Plant Patent Monopolies

Organization for Competitive Markets
P.O. Box 6486
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Newsletter, June 2002
Plant Patent Monopolies

The government not only tolerates monopolies, it establishes them.
Consider patent law. Back in the days of Thomas Edison, patents were
conceived as a way to spur innovation. During the patent period, the
inventor receives 20 years of monopoly rights to commercialize the
invention. After the patent expires, the new widget is free game for all.
The public policy bargain was that we want you to create new and better
widgets, and in return society will provide you with temporary monopoly

But what of biological advancements - modifications of living things.
Plants have been in the "commons" - no one owns them and all can raise
them - for all of human history. Yet, perhaps it is good to spur breeders
to come up with new and better varieties so that we may avoid Malthusian
devastation in which population growth exceeds the food supply. But should
full patent monopoly protection be granted for plants as well as light

Congress decided decades ago to balance these interests by enacting the
Plant Variety Protection Act and the Plant Patent Act. These are
"mini-patent" laws that grant plant developers exclusive commercialization
rights while allowing farmers to save and replant seeds (as has been done
since post hunter/gatherer days). Additionally anybody can perform research
on the new plants to build on the advance-ments for the future.
The result of those "mini-patent" laws for plants was that the plant genome
remained in the public commons while the plant breeder received the rights
to exclusive sales. But no more - read on.

J.E.M. Ag Supply vs. Pioneer

A few years back, Pioneer sued a small Iowa seed distributor for allegedly
violating Pioneer's patent rights by selling a genetically modified seed.
The distributor counter-claimed that "hey, you can't patent plants, biotech
or no-biotech." Rather, the distributor continued, one must use the
mini-patent acts, i.e. the Plant Variety Protection Act (PVPA) or the Plant
Patent Act (PPA). The case went to the U.S. Supreme Court.
The case, entitled J.E.M. Ag Supply v. Pioneer case, was decided last
December. It may be the most significant agriculture-related case of the
past few years.

The court rejected the arguments of the seed distributor that plants are
not patentable under the main patent act. Instead, the court agreed with
Pioneer holding that a plant breeder can achieve a full-blown patent under
the general patent act, as well as mini-patents under the PVPA and the PPA,
at the choice of the breeder. The case applies to all plants, GMO or
conventional hybrids.

So what? First, whole lines of new plant advances will be proprietary and
excluded from use or research by all scientists, university affiliated or
private. Second, research will dry up in areas where full patent protection
is not sought or available. Non-Monsanto varieties will become quickly
obsolete - frozen in the 1990's state of the art. Publicly available seed
banks, such as those maintained by universities, will be outmoded.

Third, monopoly patents push the new vertical integration in crop
agriculture like steroids. As smiling corporate faces promote "alliances,"
they systemically shut down competitors who don't have the right patented
product. Less competitors mean less competition. Less competition means
lower farm gate prices. Cargill and Monsanto are well ahead of these
predictions in forming the joint venture, Renessen (, to
"discover and deliver the best food in our world" through biotechnology.
The solution is for Congress to exclude plants from the general patent act
and specify that the mini-patent acts are the only way to patent plants.

What of GMO Animals?

The meat packers currently use run-of-the-mill market power tools such as
captive supplies to freeze out competitors and drive down farm gate prices.
At least they don't have exclusive rights to patented animals - not yet

Sygen International, self described "world leader in applying genomics and
biotechnology to animal breeding," is among several companies achieving
patent protections relating to animal breeding. Sygen's patents relate to
genetic markers and determination of pig coat color.

Prediction: Within the next few years, the packers will license patented
animals from GMO animal breeding companies for all or most of their
slaughter. If you raise Duroc's, you need not look for a packer contract or
a packer bid because packers will buy only patented animals. If you do
raise patented animals, you need not think about breeding a boar to a sow
without a license lest you be prosecuted in full Monsanto-style vigor -
unless you pay the "technology fee."

Solutions: (1) Deny patent protection to animal breeding advancements.
Let breeders make money the old fashioned way - by consistently producing
the best complete genome that results in the best animals; or (2)
Approximate the balance struck in plants, before the recent Supreme Court
case, in allowing commercialization while also allowing farmers to breed
animals not-for-resale as breeding stock and permitting researchers to build
on those advances down the line.

Cargill/Hormel Nonmerger Merger

Why do a merger when you can accomplish the same thing with a mere joint
venture? Last month, Excel (Cargill subsidiary) and Hormel announced the
creation of Precept Foods LLC.

"The two food companies are combining their marketing and distribution
capabilities and expertise through this joint venture to provide complete
case ready meat solutions that address consumers' and retailers' needs,"
said Hormel's press release. But, they claim that they will remain
independent competitors for operations outside the joint venture.
Because the companies are not merging, it appears that they did not have to
notify the Department of Justice of the transaction. A full merger or
acquisition would have triggered DOJ review.

So what does this mean for competition? First, they will attempt to gain
control of more retail shelf space. Second, their market power will be
greatly enhanced. Third, the joint venture allows a wide range of
communication and coordination that could give rise to unlawful activities.
In other words, the two companies are less likely to compete as
collaborators than they were as competitors.

[Edited by Michael C. Stumo]

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