How Does Monsanto Apply GMOs Patent into Company Operation?

Record of the Visit to St. Louis, Part I

 (By You Yunting) In late March, the author had the opportunity to take a journey to the United States at the invitation of the US government in order to better understand how the US IPR system operates. The third he visited was St. Louis in the midwest, and while he was there there he visited the well-known bio-tech company, Monsanto Company (NYSE: MON, the “Monsanto”), and was received by senior legal officers. The following is the brief record of the visit there. The author notes that the title of this essay only covers part of the content of the essay and should not be adopted as theory.

First, the recipient introduced commercial aspects of the patent right, which include five parts:

1. Freedom to operate of the technology (“FTO”). Considering one piece of technology may involve more than one patent, if the company has a patent in one area, it does not mean it will not face risk in implementing the technology. For this reason, the company’s IPR department must retry the FTO before implementing the technology in order to reduce the risks to the business.

2. Value Capture

3. Competition advantage

4. External cooperation

5. Stewardship

Afterwards, Monsanto introduced the aid that it has delivered to developing countries. The main problem is that the planet’s population is getting bigger and bigger but there is less and less arable land. Therefore, genetically modified organisms (“GMO”) are essential for increasing of the production. So far, Monsanto has aided many developing countries; for example, drought resistance corn can provide efficient water use. During their introduction, they also mentioned golden rice, which has generated a lot of argument in China (later internet research revealed that the Monsanto owns the golden rice patent), and has also helped people in the developing countries fight against diseases.

Afterwards, we raised several questions. The first one concerned the influence of the revision of US Patent Law on companies. The reply was that patents will use the “first application” principle instead of the “first use” principle and companies will suffer the influence to some extent. Accordingly, they have adjusted the cooperation method with their partners to meet the changes in the Patent Law.

The second question was how the company finishes FTO retrieval before launching new products. The answer was that nearly all companies have scientists with little knowledge of the law and legal personnel with little knowledge in technology. The key therefore lies in coordination. Now, the company has many scientists from academics, and the company’s legal department delivers regular legal training to them that is very detailed. At the same time, the company’s business departments also so patent searches when they have new “ideas.” The legal department regularly checks the important technological progress of the company to see whether it could apply for patents. We also asked when the company will make FTO retrieval, and the answer was “all the time.” That means that FTO retrieval is carried out throughout the entire process from “idea” to “implementation.”

The author had the following question: one of Monsanto’s most important commercial tactics is adding anti-weed killer genes to the company’s seeds. This means that once the user purchases Monsanto’s seeds, they have to buy the company’s weed killer. This creates a suspicion of bundled sales, which may lead to an investigation by Federal anti-trust authorities. Based on this, how do the legal department and the business department coordinate in order to minimize legal risks? The company replied that making sure their business does not violate law is their responsibilities, no matter what department it is is. Therefore, the legal, business and marketing departments must coordinate among themselves to ensure business tactics adhere to commercial ethics. Specifically, during development of the product the company stays in dialogue with the US Justice Department (note from the author: both the Justice Department and the Federal Trade Commission, FTC, are the organs charged with anti-trust issues), which demands that all products meet the regulations in the law.

The receiving party further explained that they produced bad produced in past wars, but they have made changes (what they mentioned may refer to the environmental pollution caused by Monsanto’s defoliants used in the Vietnam War). Now, the company’s new products are reviewed through dialogue between the company and the Justice Department and the FTC. Therefore, each product receives deep discussion before its official launch, and the company believes that good products can only come through discussion between their people and the departments.

The next question we posed was how does Monsanto decide which countries to target with its PCT patent applications? Monsanto’s representatives answered that the application place is decided by the following principles: 1. Where to produce? 2. Where to manufacture? (the main difference between the “produce” and “manufacture” refers to the planting and the manufacture of the seeds) 3. Where to export? 4. Are any other competitors producing, manufacturing, or exporting there?

Afterwards, we asked some questions about the lawsuits filed by Monsanto in Argentina and the EU. According to the Monsanto’s Patent Licensing Agreement to the farmers for use of the seeds, the farmer must not keep the seeds for further cultivation. But, as regulated by the law in Argentina, the patent rights on GMO were not licensed. Considering that there was no cost for the patent fee, the Argentine farmers have a price advantage for the GMO products and could export them in large amounts to the whole world. Monsanto then filed a lawsuit against the Argentine bean dealers in the EU for the patent infringement, but as decided by the EU court, the Technological Order for the Bio Technology in EU follows the EU Bio Technology Directive, which focuses on the functional gene when protecting the GMO patent. But, in the case, the bean pulp is no longer with the function of the seeds, and for this reason, it is not within the protective scope of the Directive. Based on this, the court denied Monsanto’s claims in the lawsuit. Yet, the company was dissatisfied with the judgment, and according to their opinion, their product has been granted the patent right through PCT. Therefore, it has patents that are protected by the law, and they were surprised by the judgment made in the case.

The other visitors also asked questions on the security of GMO product. Specifically, will GMO food lead to sterilization? The answer is that with the rapid development of science, many problems are beyond the understanding of the ordinary person, and the greatest fear of GMO products comes from the public’s lack of understanding, but we had the chance to visit and know the company as well as the whole process of the production. In fact, GMOs have are not very different traditional plant genes. The company’s main method is importing exogenous genes into plants, and there are many examination institutions that supervise, including the Agricultural Department and the Federal Food and Drug Administration. In other places around the world, Monsanto products also pass the examination of the local governments. So, the company is open to the public, and open to all. Furthermore, currently, many institutions around the world have their own repots on Monsanto’s products.

In the discussion, the author also asked questions about the patent lawsuit between Monsanto and Dupont, and that case has an influence that is not smaller than that produced by the Apple and Samsung lawsuit in the IT field. The next day, we visited the Federal Court of St. Louis, the details of the aforesaid cases would be discussed in the following posts, which we will share with our readers later.

In closing, the above record was taken by the writer himself, who recorded some content that might be incomplete or inaccurate. He decided to put them on our website primarily to share with our readers, and any opinions or corrections are warmly welcomed. Since the US authorities highlight the protection of personal information, unless the other party agrees, we will not publicize the names of any of the involved parties on the Internet; thank you for your understanding.

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You Yunting86-21-52134918

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