Canadian Inventor Sues State Research Universities

I like to toss "seed lawsuit" in the google search bar on occasion to see what's going on in the world-at-large beyond the comfortable confines of my office here in suburban Memphis, TN. I came across a story that I have posted on the reciprocal situation in the past. This time a Canadian inventor company sued three state universities from infringement. Duh-duh-duh-duuun, the plot has thickened on the agricultural patent landscape, and now no one is safe.

The full story can be found here, but I will give you a summary of the article. A Canadian inventor, Soheil Sharafabadi, claims that the University of Idaho in conjunction with Oregon State University and Washington State University infringed upon his patent to create new varieties of higher-yielding mustard seed. Obviously this is much further back in the litigation food-chain than a brownbagging case, as we have competing researchers claiming a "cheat" much like the ballyhoo of Irish in response to the Thierry Henry hand-ball situation.

Sharafabadi (more fun to spell than you think) claims that the research universities used his 1990 "Psuedoplastic Yellow Mustard Gum" patent in the development of U of I's new mustard seed varieties. Through his July 23, 2009 complaint, he claims that Idagold (developed by U of I) as well as more than two dozen other mustard seed varieties were developed by his patent. According to the article and Sharafabadi, the actual patented process consists of boiling the seeds to extract the "gum" or mucilage, which he claims is preferable and used by the Universities due to the alternative taking more time for extraction. The mucilage promotes water storage and germination that can lead to higher yields.

As a commenter noted on the article that at first blush the reporter makes this sound as if the Universities stole patented seeds and developed new lines, but rather this is purely a process patent infringement issue as noted in the previous paragraph. So, its not quite the "Escape from L.A." post-apocalyptic anarchy I foreshadowed in the beginning, but it is a slight twist of the stories that I have presented before.

This does not seem to be Sharafadi's first bout over his 1990 patent as can be seen on this website that seems to be set up by him himself, where it is claimed that there was some sort of plagiarism at the University of Manitoba by a Ph.D. candidate. The website is slightly disjointed and rather difficult to muddle through, but there is a letter by Sharafabadi explaining the educational deprivation that plagirism will bring upon the Canadian universities. Either way it seems a 1990 invention has brought Mr. Sharafabadi a 20 year plus fight.

Comment Period extended for High-oleic acid soybean

Animal and Plant Health Inspection Service (APHIS) has sent out notice that it is extending the comment period for Pioneer Hi-Bred International's high-oleic acid soybean petition for nonregulated status. The original petition that was posted to go with the initial period was found to be the incorrect petition, so the comment period has been extended to December 28, 2009. The comment period is also extended for the Environmental Assessment (EA) and the Plant Pest Risk Assessment. The Federal Register notice from October 26, 2009 is posted here.

Mexico Issues First GM Corn Permits

According to a Reuters article from last week, The Mexican Agriculture Ministry will issue two permits to grow experimental plots of GM corn in regions where there are no native corn varieties. This will put the "birthplace" of corn in the hotbed of controversy over GM foods, but many feel it will help with productivity. The article further states that some Northern Mexico farmers were getting in the game early by illegally growing GM corn prior to any government approval of permits. Supposedly, thirty-five businesses have applied for the permits, including Monsanto.

This battle has gone back over the years, as it was always acceptable to consume GM corn in Mexico, but not plant or grow it. It was said that many farmers ignored this and planted the seeds anyway therefore causing an unintended spread of GM corn within Mexican fields. The report that is the centerpiece of this 2004 Washington Post article states that the proliferation of GM corn in Mexico was also contributed to cross-pollination (a.k.a. genetic drift). That about scares the hell out of most, so its understandable way many fears begin to align in these debates. We'll see how this further develops as this process gives us very interesting insight into the development of biotech plan and attitude that swirled by many of us in the US.

Consumer Choice sends Monsanto's Roundup Ready Sugar Beets back to the Deregulation Drawing Board

The Northern District of California handed down a ruling in Center for Food Safety v. Vilsack, No. C 08-00484 JSW (N.D. Cal September 21, 2009) that would requires the USDA to perform an Environmental Impact Statement (EIS) as opposed to an Environmental Assessment (EA) in their determination of whether to deregulate Genetically Modified Sugar Beets (known as Event H7-1). The court procedurally granted plaintiffs' motion for summary judgment and denied Defendants' cross-motion for summary judgment in order to line up its decision with the Geertson Seeds decision out of the Ninth Circuit regarding Roundup Ready Alfalfa.

