This October, five major seed companies came together to sign the first part of an agreement called the Generic Event Marketability and Access Agreement (GEMAA). Facilitated by the Biotechnology Industry Organization (BIO) of Washington, DC, and the American Seed Trade Association of Alexandria, Virginia, the accord is a legally binding contract that covers expirations of single-gene patents, and aims to ensure global access to genetically modified (GM) crops, even once they go off patent. “GEMAA is the most immediate concern,” says Cathy Enright, executive vice president of BIO's food and agriculture section. “Farmers want to make sure that if they use a product that's under patent today they can continue to when it's off patent.” Because regulatory agencies in some countries require reregistration of GM crops, the accord allays concerns that companies would fail to re-apply for registration of their products, once the patent expires.
In 2014, the 20-year term for the gene patent on Monsanto's Roundup Ready soybean, which is used by >90% of US soybean farmers, will expire, and the looming deadline has raised fears among farmers that the expiration may disrupt trade. Their concern hinges on the disparity between how genetically modified organisms (GMOs) are regulated in the US and internationally. In the US, after a gene inserted into a crop is deregulated, the US Department of Agriculture (USDA) accepts its use in the crop indefinitely. But in the rest of the world, GM crops are approved for a specified time, which means that companies must periodically reapply with the regulatory agencies. In China, applications are submitted every three years, in Korea every five years, in Japan and Europe every ten.
Trade today moves smoothly because Monsanto maintains these approvals, but once the patent expires, Monsanto loses the financial incentive to continue filing. Nearly 60% of American-grown soy is exported abroad, mainly to China, Japan and Mexico, and almost all of it contains the Roundup Ready resistance gene. So in 2009, when Monsanto launched a second-generation GM soybean—Roundup Ready 2 Yield—farmers and other industry stakeholders realized that Monsanto had a de facto lock on the soybean trade. They feared that the seed giant would force them to adopt the next-generation trait by failing to file international approvals after expiration.
“There could be a terrible trade disruption if we had a product that was no longer registered in a foreign country. It could lock down ships. It could disrupt the entire trade system,” says farmer Ray Gaesser, vice president and chairman of the regulatory committee of the American Soybean Association in St. Louis.
Monsanto acknowledges the problem and has pledged to continue filing until 2021. “There clearly were legitimate concerns from growers and grain handlers about what happens at the end of patent expiry. Quite honestly, we hadn't faced this situation ever before,” says Jerry Steiner, executive vice president of sustainability and corporate affairs at Monsanto. “No one had prepared for that kind of thing.”
Meanwhile, another wave of gene patents are scheduled to expire around 2020, including those owned by other companies. The industry had no strategy on how to maintain the regulatory approvals once off patent.
The accord requires signatories to announce their patent expiration three years ahead of time, after which patent owners have three options: they may continue maintaining regulatory authorizations themselves, sign an arbitrated agreement to share responsibility with other companies, or discontinue maintenance by either transferring responsibility to another company or, failing that, announcing their intention to discontinue filing seven years hence.
Although it sounds straightforward, representatives from the companies and industry organizations have been gathering since 2010 for weekly meetings, sometimes several days long, to outline the legal framework for the 38-page document. “It's been a long journey,” says Matt O'Mara, director of international affairs at BIO.
“O'Mara believes that at the end of most patents' lives, consortiums will form to cover the costs of maintaining approvals.”
O'Mara believes that at the end of most patents' lives, consortiums will form to cover the costs of maintaining approvals. So far, however, the only signatories include seed giants, BASF Plant Science of Raleigh, North Carolina, Bayer CropScience in Monheim, Germany, Indianapolis' Dow AgroSciences, DuPont Pioneer of Johnston, Iowa, and Monsanto. None of the smaller seed companies have joined. Enright remains hopeful. “If you look at the signatories in six months, I think you're going to see new names.”
Whereas GEMAA covers half the framework necessary for maintaining approvals, the signatories are now working on a second agreement called the Data Use and Compensation Agreement (DUCA) to be completed in 2013. Companies must periodically submit new data in order to maintain international approvals on crops that combine several foreign genes, or gene stacks. For gene stacks in Europe, for example, companies must submit data on the foreign genes in all their permutations. Therefore, as the number of genes in stacks rise, these data packages become exponentially larger and more expensive to maintain. With 100 pages written so far, the accord specifies that DUCA mandate signatories to share their data in return for managing the data, for which they will collect a designated fee. “We've got to make sure in the post-patent environment that someone is answering the phone calls from regulators, or trade is going to stop,” says O'Mara.
Of the stacked seeds on the market, about half are the result of cross-licensing between companies. Monsanto's Smartstax corn, for example, incorporates an insect protection gene from Dow (Herculex Xtra), an herbicide resistance gene from Bayer (LibertyLink) and its own glyphosate resistance gene in Roundup Ready 2. DUCA will ensure that a single gene going off patent won't jeopardize the other licenses in a stacked product. “Cross-licensing is the lifeblood of the seed breeding industry,” O'Mara says.
The accord emerged out of a morass surrounding Monsanto in 2009–2010, when it first commercialized Roundup Ready 2. The company became embroiled in a legal battle with DuPont over DuPont's program to stack the Roundup Ready 2 gene with DuPont's own glyphosate resistance gene. Monsanto sued for patent infringement. DuPont countered with an antitrust suit that prompted the US Department of Justice and a number of state's attorneys to begin their own antitrust investigations. “There was a lot of confusion at that time. I think a lot of competitive pressure and actions were causing some of that confusion,” says Monsanto's Steiner.
Those allegations have since faded. A Missouri judge awarded Monsanto $1 billion in its suit. And DuPont's antitrust suit, which will go before the same judge next year, will likely fail, according to legal experts. “It's just gone away after they did the dog and pony show,” says Tamara Nelsen, senior director of commodities at the Illinois Agricultural Association in Bloomington, Illinois.
After patent expiration, with GEMAA in place, the seed companies that now license Roundup will have one less bill to pay. “We still have some 600 small seed companies in the US. What we expect some of those smaller companies to do is look for more of a niche,” says Nelsen. For smaller farms without the ideal farming conditions, “you are not going to worry about buying the latest and greatest.”
At stake is the question, with a majority market share in most of America's staple crops, is Monsanto stifling competition and a potential generics market? “Ninety-three percent of soybean production is Roundup Ready,” says Nelsen. “It's still like everyone is on a Microsoft system—at least, that's how farmers feel.”
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