Marcy Kaptur's bill to create a compulsory license for patented seeds: the Seed Availability and Competition Act of 2009

Marcy Kaptur is a Democratic member of Congress from Ohio. In 2009 she introduced HR 3299, the Seed Availability and Competition Act of 2009. This bill sought to create a system of compulsory licensing of patents on seeds, and to make null and void contractual restrictions that limited the ability of a person to "retain seed from the harvest of a planted seed for replanting by that person." While the bill did not receive much attention in the 111th Congress, it provides a useful example of the many bills introduced over the years to create new exceptions and limitations to the patent system, in areas where the patent system is widely considered to have fallen short in terms of promoting the public interest.

In this case, Kapture proposed to create a Patented Seed Fund. Farmers that choose to pay a fee into the Fund would be free from contractual restrictions on reusing seeds, and not bound by "any requirement to pay royalties or licensing or other fees, by reason of the patent, for retaining such seed." The administrators of the Patented Seed Fund would "pay the collected fees to the appropriate patent holders, at a frequency that the Secretary determines is appropriate."

Not only is the Kaptur proposal an interesting model for agricultural patents, but it provides a possible approach for other areas of the economy, such as software, various devices that depend upon standards that incorporate patents, or possibly some fields of technology such as medical diagnostic tests that would infringe on genetics patents.

Relationship to the WTO TRIPS Agreement

Is the Patented Seed Fund proposal consistent with the TRIPS? The short answer is yes. There are several articles of the TRIPS that are potentially relevant, including Article 6, concerning the Exhaustion of Rights, Article 7 and 8 on the Objectives and Principles of the agreement, Article 27(3)(b) on Patentable Subject Matter, Article 30 on Exceptions to (Patent) Rights Conferred, Article 31 concerning Other Use Without Authorization of the (Patent) Right Holder, Article 40 concerning the Control of Anti-Competitive Practices in Contractual Licenses, and Article 44.2 concerning injunctions. All of these articles provide a possible basis for withstanding a challenge to the act in the WTO. The most serious objection to bill under the TRIPS would be Article 27(1), which states, in part that:

patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

However, Article 27 also provides that protection for plant varieties may be "either by patents or by an effective sui generis system or by any combination thereof." In addition, it is well known that all members of the European Union, the United States and many countries have numerous specialized provisions in existing patent laws that illustrate substantial differences in both rights and remedies against infringement, such as the European Biotechnology Directive that provides for mandatory compulsory licensing of patents on seeds, the U.S. compulsory licensing provisions for nuclear energy and clean air, and the elimination of remedies for infringement by surgeons, or makers of generic biologic drugs in cases of non-disclosure of patents.

The bill

H.R.3299 -- Seed Availability and Competition Act of 2009 (Introduced in House - IH)
111th CONGRESS, 1st Session

To require persons who seek to retain seed harvested from the planting of patented seeds to register with the Secretary of Agriculture and pay fees set by the Secretary for retaining such seed, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES
July 22, 2009

Ms. KAPTUR introduced the following bill; which was referred to the Committee on Agriculture, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL
To require persons who seek to retain seed harvested from the planting of patented seeds to register with the Secretary of Agriculture and pay fees set by the Secretary for retaining such seed, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.

This Act may be cited as the `Seed Availability and Competition Act of 2009'.

SEC. 2. RETAINING PATENTED SEED.

(a) Registration- Any person who plants patented seed or seed derived from patented seed may retain seed from the harvest of the planted seed for replanting by that person if that person--
(1) submits to the Secretary of Agriculture notice, in such form as the Secretary may require, of the type and quantity of seed to be retained and any other information the Secretary determines to be appropriate; and
(2) pays the fee established by the Secretary pursuant to subsection (b) for the type and quantity of seed retained.
(b) Fees- The Secretary of Agriculture shall establish a fee to be paid by a person pursuant to subsection (a)(2) based on the type and quantity of seed retained. The Secretary shall deposit amounts collected pursuant to subsection (a)(2) in the Patented Seed Fund established under subsection (e)(1).
(c) Refunds- The Secretary of Agriculture may refund or make an adjustment of the fee paid pursuant to subsection (a)(2) when the person is unable to plant or harvest the retained seed as a result of a natural disaster or related condition and under such other circumstances as the Secretary considers such refund or adjustment appropriate.
(d) Distributions- The Secretary of Agriculture shall pay the collected fees to the appropriate patent holders, at a frequency that the Secretary determines is appropriate, from the Patented Seed Fund established under subsection (e)(1), taking into consideration the possibility of refunds pursuant to subsection (c).
(e) Patented Seed Fund-
(1) ESTABLISHMENT- There is established in the Treasury of the United States a fund to be known as the `Patented Seed Fund', consisting of such amounts as may be received by the Secretary and deposited into such Fund as provided in this section.
(2) ADMINISTRATION- The Fund shall be administered by the Secretary of Agriculture and all moneys in the Fund shall be distributed solely by the Secretary in accordance with this section and shall not be distributed or appropriated for any other purpose. Amounts in the Fund are available without further appropriation and until expended to make payments to patent holders.
(f) Inapplicability of Contracts and Patent Fees- A person who retains seed under subsection (a) from the harvest of patented seed or seed derived from patented seed shall not be bound by any contractual limitation on retaining such seed, or by any requirement to pay royalties or licensing or other fees, by reason of the patent, for retaining such seed.
(g) Definition- In this section, the term `patented seed' means seed for which a person holds a valid patent.

SEC. 3. TARIFF ON CERTAIN IMPORTED PRODUCTS.

(a) Tariff- In any case in which--
(1) genetically modified seed on which royalties or licensing or other fees are charged by the owner of a patent on such seed to persons purchasing the seed in the United States is exported, and
(2) no such fees, or a lesser amount of such fees, are charged to purchasers of the exported seed in a foreign country,
then there shall be imposed on any product of the exported seed from that foreign country that enters the customs territory of the United States a duty determined by the Secretary of the Treasury, in addition to any duty that otherwise applies, in an amount that recovers the difference between the fees paid by purchasers of the seed in the United States and purchasers of the exported seed in that country.
(b) Deposit of Duties- There shall be deposited in the Patented Seed Fund established under section 2(e)(1) the amount of all duties collected under subsection (a) for distribution to the appropriate patent holders in accordance with section 2(d).
(c) Definitions- In this section--
(1) the term `genetically modified seed' means any seed that contains a genetically modified material, was produced with a genetically modified material, or is descended from a seed that contained a genetically modified material or was produced with a genetically modified material; and
(2) the term `genetically modified material' means material that has been altered at the molecular or cellular level by means that are not possible under natural conditions or processes (including recombinant DNA and RNA techniques, cell fusion, microencapsulation, macroencapsulation, gene deletion and doubling, introducing a foreign gene, and changing the positions of genes), other than a means consisting exclusively of breeding, conjugation, fermentation, hybridization, in vitro fertilization, tissue culture, or mutagenesis.