The actual technology would make the sugar beets glysophate tolerant, which is similar to roundup ready alfalfa technology in the Geertson case. APHIS created an EA in response to the application for deregulation and reached a Finding of No Significant Impact (FONSI). The Court reasoned that the decision not to use the hard look of the EIS was arbitrary and capricious as there was evidence acknowledged by the agency, but cursorily tossed aside, that proved to be "significantly effect" the human environment as stated in the the procedural statute the National Environmental Policy Act (NEPA) .

The determination of whether an impact is significant will be determined by the context and intensity or severity, as it is defined by factors in 40 CFR 1508.27. The analysis of these will be reviewed by the judiciary under the APA's arbitrary and capricious standard. As stated, the Court found the Agency's conclusory statements regarding severity to deifferent factors arbitrary and capricious and ruled against it.

The evidence the court pointed to was the difference in opinion regarding length of time sugar beet pollen that can be carried by wind or animals was viable and the distance it could travel. In the related point that the Court considered significant was the socioeconomic effect on organic farmers or simply non-GMO farmers if genetic drift were to occur and consumer choice, if there is a significant limit of non-GMO sugar beets used in the market. Defedants countered that there was no real organic sugar beet market and that they simply do not have to take socioeconomic factors into the analysis of whether to issue an EIS. Obviously, the counter-arguments did not win the day. The Court reasoned that the socioeconomic and consumer choice factors were interrelated, if not a diresult of, the environmental factors that must be considered, and therefore carry as much weight.

Simple to this analysis is that consumer choice will be taken into account in the Ninth Circuit (if not elsewhere based on the focus of natural and organic products), and the skepticim especially abroad of GMO seeds should send a message to just use the EIS and scrap the EA in assessing deregulation possibility as of right now.

Don't Gulp the Force Majeure De Jure - a cautionary tale

Recently I read an article on Farm.com by Stu Ellis that was sent out by a colleague regarding the effect of COOL and H1N1 on vertically integrated livestock agriculture. There has been large scale unprofitability in the pork market due to increased food inputs and a decrease in exports attached to the misperceptions of the H1N1 virus based on its more common nomenclature of "swine flu". According to the article, there has been reported losses by the

Iowa State Economists for 18 months in the pork market. Naturally, there is a push down the chain effect as these vertically integrated businesses are set up through production contracts with hog producers that are minimally negotiable. In these contracts there is a "ForceMajeure" Clause, a.k.a. "Acts of God." The secondary name is slightly misleading as a forcemajeure clause can typically cover many things that typically wouldn't be attributed to a diety, such as a changes in law, regulations, riots, and coups. The clause is anticipated to cover extraordinary situations that are beyond the control of the parties and would frustrate the purposes of the contract. These clauses are typically enforceable unless it can be shown that the the use of the clause was overreaching or unconsciousable (a legally defined term).

The panic around the H1N1 pandemic and the push of COOL are now being used as rationale to repudiate contracts through the force majeure clauses, which is a major concern in the livestock sector as there is a lack of insurance options that can be found in row cropping operations. The pork integrators have either repudiated the contracts or simply renegotiated a new contract based on there being a "frustration of purpose" (another legally defined term) in implementing the original contract based on the terms as they were drafted. Some scholars argue that the renegotiation aspects is not typical of use of the force majeure clauses. However, tobacco contracts that were considered void by one party through a force majeure clauses were renegotiated based on price terms in the past. Therefore that behavior has been accepted in general agribusiness dealings beforehand, whether a court would enforce that is still unclear as I can assume that many producers simply took the lower renegotiated price.

Now there are a few concerns I have regarding the whole situation of H1N1 and COOL being used under a Force Majeure clause triggering occurrence, even if there is language in the forcemajeure clause speaking to changes in regulations and legislation.

