A headline decision by the Indian Supreme Court on January 8 in Monsanto Technology v Nuziveedu Seeds overturned April 2018’s Delhi High Court Division Bench decision invalidating a Monsanto process patent over Bt trait cotton.
In its place, the Supreme Court restored a March 2017 decision by Mr Justice Gauba of the Delhi High Court. This decision, which was in the nature of an interim order, had returned some tentative findings on the contractual disputes between the Claimant (Monsanto) and the Defendants (Nuziveedu and others), and issued directions requiring the parties to operate, with some modifications, under the same contractual terms it found Monsanto to have violated in November 2015.
In opting to restore Mr Justice Gauba’s decision to bind the parties over until the completion of a full trial, the Supreme Court has, remarkably, reaffirmed a view taken twenty-two months ago by a judge who admitted to no little trepidation in ruling on a set of disputes he acknowledged as constituting “complicated matters”. At a minimum, it also means that the Supreme Court ruling means that a status quo that neither party was satisfied with in March 2017 has been now been reinstated.
(For a detailed background to the dispute, see this April 2018 discussion of the Division Bench decision.)
Let us now examine the observations made by the Monsanto Supreme Court in arriving at its finding.
“Summary Adjudication of a Technically Complex Suit”
The principal objection of the Monsanto Supreme Court to the Delhi Division Bench judgment it sits in appeal of is technical in name, but not in construction.
The Supreme Court characterizes the subject matter of the case — an inquiry into whether Nuziveedu was infringing Monsanto’s patent — as scientific and “technically complex”. It reasons that such cases require expert evidence and examination of witnesses, in preference to relying on material which is publicly available and, for the most part in this case, had not even been exhibited before the Delhi High Court, where Monsanto filed suit in 2016.
“Summary adjudication of a technically complex suit,” says the Supreme Court, is “neither desirable nor permissible”.
On the strength of this impression, after having heard arguments at length on this “technically complex” subject matter, and without offering a single substantive reason for why the Division Bench’s opinion invalidating Monsanto’s patent was unsatisfactory, the Supreme Court sets aside the Division Bench judgment.
Dealing with Scientific Inquiries
There are two points to be made in defence of the Supreme Court’s view.
The first is an admission: that the subject matter in this case is, in fact, quite complicated. Indeed, a prominent criticism of the Division Bench ruling was that it tried and failed to sufficiently appreciate the science involved. As such, it would be duplicitous to now criticize the Supreme Court for admitting its unwillingness to try at all. Supreme Court judges are not subject matter experts; the chance of oversight or improper appreciation absolutely does exist, and the consequences of such oversight are considerable.
The opposition to this view, however, is easily constructed.
First, let us concede that the Supreme Court is right to prefer ruling on a case with expert evidence than without. This is a perfectly acceptable preference. In reality, however, in a contested case such as this one, even with expert evidence at hand, generalist judges will eventually be tasked with finding one set of scientific explanations more persuasive than others.
This position is further strengthened at interim injunction hearings, where the very purpose of the hearing is to trade off expediency with comprehensiveness, and to take a reasonable view based on summary material. To be clear, this is not to say that courts sitting in review of interim injunction rulings should prefer guessing on a scientific explanation where one may emerge in time through expert evidence. It is, instead, to remember that, en route to achieving the aim of an interim hearing — which the Supreme Court insists Monsanto must be treated as — the evidence examined will often be less than perfect.
Therefore, the inquiry in such cases ought to be this: what else does the deciding court need to examine to come to a reasonably informed prima facie opinion, and can it be called for presently? Far from commencing such an inquiry, the Monsanto Supreme Court, having heard the parties and interveners at length on the merits of the case, finds such an assessment to be beyond its powers. Instead, it simply insists that the Delhi Division Bench should have restricted itself to reviewing Mr Justice Gauba’s interim injunction ruling.
This presents a second difficulty with the Supreme Court’s position: having found that the Division Bench was in error in not restricting itself to an interim consideration, the Supreme Court does not explain why its restoration of Mr Justice Gauba’s decision was the correct course of action. The only explanation offered is that the decision by Justice Gauba is in order, and merits no interference.
The effect is an absurd one: Mr Justice Gauba’s decision, made without taking into account Nuziveedu’s case for invalidity of Monsanto’s patent, is ruled more “satisfactory” than the Division Bench ruling which did consider the case for invalidity of Monsanto’s patent.
