Possible Consequences of Remedy in Monsanto Canada Inc. V. Schmeiser

In 2004, the Supreme Court of Canada (S.C.C.) passed judgment on Monsanto Canada Inc. v. Schmeiser, (1) an infringement action brought about by the possession of genetically modified crops, and the result is one of the most significant cases in Canadian patent law. The judgment was based upon the facts determined at trial, where the judge found Mr. Schmeiser, without permission or license from Monsanto Canada Inc., intentionally grew crops containing a herbicide resistant gene, the patent for which was owned by Monsanto. (2) In a 5-4 decision drew much criticism, the majority of the S.C.C. decided the patenting of a gene, and indirectly, for the resulting plant, was valid, and the cultivation of seeds containing the patented cell and gene by Mr. Schmeiser constituted an infringing use violated the monopoly granted to Monsanto by s. 42 of the Patent Act. (3) It is in this finding of validity and infringing use much of the controversy lies. Most critics, including the minority of the S.C.C. in this case, point out by patenting a gene, it is, in effect, granting the patent rights to the subsequent higher life form, something which was deemed unpatentable by a previous S.C.C. case, Harvard College v. Canada (Commissioner of Patents). (4) However, this paper focuses on another aspect of the decision, of the determined remedy to the infringement. There are two remedial avenues, usually mutually exclusive, a plaintiff may seek in a patent infringement application as per the Patent Act: a) an account of made by the defendant from the use or sale of the patented invention or (b) the payment of such damages as may have been suffered by reason of the wrongful acts of the defendant. (5) At trial, an application was made by the plaintiffs (Monsanto U.S. Inc. and Monsanto Canada Inc.) for both an accounting of in the amount of $105,000, calculated from the profit from the sale of the crop, as well damages in the amount of $15,450, calculated from the cost of a licensing fee under the Technology Use Agreement, of $15/acre. In the alternative, if both awards were not possible, the plaintiffs requested simply the accounting of profits. (6) The trial judge, MacKay J., awarded only an accounting of profits, and only in the amount of $19, 832 after factoring in the cost of the labour done by Mr. Schmeiser. (7) The decision of MacKay J. was upheld in the Federal Court of Appeal. (8) Upon reaching the Supreme Court, the majority stated the current case law in the area of patent infringement remedy requires that the inventor is only entitled to portion of the infringer's profit which is causally attributable to the and if nexus is found, [a] comparison is to be made between the defendant's profit attributable to the invention and his profit had he used the best non-infringing option. (9) It was determined at trial, largely from the testimony of Mr. Schmeiser, although the seeds used in his 1998 crop were collected from the surviving plants of a herbicide spraying in 1996, he did not in fact spray the 1998 crop with herbicide. (10) Therefore, Mr. Schmeiser did not take advantage of the genetically modified herbicide resistance inherent in the canola plants, and the Supreme Court could find no nexus between the profit from the sale of the canola and Monsanto's invention, finding profits were precisely what they would have been had they planted and harvested ordinary canola. (11) The Supreme Court reversed the award of an accounting of profits, and determined each party should bear its own costs. (12) While the finding of a valid patent and subsequent infringement in this case may be seen as a victory for biotechnology companies, who may now indirectly obtain a patent for higher life forms, the remedy awarded in this case results in a somewhat perplexing situation. The Supreme Court has arguably taken much of the utility away from the account of remedy in situations where it is difficult or impossible to establish the defendant had used the essence of a patent for his financial gain. …

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