1.) These are market aberrations directly linked to the product, which can be broadly anticipated by the very participation in a fluid market. A Force Majeure typically covers things such as catastrophic crop damage, earthquakes, four horseman, and rain that forces you to grab two of every animal.

There is an obvious counter in that if the market shuts down where the goods were anticipated to go due to back-to-back contracting (Having a sales contract in place to hedge a production contract, where you as a merchant or integrator are the middle person) than there would be a frustration of purpose of the overall operation that the production contract is just merely one aspect. However, I would argue that unless there is explicit language created a escape hatch for the integrator based on the frustration of purpose in another contract or there is precondition that the "non-producer to integrator" back-to-back contract must be enforceable. More concisely, a force majeure clause should only pertain to events that frustrate the contract that is subject to the clause, not to the entire market unless that is explicitly stated in the contract.

2.) In line with the lack of insurance available to livestock producers, there also seems to be a lack of any traditional or spot market outside of the contracts where the pig producer could sell the pork. Therefore, the unconsciousability could be used in the new offer to renegotiate as there are no viable alternatives to the producer at the time. This argument would obviously depend on the other clauses of the contract and the state where it is brought as contract laws vary from state-to-state.

The market would only be a concern if the integrator repudiates the contract and abandons the hogs or signs over title to the hogs to the producer. However, the market is still virtually unavailable to go at it your own if you are a hog farmer which would still allow anunconsciousability argument for any renegotiation.

3.) The contractor's lien spoken of in the article should be expanded and enacted in all states that there are a multitude of vertically integrated agriculture. These producers are purely service providers, much like a mechanic, where they have a temporary possessory interest in the goods (hogs in this case) but do not have actual title to the animals. As long as the producers actually file these statutory liens it could be effective means, so long as there is some form a non-retaliation provision for enforcing statutory rights.

****I put this on the seed law blog since many seed companies are going into new areas through use of production contracts and crops that will not have subsidized crop insurance, therefore no crop insurance may be covering the product as many contractors will say "give me whatever you produce as we need to use it all so that we can ramp up production." This is where I implement this cautionary tale due to the increased used of GM seeds and the constant back-and-forth on the general acceptance of GM. So:

1.) Please read the contract and understand it. Have an attorney trained in these type of contracts to take a look to help with the understanding. I understand this can be pricey, but if you are undertaking a huge obligation in your business (you be the judge), please seek assistance in understand the legally defined terms.

2.) You may be able to negotiate the contract much more than a vertically integrated hog producer without having the other party walk away from the table.

3.) Make the expectations and clauses known in the contract to avoid future surprise - it will save money and hurt feelings, as well allow the parties to truly assess liabilities. In other words, Be a Straight Shooter.

4.) Get to know your rights if there is future communications where the other party tells you want the contract means, and you take it as a surprise.

Don't be afraid of taking advantage of opportunities for new markets or technologies, but please make informed choices or you may be eventually visiting another type of attorney - a bankruptcy one.

Has Consumer Fear Truly Halted Genetic Engineering?

A recent article out of the trade journal Nature Biotechnology, according to seedquest, states that the failure of certain genetically engineered traits to make it to market such as nutritional content, ripening control and processing attributes to reach consumers and processors was due to a failure in the European regulatory regime to allow these products to make it through the approval process. It seems that the sell of herbicide resistant and insecticide resistant were much more successful as the regulatory channels allowed these to go through a relatively easy process and were accepted by the end user - the farmer. Without going into the developments of the regulations themselves, I believe there exists a natural inquiry into this tale - why? Some of the summary of the argument presuppose that the problem arises because the latter benefits were researched and developed during the infancy of agricultural biotechnology.

I believe this is attributed to the basic disconnect between consumers and consumers and producers and/or production methods. The perceived end user for an herbicide resistant soybean would be the consumer as they would be given a cheaper price for soy products due to the possibility of increased yield as it knocks out a predator from depleting the volume of soybeans produced on the same amount of acreage. However, on a practical level, it would seem the consumer does not notice the difference in food prices unless there is significant magnitude in the change. Therefore the true sell would be to the producer as he/she would be the one dealing with the pests that the consumer would never even know about unless there is significant change in the price as they are so far removed from the production of the soybean.

