Percy Schmeiser

Where the Wild Wind Blow:
Genetically Altered Seed and Neighboring Farmers

JILL SUDDUTH / Duke Law & Technology Review n.0015 3may01

iBRIEF / Biotechnology

In March 2001, agro-business giant Monsanto won a victory in Canadian Federal Court over Saskatchewan farmer Percy Schmeiser. This case sets international precedent for appropriated seed cases and illustrates the primary concerns American courts must face as they consider Monsanto’s prosecution of 22 cases against American farmers.

Introduction

Percy Schmeiser is a farmer in the town of Bruno, Saskatchewan, Canada.[1] He has spent the last 50 years of his life farming canola and has, like many other local farmers, had his ups and downs over the years. But things seemed to plummet straight down in 1998, when agro-business giant Monsanto contacted Schmeiser and accused him of illegally planting its patented "Roundup Ready"[2] canola seed without the requisite contract.[3] Unlike other farmers who have crossed paths with Monsanto in the past, Schmeiser refused to pay Monsanto’s requested fees. So Monsanto took Schmeiser to Canadian Federal court seeking damages of $145,450 (Canadian Dollars).[4]

Mr. Schmeiser claimed to be wrongly accused, stating that the seeds blew onto his farm without his knowledge or permission. Schmeiser noted that his farm is surrounded by other farms using the patented seed and that his fields are located along highways connecting to grain elevators. Monsanto was unmoved by these claims, arguing that even if the seed blew onto Mr. Schmeiser’s property, he still cannot sell it - the seed and resulting crop are the property of Monsanto as patent-holder of "Roundup Ready."[5]

Canadian Federal Court Judge W. Andrew Mackay held weeks of hearings in the case and announced his decision in favor of Monsanto on March 29th, 2001.[6] Judge Mackay awarded damages based on Schmeiser’s 1998 profits, as well as what would have been the amount of technical fees for contracted use of the seed.[7]

All eyes have been on the Schmeiser case as the first international precedent in Monsanto’s genetically modified seed cases. The Canadian court appeared to hold that it was irrelevant whether or not Schmeiser took advantage of the modified strain.[8] Judge Mackay was quoted as saying that even if the seed was windblown onto Schmeiser’s property it was Schmeiser’s duty to destroy it as soon as he realized that it was the patented strain; it was no Monsanto’s duty to prevent it from spreading.[9]

Monsanto’s Image

Monsanto has suffered from disfavored status in the public’s eyes for quite a while now, despite obvious efforts by its public relations department. It has faced criticism from governments, from such crusaders as Ralph Nader, and even conservative business journals, such as Forbes. Monsanto has a long history of association with potentially suspicious scientific endeavors ranging from the distribution of Agent Orange, to the use of bovine growth hormones, to the creation of genetically modified foods. All in all, Monsanto has kept ordinary people on edge, and social justice and environmental activists very busy. Suing Percy Schmeiser is nothing out of the ordinary.

One area of concern among commentators is Monsanto’s methods for detecting "seed pirates," those using Monsanto seeds without a license. Monsanto employs a private investigation firm, Robinson Investigations, to question farmers and take samples from crops in both the U.S. and Canada. Farmers claim that Robinson and Monsanto use their weight to bully and intimidate farmers to obtain information and Monsanto even uses a toll-free telephone line that allows farmers to report others for seed piracy. Monsanto claims that its tactics are useful deterrents and refers to the practice as "auditing."

American Patent Law and the 22 Pending Cases

Seed patents and altered natural substances are nothing new to patent law. Congress first considered the patentability of plants in 1930,[10] and currently plants are patentable under three statutes, the utility patent statute, the plant patent statute, and the Plant Variety Protection Act.11 Specifically, plants may be patented when they have been substantively transformed into man-made articles through the introduction of characteristics that would not result naturally in that substance.[12] Over the years there were significant debates on a more theoretical level regarding whether a new plant was a discovery or a man-made creation.[13]

While plant and seed protection are not new, the issue of how to deal with a patented-product that appears to have a natural tendency not to remain under the clear control of the patent-owner and his licensee - the problem of the windblown patented seed - is new. Under U.S. patent law, the patent owner has the right to use or license her use of her patented product.[14] This is what allows Monsanto to control the use of "Roundup Ready" in the United States.

