural industry. The CBAC recommends that a farmers'privilege provision be included in the Act. The privilege would permit farmers to collect and reuse seeds harvested from patented plants and to breed patented animals for their own use, so long as these were not sold for commercial breeding purposes. Although the CBAC puts forward suggestions pertaining to the general nature of such a provision, it nonetheless recognizes that more work would need to be done to identify the extent of the privilege in relation to plants and animals. i q t= I 172 Another concern identified by the CBAC in respect to self-replication pertains to infringement. The CBAC observes that since plants and animals are often capable of reproducing on their own, it must be recognized that they will not always do so under the control or with the knowledge of those who grow the plants or raise the animals. Patent law does not currently require a patent holder to prove that an alleged infringer knew or ought to have known about the reproduction of a patented invention. An "innocent bystander" may therefore be faced with high costs to defend a patent infringement suit and an award of damages for infringement without a countervailing remedy against the patent holder. The CBAC correspondingly recommends that the Patent Act contain a provision that would allow the so-called "innocent bystander" to rebut the usual presumption concerning knowledge of infringement in respect of inventions

20 16 capable of reproducing, such as plants, seeds and animals. It was disappointing for Mr. Schmeiser that the Supreme Court did not follow through with what it said in Harvard College. On the contrary, Monsanto ended up with broader patent rights than what was denied to Harvard College. In the result, its patent to a gene gave Monsanto monopoly rights over any plant in which its gene is incorporated without having to fully describe that plant in its patent claims. Thus, while Monsanto could not patent a plant, they were able to patent a gene and gain patent control over any plant in which the gene is incorporated. v. SAMPLING AND TESTING Apart from addressing thorny patent issues, the decision in Monsanto Canada Inc. v. Schmeiser determined other issues relevant in the contest of rights between farmers and biotechnology companies pertaining to patented crops. Monsanto's private investigators, without Mr. Schmeiser's consent, took crop samples of his canola crops that were growing in public roadways. They denied trespassing on Mr. Schmeiser's fields in order to obtain the samples. Nevertheless, Mr. Schmeiser argued that the plants that were sampled belonged to him and, in that sense, the samples were illegally obtained. The same is true of the seed Mr. Schmeiser had treated at Humboldt Flour Mills prior to seeding his crops Monsanto obtained a sample of the treated and untreated canola from Mr. Schmeiser's grain truck, without Mr. Schmeiser's knowledge or consent. Monsanto was able to do so because Humboldt Flour Mills had informed Monsanto that Mr. Schmeiser was about to have his seed treated at its facilities and Monsanto requested that Humboldt Flour Mills take samples of Mr. Schmeiser's canola seed for Monsanto. Mr. Schmeiser argued that the evidence was illegally obtained and, therefore, should be thrown out. He urged that the common law rule allowing illegally obtained evidence in civil proceedings was antiquated, and should be repealed by reason of the Charter which protects individuals from unreasonable search and seizure. Mr. Justice McKay, for the Federal Court Trial Division, declined to find that the samples were illegally obtained. He furthermore held that even if the