[A sidebar to this discussion (taken up by the SpicyIP blog here) is also invites some thought: did the parties consent to the Division Bench deciding the claims in the suit in full without a trial? The Division Bench judgment suggests that Monsanto did, but, per the Supreme Court, this consent to a full adjudication minus trial is disputed by both sides.]
A History of Trial
The second defence of the Monsanto Supreme Court’s hands-off approach to scientific subject matter is a historical one.
There is considerable force behind the view that the attitude of the Indian Supreme Court towards intellectual property cases in recent years has been marked by a single-minded urgency to usher such cases towards trial. It has been a long-running grouse of the Supreme Court, going back at least to the start of this century, that intellectual property cases take too long at the preliminary stage, and should be put to trial as fast as possible. On the surface, the approach of the Monsanto Supreme Court is consistent with this attitude: a judicial hands-off until a trial has been conducted.
However, this carries the handicap of being a conversation that the Supreme Court has, in large part, been having with itself in a vacuum. The pushback against this trial-at-all-costs position by Indian intellectual property litigants down the judicial hierarchy has been as consistent as it has been widespread. Until the introduction of the Commercial Courts Act in some Indian jurisdictions arrested the problem to some degree, the attitude of intellectual property litigants has been characterized by persistent disobeyance of trial timelines in favour of multiple shots at interim appeals.
To be sure, there are well-founded practical reasons for this. These range from the time-sensitive nature of the underlying rights (patents, for instance, carry built-in countdown clocks) to the broad coverage of interim orders (often resulting in the shutting down of principal avenues of, if not entire, Defendant businesses), and skew the incentives of litigants towards seeking quicker outcomes through the appeals system rather than through trial.
In this backdrop, for the Monsanto Supreme Court to now reverse a lower court’s finding because it entered full judgment in substitution for a trial instead of restricting itself to a interim opinion, therefore, seems pointedly anachronistic.
However, the historical justification suffers for another reason: the assumption that scientific expertise of the kind needed to decide such cases is exclusively accessible through trial is often exposed as a faulty one in practice. The setup of interim injunction hearings in India enforce few limitations on the introduction of materials before courts. As a result, exhaustive, mini-trial-style hearings at the interim stage are commonplace, eroding the value of trial as an exclusive avenue for expert evidence.
Indeed, parallel to the Indian Supreme Court’s enthusiasm for shovelling intellectual property cases in the direction of trial, there has also been an entire generation’s worth of substantive review by Indian courts in patent cases without trial. This point is easily made at the Supreme Court itself. An examination of the Supreme Court’s recent body of precedent offers several rulings on pure questions of patent law, including on patent appeals and patent opposition proceedings, aside from substantive review in Novartis, Aloys Wobben, and, in fact, even an excellent scratch opinion in a 1986 ruling involving another Monsanto patent.
Elsewhere, the nine-year tussle between Roche and Cipla at the Delhi High Court over Roche’s Erlotinib patent makes the point better than most: two interim injunction opinions (in 2008 and 2009) returned substantive scientific findings on material that would comfortably qualify as “technically complex” per the Monsanto Supreme Court. These were followed by two post-trial judgments (in 2012 and 2015), which did so with the benefit of a trial. If there is a reason to prefer the second set of opinions over the first, a lack of appreciation of “technically complex” subject matter decidedly does not qualify as one.
Over and above specific examples, though, the objection to the approach by the Monsanto Supreme Court is rooted in norm-setting: if the Supreme Court shies away from interfering in a patent case citing scientific distress, and makes no effort to clarify the labour of a lower court’s obvious struggles with the same science, it could quite easily embolden litigants to tactically press the science button to escape judicial scrutiny.
No Clarity on Directions
The final point of note from the Monsanto Supreme Court arises from a disagreeable understanding of the very opinion it seeks to restore.
Two points appear prominent in this regard.
First, the Supreme Court’s baseline position appears to be to treat a full adjudication after trial (and, specifically, on whether Monsanto’s patent is invalid) as the polar opposite of reviewing an interim injunction finding. As I have already suggested, this is a false binary: answering whether an interim injunction is justified on facts frequently involves adjudicating on the validity of the patent, as a component of the inquiry assessing whether the Claimant is entitled to an interim injunction.
However, the problem runs deeper still: Mr Justice Gauba did, albeit in a watered down manner, affirm that Monsanto’s patent did not suffer from an obvious infirmity, on the back of a pidgin “threshold challenge” under Section 3(j) of the Patents Act. This alone cuts the legs out from under the Supreme Court’s entreaty that a full adjudication is necessary to rule on validity. If it does restore Mr Justice Gauba’s decision, it would be forgivable leap to believe that it amounts to a restoration of Monsanto’s patent as well.