In the United States, direct infringement of a patent is defined as the making, using, selling, or offering to sell of the patented product within U.S. jurisdiction.[15] In specific, a patent owner of a sexually reproduced seeds holds the rights to "exclude others from selling the variety, or offering it for sale, or reproducing it, or importing it, or exporting it, or using it in producing (as distinguished from developing) a hybrid or different variety therefrom."[16] There are four primary defenses to direct infringement: invalidity of the patent, fraudulent procurement, misuse, and laches or estoppel.[17] A few other defenses have been made available by virtue of 35 U.S.C. §282, but these are narrow exceptions that would not apply to the neighboring farmer, such as Schmeiser.[18] There are also a few doctrines that have appeared in courts over the years, such as first use (exhaustion), implied licensing, experimental purpose, legal estoppel, and bona fide purchaser.[19]

It appears that no innocent infringement doctrine would necessarily protect U.S. farmers dealing with windblown patented seeds, and none of the major defenses to infringement would necessarily apply either. The farmers may be able to make a case using one of the court-made doctrines such as an implied license (resulting from the very nature of the "escaping" seed), but Monsanto would surely fight this argument. However, it could be argued that what Monsanto was seeking in the Schmeiser case might be rights not at all accorded to the patent-owner under American law - i.e. a holding for Monsanto in such a case would be an unreasonable extension of our patent laws and thus misuse of patent.[20]

Cultural and Agricultural Concerns for Farmers: The Aftermath of the Schmeiser Case

Schmeiser was a test case for Monsanto. According to a spokesperson, Monsanto is currently pushing forward on prosecution of roughly 22 cases against American farmers.[21] Many Governmental agencies and farmers in countries such as India, Great Britain, and the United States have anxiously awaited the Schmeiser result. Clearly, the impact of this decision goes far beyond the edges of Percy Schmeiser’s farm.

Many American farmers have begun to grow and market foods derived from genetically modified seeds, but many are resisting this technology. But their resistance may be futile. Examples show that genetically engineered seeds can contaminate organic fields through wind or animal distribution despite such precautions as tree line barriers. Some sources predict American farmers could lose millions of dollars in profits from genetic contamination.[22] On top of these lost profits, the farmers may have to pay Monsanto for their contamination.

Farmers are also concerned that newly patented seeds will threaten the historic and economical practice of seed saving by stifling the practice in non-patented crops possibly contaminated by patented seeds. It is perhaps a justified fear in light of the bill Monsanto encouraged to be introduced into the Ohio State Legislature last year requiring registration of all seed cleaning and conditioning activities. The sponsoring representative of the bill quickly backed away after the strong response, but suggestions remained that it would be reintroduced later is perhaps another form.[23]

Perhaps the largest concern for American farmers is the very one that infuriated Percy Schmeiser: Can Monsanto recover damages when seed is spread to the fields of non-paying, non-contractual farmers through natural means?

Conclusion

The Schmeiser case is the first case regarding the use of patented seed without a contract, regardless of how that seed is obtained. This case presented several difficult issues, but the Canadian court provided little international guidance on these issues from either a policy or theoretical standpoint. These issues will need to be addressed in the 22 pending cases brought by Monsanto against U.S. farmers. It does not appear that a similarly situated farmer in America would have a defense to Monsanto’s claims, but several questions remain:

Can a U.S. patent-owner recover for damages for unlicensed seed use when that seed was planted only through natural distribution, such as wind or animal transportation? Is it relevant if the farmer took advantage of the genetically altered characteristics of that seed? Can a U.S. organic farmer recover for damages if his or her crop is contaminated by genetically altered seed that is spread through natural means despite preventative measures undertaken by the organic farmer? If damages can be recovered by organic farmers, then from whom? The neighboring farmer or the patent owner such as Monsanto?

By: Jill Sudduth [24]

Footnotes

1. Mr. Schmeiser’s case has resulted in the launch of a personal Internet site covering his side of the story. Percy Schmeiser, Monsanto vs Schmeiser, http://www.percyschmeiser.com  (visited May 3, 2001).

2. The "Roundup Ready" canola seed that grew in Mr. Schmeiser’s fields is resistant to glyphosate, an herbicide marketed by Monsanto as "Roundup." The seed is sold only to farmers willing to sign a contract preventing them from engaging in seed-saving practices for planting in later years. Once a farmer agrees, they spray their fields with "Roundup," which kills everything but the "Roundup Ready" canola.