21 17 Charter applied, which it did not, the evidence would be saved under Section 24( 1 because its admission would not bring the administration ofjustice into disrepute. Mr. Justice McKay held: [71] Considering this case in light of the factors outlined in Collins, in my opinion, even if the evidence for the tests could be said to be improperly obtained by conversion of the defendants' property without consent, a matter I decline to determine, Mr. Schmeiser has civil remedies to address that issue. The evidence, samples of Schmeiser's 1997 and 1998 canola crops, is of conditions independent from and existing before this action was commenced. The evidence is relevant to the plaintiffs' case. It is not otherwise obtainable. Its introduction is not prejudicial to the defendants' case. [72] In my opinion, the evidence of tests conducted on all of the samples taken of the 1997 and 1998 canola crops of the corporate defendant is admissible. It is clearly relevant to the issues. It was not obtained illegally. I conclude that its admission would not bring the administration of justice into disrepute. On appeal to the Federal Court of Appeal, Madam Justice Sharlow agreed with Justice McKay's analysis: [68] In 1997, Monsanto obtained samples of Mr. Schmeiser's crops from the road allowances beside his fields. It was not established that any trespass occurred, but counsel for Mr. Schmeiser argued that nevertheless the samples taken were the property of Mr. Schmeiser, and the evidence of the tests from those samples should have been excluded because they were taken unlawfully. A similar argument is made for the results of tests of samples of canola seeds from Mr. Schmeiser's 1997 crop that Monsanto obtained from Humboldt Flour Mill. It appears that Humboldt Flour Mill routinely took "before and after" samples of seeds that they treat. They retained such samples from the seeds that Mr. Schmeiser brought for treatment in the spring of When Monsanto asked for those samples, Humboldt flour Mill obliged them, without informing Mr. Schmeiser. Counsel for Mr. Schmeiser argued that those samples were the property of Mr. Schmeiser, and that Humboldt Flour Mill had no right to give them to Monsanto without his consent. [69] Both of these arguments are based on the premise of seed ownership. The Trial Judge did not question that premise. I will not question it either, but will simply assume, without deciding, that Mr. Schmeiser was the legal owner of all of those samples. [70] Counsel for Mr. Schmeiser acknowledged that at common law, illegally obtained evidence is generally admissible in a civil dispute, but he argued that this Court should change the common law on that point to reflect the values underlying section 24 of the Canadian Charter ofrights and Freedoms:...

22 18 [71] The Trial Judge noted that section 24 of the Charter has no application to a dispute between private parties in which no agency of government is a party: Retail, Wholesale and Department Store Union Local 580 v. Dolphin Delivery Ltd., [1986] 2 S.C.R. 573 at He went on to say that this is not an appropriate case in which to move to evolve the principles of the common law as suggested by counsel for Mr. Schmeiser, because under the principles in R. v. Collins, [1987] 1 S.c.R. 265, the admission of the evidence would not bring the administration of justice into disrepute. I agree with his reasoning on this point, and his conclusion. In my view, the Trial Judge did not err in admitting the testing evidence from the roadside samples or the samples from the Humboldt Flour Mill. One questions whether the evidence would have been admitted, if Monsanto had trespassed on Mr. Schmeiser's fields to take samples. Nevertheless, the case clearly establishes that Monsanto is entitled to take samples of a farmer's field, where that field is over-seeded into public rightsof-way. Furthermore, Monsanto is entitled to samples taken of a farmer's seed when taken to a seed treatment or cleaning facility, if such a facility is prepared to hand over a sample to Monsanto. Typically, such evidence is used by Monsanto to obtain a court order allowing it to take samples from a farmer's field, as Monsanto did in Mr. Schmeiser's case. In hindsight, much expense and trial time could have been avoided had there been a better procedure in place having regard to the sampling of the canola reflected in the court order. Failing to use a third party expert to sample, store and test the samples resulted in major issues at trial over chains of possession, improper sampling procedures, improper testing procedures, and allegations of sample tampering. With the benefit of hindsight, the following provisions should be considered for any future order allowing the sampling of a farmer's field where the farmer is alleged to be infringing Monsanto's patent: 1. The parties will agree on or before a specified date to an independent agrologist to take the crop samples (provisions will need to put in to address the situation of where the parties do not agree. 2. The agrologist will design the sampling procedure with the aim of obtaining a fair representative sample of the crop growing on the farmer's field. I 3. The farmer and Monsanto will have the right to observe the sampling.

23 19 4. The sampling will take place when the plants are ripe and have produced seeds. 5. The agrologist will collect three sets of samples, one for the farmer, one for Monsanto, and one to be retained by the agrologist. 6. The sampling procedure will be designed to minimize harm to the farmer's field. _J Most agrologists are trained in crop sampling methods. Generally, they will collect seed samples from each field using patterns such as a "W", put the seed pods in a bag and thresh them. The threshed seed is then divided. This way Monsanto can test the seeds and would be obliged to share the results with the farmer. The farmer would then have a choice to accept the results, or proceed to have his copy independently tested. If the test results do not match up, there will at least be a third copy of the samples stored by the agologist with which to compare the results. v. CONCLUSION For better or worse GM crops have changed farming. Some have painted the dispute in Monsanto v. Schmeiser as a struggle over who will control the future supply of seeds - large seed companies or farmers. While Monsanto lost on the issue of remedies, it scored a significant victory in having its patent rights recognized.

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