The case is not the same for GM nutrition traits as the true customer would be the consumer as it does not seem to solve a problem for the producer. The technical problem being solved would be a nutrition deficiency or a convenience to obtain nutritional benefits from the product. Allan Bennett, a professor at UC-Davis professor, stated "It had been hoped that these products would directly benefit the general public and change the public perception of agricultural biotechnology". This mentality would be the reason there is opposition from the customer, since many may have not seen the problem beforehand or even recognize the nutrition deficiency as an issue, unlike the producers dealing with crop pests. Therefore the groundwork was never done to create "public" acceptance of the GM benefits as there was never a problem or a recognized problem as it wasn't a generally accepted problem.

I would suggest the regulatory regime is merely a reflection of biotechnology market assuming that there product would be accepted without doing the groundwork of showing how the GM nutritional traits would solve a problem or create a convenience for people that should be desired. It would seem that many developers just assume that there is benefits in the development of these traits and the general usefulness of the technology. GM needed a better marketing and advertising campaign showing the benefits and easing fears for these more direct consumer traits from the get-go, which would have taken pressure off of the regulatory regime and allowed quicker approval without as much mainstream skepticism.

Therefore, the I would venture to say that the regulations were not the true cause of halting "direct benefit to consumer" GMs, but the way they were marketed to the public. The fear of the public, caused by a non-recognition of the benefit as opposed to percieved cost, created a stringent beuracracy.

Tobacco may Help Diabetic Patients in the Future

SemBioSys Genetics Inc., out of Canada, was granted U.S. patent number 7,547, 821 entitled"Methods for the Production of Insulin in Plants". A similar patent was granted in Europe last year, and there are patent applications submitted in a multitude of countries worldwide according to the official company press release. The ever-increasing obesity problem that is facing the United States virtually guarantees great success on the patent as plant production is considered the fastest and cheapest methods of reproducing proteins. They will have a lock on the commercialization processes of this plant production method, I bet you wish you would have wanted to know this before its IPO last week.

From the abstract of the Patent "Production in seeds offers flexibility in storage and shipment of insulin as a raw material, and insulin retains its activity upon extraction from stored seed. Further, the amount of biomass subjected to extraction is limited, due to the relatively low water content of plant seeds." The benefits also include the cost factor in production as the scientists do not have to spend tons of money on generating the proteins within labs in small quantities. There is one aspect of the work that seems to worry me based on language in the patent. The claims of the patent seem to use tobacco, as it is typically an easy plant to use due to its regeneration and large pours that let you pop those proteins right out of the leaves in a vacuum chamber. However, it seems that the inventors would prefer to use the Arabidopsis (first plant that had its genome sequenced due to its simplicity), flax plant, or safflower. I am not sure the reason to steer away form tobacco, as it works well in demonstration scale tests, but perhaps its the perception, cost, complexity of the plant, or a host of other factors in which a learned expert in science or business could provide illumination.

This preference for other plants besides the Arabidopsis concerns me, as I believe it will give it a tougher time through the regulatory channels that transgenic crops must go through with APHIS and FDA. No one is much on tobacco, even smoking "unprocessed" tobacco is odious and the demand for consumption of Arabidopsis is virtually non-existent, so there would be no concern of these seeds getting into the food supply as there is no channel for these seeds. However, flax is being used more and more as an alternative to "traditional" foods with its presumed or known health effects, and safflower is used in vegetable oil and salad dressings. I believe this could cause more obstacles than need to be there during the regulatory phase as well as the possibility of public relations problems. This push-back from segments of the public can be seen in the opposition of corn's usage in pharmacropping.

I will continue to follow the progress of this company's patented invention as it continues its clinical trials and comment on the legal steps it will take and possible ramifications of actions taken while attempting to install it into the commercial chain.

I want to comment, and give credit, on where I get my base information to run off with into fanciful flights of legal discovery and opining upon all things seed. Please visit SeedQuest as they provide far more of an overview of the seed industry than my blog ever could, as they should. Another great resource for topic ideas and the most comprehensive blog regarding the extremely broad field of agricultural law is a combined effort of the National Agricultural Law Center and the American Agricultural Law Center, which can be found here.

-Craig