3. Monsanto’s homepage may be accessed at http://www.monsanto.com  (visited May 3, 2001).

4. Monsanto Canada Inc. v. Schmeiser [2001] FCT 256.

5. See Canadian Broadcasting Company, Blowin’ in the Wind, [below]. This site contains links to some of the documents from the case, such as affidavits and memoranda.

6. The Canadian Federal Court decision may be viewed in full (.pdf document format) from the Percy Schmeiser site, supra. [Link available from www.percyshmeiser.com]

7. Monsanto Canada Inc. v. Schmeiser [2001] FCT 256.

8. GM Ruling Against Farmer Brings Shockwaves, The Dominion (Wellington), April 3, 2001.

9. Kurt Kleiner, Victory for Monsanto, New Scientist, April 7, 2001.

10. 1-1 Chisum on Patents §1.05.

11. 1-1 Chisum on Patents §1.05. The Plant Variety Protection Act was enacted in 1970 and added specific protection for plants that are sexually reproduced, i.e. grown from seeds.

12. The primary U.S. Supreme Court case which discussing patents for quasi-natural or natural substances is Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 76 USPQ 280 (1948).

13. See 1-1 Chisum on Patents §1.05.

14. 1-16 Chisum on Patents §16.01.

15. 35 U.S.C. §271(a).

16. 7 U.S.C. §2483.

17. See 1-19 Chisum on Patents §19.01.

18. See 35 U.S.C. §282.

19. 1-19 Chisum on Patents §19.01.

20. The theory here might be something similar to issues in trade secret law: once the protected-material has clearly escaped control of the owner, the law no longer offers protections.

21. Bill Lambrecht, Monsanto’s Win in Court Sharpens Battle Lines in Biotech Fight, St. Louis Post-Dispatch, April 1, 2001.

22. Anthony Shadid, Blown Profits: Genetic Drift Affects More Than Biology--US Farmers Stand to Lose Millions, The Boston Globe, April 8, 2001.

23. Brian Williams, Battle Over Farming Growing with Monsanto Seed Debate, The Columbus Dispatch, April 4, 1999.

24. My thanks to Robert Hyde for substantial editing work and advice in preparation of this iBrief.

source: http://www.law.duke.edu/journals/DLTR/ARTICLES/2001dltr0015.html 25oct02

Blowin' in the Wind Canadian Broadcasting Company (CBC)

Hear this online from CBC (Real Audio)

Percy Schmeiser has spent fifty years farming his land near Bruno, Saskatchewan. Now suddenly, Schmeiser is fighting what may be the strangest battle in the history of agriculture.

Percy Schmeiser

"My grandfather and my father homesteaded here," Schmeiser says. "There was no such thing as chemical companies, or even seed companies. They were free and independent."

Schmeiser learned a long time ago that the wind is often a farmer's worst enemy. Wind blows the seeds and pollen of weeds into farm fields, choking out crops.

But now the wind may have brought a new threat to Schmeiser's farm, forcing him to fight for control of the seeds planted in his field.

Schmeiser has picked a fight with the biggest boy on the block; he's battling the world's largest agrochemical company, Monsanto.

Monsanto makes the weedkiller called Roundup. Spray it onto a field and it kills everything growing there. But now Monsanto has genetically engineered a canola seed so that Roundup doesn't hurt it. That means a farmer can spray Roundup herbicide over an entire field, kill all the weeds growing there, and not hurt the canola crops, as long as it comes from Monsanto's special seed.

Many Canadian farmers want the special canola seeds containing Monsanto's DNA. But while farmers can buy the special seed, Monsanto keeps the rights to the DNA itself. That's what makes the seed special and that's where Monsanto makes its money.

Farmers traditionally plant their fields using seeds saved from their previous year's crop.

Just like in human beings, the DNA of seeds is passed along from generation to generation. A farmer could buy Monsanto's special seed once, then never have to pay for it again; all the benefits, without the cost.

So the problem for Monsanto is protecting its investment. In the brave new world of agriculture, it's Monsanto versus the farmer.

Farmers buying Monsanto's seed must sign a contract promising to buy fresh seed every year.

Then, they must let Monsanto inspect their fields for cheating.

Randy Christenson

Monsanto's regional director in Western Canada is Randy Christenson. He says the company has to be tough.

"We've put years, years and years of research and time into developing this technology. So for us to be able to recoup our investment, we have to be able to be paid for that, Christenson says.

