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Monsanto decision hurts equity, innovation: Expert Ruling sows seeds of conflict, Stuart Laidlaw, Toronto Star, June 21, 2004

Canada's patent laws have been thrown into disarray by a recent Supreme Court decision that will take years of court battles to resolve, and could put technological innovation in this country in jeopardy until the mess is sorted out, one of Canada's leading patent law experts says.

And during those years, technological innovation could be made more difficult, and that, in turn, could hurt the world's most vulnerable people, he and others contend.

Others, however, are not so sure, arguing that patent laws today are no more complicated or confusing than they were before the court's May 21 decision.

But that might not be saying much.

In deciding against Saskatchewan farmer Percy Schmeiser in his battle against biotechnology giant Monsanto, the court redefined what it means to use a patent, changing more than 100 years of patent law in Canada says Richard Gold, an associate law professor at McGill University in Montreal.

Gold is director of the university's Centre for Intellectual Property Policy and author of Body Parts: Property Rights And The Ownership Of Human Biological Materials. He was among the first to look at how decades-old patent laws are being applied to biotechnology.

While he said he has nothing against patenting a gene, he said patent law needs to evolve to recognize that biotechnology is different from all other technologies.

"It self-replicates," he said.

And by not recognizing that biological inventions are different from all others, the courts risk making clumsy rulings that can only make the already complicated world of patents even more complicated, he said.

The ramifications of the May 21 decision, centred around canola in Schmeiser's fields that contained a patented Monsanto gene, will extend to all patent cases and all industries that rely on innovation, he said, whether it's biotechnology, computer technology or "better Christmas tree stands."

The purpose of patents is to induce companies to spend the money needed to come up with new products, secure in the knowledge that they will be able to recoup their investment by having a monopoly over the new products for 20 years to come.

Patents can be infringed by making, selling or using a patented product without permission. But while making and selling are fairly simple concepts, the question of what it means to use a patent can be more complicated, and has been the stuff of legal arguments for more than a century.

In ruling against Schmeiser, the Supreme Court decided that he had infringed on the Monsanto patent because a gene it held a patent on was found to be in the canola plants in his field.

In doing so, the court opened up the definition of "commercial exploitation" of a patent, or use. "They've introduced new concepts into patent law without fully understanding them," Gold said.

By introducing a test of commercial benefit to deciding whether a patent has been infringed, but without defining what is meant by this - or what would constitute a non-commercial use of a patent - the court has set itself up for years of litigation as cases come before it arguing the matter.

What the Supreme Court did not define, Gold said, other courts will be called on to define in future cases. And that could take years.

Universities, for instance, conduct much of the research done in this country, often involving patented products and processes. But because universities are not commercial entities, they may not be bound by patent law after the Schmeiser decision, Gold said.

But even those who are in business may be able to use a patent non-commercially, he said, without compensating the patent holder.

For instance, companies routinely examine another company's patented products to better understand what their competitors are up to.

But if they never use the patented innovation in their own products, have they actually derived a commercial benefit from the patent? Gold isn't sure. It could be argued, he said, that anything that advances a company's interests is commercial.

Tony Creber, a patent expert who intervened in the Schmeiser case on Monsanto's side, doesn't think patent holders will quibble with such use. He said researchers who are not trying to steal another company's ideas have little to worry about.

"Research use often is exempt," Creber, a lawyer for the biotechnology industry group Biotecanada, said in a telephone interview from his Ottawa office.

"Non-commercial is where you are doing it for private study or research, maybe if you are doing purely academic research. But if you are running a medical lab where you are processing blood that has been ordered by a doctor, that's commercial utilization."

He said the Supreme Court decision is "consistent with the law as it always has been. If you have possession for the purpose of commercial utilization, that's commercial use . . . . It's infringement."

In that way, because Schmeiser has the patented gene in a field of canola he intended to harvest and sell, he was putting the patent to commercial use, as far as the court was concerned, since a patent on the gene gave Monsanto a claim to the entire plant.

Creber doesn't expect the Schmeiser/Monsanto decision to lead to years of litigation, saying those involved in research fields already have a pretty good idea of what constitutes commercial use of another company's patent.

"It's pretty clear when you are using it for commercial benefit," he said. "You know it when you see it."

But such assurances offer little comfort to Jillian Clare Cohen, a professor at the University of Toronto who specializes in international property rights, and how those rights affect research into diseases of the Third World.

"Drug research tends to be directed to the diseases of the rich," she said. "Things like hair loss and erectile dysfunction."

Diseases such as such as Ebola and dengue fever, however, pose grave threats to more people, she said, but attract little research attention because the potential market - while large - is poor.

Much of the research is done by non-profit groups, so could be considered non-commercial, Cohen said.

Cohen is concerned, however, that the Schmeiser/Monsanto decision offers such researchers little guidance as to when they are infringing on the patents of commercial researchers, whose companies might sue.

"Therein lies the problem," she said. "It's not really clarifying a situation, it's muddying already cloudy situation."

It is simply not good enough, she said, to say that you know what patent infringement is when you see it.

"That means nothing," she said of Creber's argument.

Cohen, like Gold, worries that the matter will be left to the courts to decide how to further define commercial and non-commercial use of a patent. Gold warns that because the courts can only deal with the cases before them, leaving it to them to come up with a workable definition could take years.

But governments, Cohen said, can anticipate situations and write laws to meet them. It will take constant pressure, however, to get governments to act, she said.

"Political decision makers don't want to have to make tough decisions, so they pass the buck to the court system," she said.

Again, Creber is not worried. Anyone worried about whether they are infringing a patent is likely to just pay the patent fee rather than risk a lengthy and costly court battle.

Besides, he said, borderline cases are rarely, if ever, taken to court. "Let's be blunt, if it's truly borderline, the patentee will never know about it," he said.

"I do a lot of patent infringement (cases), sand it's got to be pretty blatant before the patentee discovers it. So as a practical matter, it's not going to arise very often. So I'm not too worried."

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