Second, while it is clear that Mr Justice Gauba’s decision now holds the field again, there remains little clarity on what this actually means. There is no specific instruction by the Supreme Court on the point, nor is there a single sentence on which of Mr Justice Gauba’s 11-point directions are to revive, and to what effect.
One such direction suffices to illustrate this impediment.
The last of Mr Justice Gauba’s March 2017 directions warns that any default by Nuziveedu in making the trait fee payments to Monsanto would mean that they stand injuncted against the continued use of Monsanto’s patent. (Presumably, this is prospective, since the directions originally permitted four weeks from March 28, 2017 for the directions to be executed, which time has long since elapsed.)
There is considerable confusion over this element of Mr Justice Gauba’s finding. The only assistance offered by the Supreme Court is of attaching the description “nature of the injunctive relief granted” to describe Mr Justice Gauba’s order. This suggests that the contemplation is of an automatic injunction upon the Defendants defaulting — after all, the words “injunctive relief” would hardly describe a situation where no injunction is intended to follow. Yet, the words used by Mr Justice Gauba in Para 132 are that the Defendants “cannot be injuncted against the use of” Monsanto’s intellectual property, so long as the sub-licenses continue to operate.
These objections stand apart from a more fundamental one (addressed at length here): under Indian contract law, specific enforcement cannot be processed on a contract that is terminable by its construction. Injunctions, in turn, cannot be processed on breaching contracts that cannot be specifically enforced. The sub-licenses in this case, unarguably, were terminable, which throws the execution of the injunction — if one does indeed attach to non-compliance — into serious doubt.
Summary of Findings
In summary:
There is no ruling by the Supreme Court on the validity of Monsanto’s patent. More specifically, the Supreme Court expresses no opinion on Mr Justice Gauba’s examination of the “threshold challenge” to Monsanto’s patent under Section 3(j) of the Patents Act.
Mr Justice Gauba’s finding that Monsanto illegally terminated sub-licenses in November 2015 is restored.
In line with Mr Justice Gauba’s directions, the parties are to agree to a trait fee and modify attendant terms of their contracts in line with the 2016 GM Technology Agreement Guidelines issued by the Government of India.
Also in line with Mr Justice Gauba’s directions, should an agreement not be reached, the Defendants are to deposit the trait fee “at such rates as are in accord with the prevalent local laws, as in force or revised from time to time” before the Delhi High Court. Monsanto, in turn, would be entitled to draw on this money, to keep the contract rolling. (Presumably, the directions towards maintenance of accounts, payment and deposit of fees carried by Mr Justice Gauba’s order will also revive.)
Worrying Portents for a Hands-Off Future
Early reactions to the decision confirm the sense that the Supreme Court has disappointed, and is in error.
Substantively, it has decided next to nothing: on the interpretation of Section 3(j) of the Patents Act, or on its overlap with rights under Plant Varieties Act, or on the degree to which this furrow of Indian law can lean on foreign precedent, or on India’s obligations on this subject under TRIPs, or on a host of other legal questions.
It has, instead, granted its imprimatur to an opinion that possibly threatens Nuziveedu with an automatic injunction for not paying up on a contract that Monsanto is found to have illegally terminated. (Worse still, it is not clear if this is, in fact, what the opinion intends to convey.)
It has restored the tentative findings of a narrow, twenty-two month old judicial opinion that is acutely alive to the possibility that its own findings are “tentativ[e]…incomplete, and possibly open to debate”. In so doing, it has wiped those twenty-two months off the clock for Nuziveedu, in favour of a full trial which, recent history shows, is unlikely to arrive at findings any more thorough than those carried by the very judgment the parties were in appeal of before this Supreme Court.
Of infinitely greater concern, though, is the Monsanto Supreme Court’s suggestion that science-heavy findings ought not to be the subject of substantive appellate review unless supported by a trial. This not only upturns a rich history of Indian courts doing precisely the opposite to much acclaim, but it also fundamentally misunderstands the purpose and the necessity of doing so where it is warranted.
And at the start of a new year that is primed to bring several such scientific inquiries to its doors, the prospect of a Supreme Court prepared to stay far away from engaging in such inquiries is a bleak one for Indian intellectual property law to countenance.
Comments