Percy Schmeiser says he's never used Monsanto's seed. He saves the seeds from his own crops, then replants them in the spring.

Percy Schmeiser

But Monsanto investigators say they've found Monsanto DNA in Schmeiser's crops. Monsanto says Schmeiser never paid for the rights to use its DNA. Now they're suing Schmeiser for the money.

"I've been farming for fifty years, and all of the sudden I have this," Schmeisser says, "It's very upsetting and nerve wracking to have a multi-giant corporation come after you. I don't have the resources to fight this."

Monsanto first got a tip about Schmeiser on its toll-free snitchline. Monsanto asks farmers to turn-in neighbors they suspect of growing the seed without paying.

Monsanto uses private investigators from a Saskatoon firm to check out the tips. Investigators patrolling grid roads took crop samples from Schmeiser's fields to check for Monsanto's DNA.

Monsanto doesn't apologize for playing hardball. But the Monsanto representatives insist the whole process is very friendly. Monsanto calls its investigations, "audits."

"Yes, we do have a group that do audit, they do make farm visits, but they do it in a way that is extremely respectful to the farmers," Christensen says "And, in fact, I would encourage you to talk to the farmers who have been through it. They're very comfortable with what they're doing." We never, never, go on their property, never, without their permission."

But court documents show Monsanto ordered its investigators to trespass into Schmeiser's fields and collect samples.

Then Monsanto agents paid a secret visit to the company that processes Schmeiser's seeds for planting.

Gary Pappenfus was the manager.

Gary Pappenfus

"We were approached by someone in Monsanto asking if Percy had some seed treated there, we said there was. They asked for a sample. I asked my superior in Saskatoon if it was okay to give a sample, he said it was okay, so we did," Pappenfoot says.

Monsanto says Schmeiser has stolen its DNA.

In fact, Monsanto has accused dozens of farmers of growing the special seed without paying for it.

The problem is, Mother Nature has been moving DNA around for thousands of years. Monsanto's is just the latest.

"It will blow in the wind. you can't control it. you can't just say, put a fence around it and say that's where it stops. It might end up 10 miles, 20 miles," Schmeiser says.

Schmeiser is backed up by some impressive research. scientists from Agriculture Canada say wind can blow seeds or pollen between field, meaning the DNA of crops in one field often mixes with another.

Seeds or pollen can also be blown off uncovered trucks and off farm equipment.

But Monsanto seems to be saying it's up to farmers to dig out any Monsanto crops blowing into their fields.

Without a microscope, there's no way to tell regular crops, from crops carrying the Monsanto DNA.

This means even the seed farmers keep from their own crops may contain Monsanto's altered gene.

Edward Zilinski

Last year, Edward Zilinski of Micado traded seeds with a farmer from Prince Albert. This is an old farming tradition. But the seeds he got in return had Monsanto's DNA. Now Monsanto says Zilinski and his wife owe them over $28,000 in penalties.

"Farmer's should have some rights of their own!" Zilinski says.

Monsanto's heavy-hand is sparking the anger of many farmers in Western Canada.

The Kram family in Raymore say planes and a helicopter have buzzed their fields. The couple says agents dropped weedkiller on their canola field, to see if the crops had the Monsanto's gene.

Monsanto says they had absolutely nothing to do with it.

Elizabeth Kram

The Krams think otherwise: "We are honestly disgusted with the way things are going," Elizabeth Kram says "Who put the canola in? It is the farmer. It doesn't belong to Monsanto or anybody else and I don't see anybody else's name on the titles of all the land we own. It's my husband and myself. Nobody else. [We're] thoroughly pissed off. "

For his part, Percy Schmeiser believes Monsanto hopes to force farmers into accepting genetically engineered products.

Schmeiser is standing up to Monsanto in court. "I'm going to fight, and fight and fight," he says. "Because what I believe what is happening to farmers is wrong. And I'm fighting this not just for myself, but for my children and my grandchildren. and for my farmer's friends."

"As you move to adopt new technology, whether it was from the horse to the car, there was a great deal of controversy, questions being asked, on how to deal with certain issue," Monsanto's Christensen says.

But the real question is this, can Monsanto or anybody put a patent on a piece of nature?

The answer could determine who controls the future of world farming.

source: http://tv.cbc.ca/national/pgminfo/canola/index.html 25oct02