Case Study 4

Posted on by kdm222

This case involves a local business owner Chetan who has had this deem-based product business in the family for the past 7 generations. A tourist went to this part of India and discovered the neem seeds for himself and decided to make a pesticide based off the product and now wants to sell it and expand his business, especially in this region.

FACTS OF THE CASE (for part I and II):

  • Neem is an indiginous tree to India that’s considered sacred 
  • 14 million trees in India have been used over the past 2,000 years for medicinal purposes, food production, toiletries, fuel, and pesticides
  • Neem products widely used across India and employs over 100,000 of the poorest people
  • Chetan operates a small business of neem tree products that has been in his family for 7 generations
  • Employs 60 people in different functions
  • Chetan does not know the specific name of the neem seed extraction
  • 10 years ago, Tom Johnson, the director of OOPS travelled to India on vacation and discovered the Need Seed as a potent pesticide
  • Tom exported the seeds to USA and found a formula for organic pesticides based on the seeds
  • His company invested $5 million to conduct extensive safety and performance tests over the next decade 
  • Tom received a patent for the pesticide formula and brought the product into market
  • OOPS has a net profit $12.5 million in the first year
  • OOPS infiltrated the markets and wants to bring the product into places like India 

STAKEHOLDERS (for part I and II):

  1. Chetan
    1. It’s his family that has been running the company for 7 generations
    2. He’s been using the need tree to produce products for generations
    3. Wants to maintain a successful family business
    4. Preserve his family name and legacy
    5. Does not want to lose any income/profits by paying the royalties
    6. Doesn’t want OOPS to claim the products
  2. Tom
    1. Currently has a patent of the pesticide recipe
    2. Wants to make money using the need tree to produce products for generations
  3. OOPS
    1. Wants to produce the best neem products – especially pesticides
    2. Wants to make a profit selling the neem-products
    3. Wants to create and establish a good relationship with the other businesses in India
    4. Could earn greater profits by demanding royalties from Chetan
  4. Employees of Chetan
    1. Wants to maintain their jobs 
    2. Maintain an income to support their family 
    3. They don’t want to lose their jobs by American companies
  5. Indian Governments
    1. Wants the economy to flourish
    2. Wants unemployment levels to stay low
  6. Neem consumers
    1. Wants their products
    2. They want the best price and the most convenient pice
  7. Other Neem companies
    1. Want their business to succeed without anyone else competing with them, especially American companies
    2. They’d suffer from larger US companies monopolizing the market
    3. They would have to pay a royalty
    4. Plant is ntive to India and sacred

Part I:

This is not an ethical case study, but rather an intellectual property case. The definition of intellectual property is “a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, or trademark.” The reason that this particular case is not an ethical case is because ethically, if Tom has the patent for this particular pesticide, then he has every right to sell the product. This falls into the category of an intellectual property case because the question is should Tom had even been given the patent and who technically has the legal rights to the pesticide/neem seed. Since the neem tree is sacred and indigenous to India, whose property is it? Legally, you can’t exactly obtain a patent for a naturally occurring thing (someone can’t patent DNA), however the process in which the material is being extracted or used can be patented, in this case the extraction and recipe of the pesticide can be patented. After some extensive research, it was discovered that there were some other patents filed since then and they were all denied on the basis that they couldn’t patent the neem seeds. Therefore the intellectual property question becomes who has rights to this product and can someone make another person pay royalties and make a profit off of this type of ownership over a product.

Part II:

ALTERNATIVE SOLUTIONS:

  1. Chetan partners with OOPS – with this solution, Chetan would have a partnership with OOPS rather than paying them royalties. Chetan would produce the raw materials for OOPS and then OOPS will pay Chetan a part of the profits. This solution saves face for Chetan because he still gets to have a part in the business but doesn’t have to pay any royalties or lose his business. This also saves face for OOPs from having to go through an entire court case and potentially losing.
    1. PROS
      1. Chetan gets to keep his family business
      2. Chetan’s employees would be able to work at the business still
    2. CONS
      1. Chetan does not have the ability to control his business
      2. Chetan has to answer to OOPS and it decreases his sense of business autonomy
      3. The other neem pesticide companies will not be able to continue their business because only Chetan’s company will be employed by OOPS
    3. PROS on RELATIONSHIPS
      1. Chetan has his business and his employees who get to protect him
      2. OOPs has the ability to keep his business and make new relationships with another market
    4. CONS on RELATIONSHIPS
      1. Chetan’s employees might be upset with him for partnering with a larger American company
    5. PROS on VENTURES
      1. There would be a whole other market opened up
      2. Prices might be cheaper because of the mass production
    6. CONS on VENTURES
      1. Consumers might be upset because they’re not from a local company and boycott the products
  2. Chetan stops selling pesticides – Chetan would stop selling the pesticides but could continue selling the rest of the neem products. This would save face for Chetan and OOPs because Chetan wouldn’t have to shut down his business or partner with OOPs and could just continue selling other products. This also saves face for OOPs from having to go through an entire court case and potentially losing.
    1. PROS
      1. Chetan would have the ability to continue running the business full fledge 
      2. Chetan would continue be able to employ his employees
      3. Chetan would be able to not have to pay royalties
    2. CONS
      1. Chetan would have to stop selling one of his products without being compensated
      2. The tree being used to make the pesticide is a sacred Indian tree and Tom should not have the ability to sell it
      3. The other neem pesticide companies will also have to go out of business since the big American company is coming in and taking over
    3. PROS on RELATIONSHIPS
      1. OOPs and Chetan would have an understanding on what their marketing jurisdictions would be
      2. Chetan’s employees could keep their jobs
    4. CONS on RELATIONSHIPS
      1. Chetan’s employees might feel cheated out because they couldn’t sell everything
    5. PROS on VENTURES
      1. OOPs would get to keep their license and sell the neem pesticides
      2. Chetan could continue selling and maintaining his business in the family
      3. Customers could continue buying from locally sourced and made companies
    6. CONS on VENTURES
      1. Customers might feel cheated with buying from another company’s pesticides after always buying from Chetan
      2. It may make sales go down for the venture because of the local competition
  3. Chetan can fight the patent  – there have been lots of patents tried to be produced but they have all failed because you cannot patent a naturally occurring object. This saves face for Chetan because it shows he is strong enough and passionate enough to stand up for what he believes in. 
    1. PROS
      1. If Chetan wins, he gets full control over his business again
      2. He doesn’t have to answer to anyone and the fight for the ownership ends and there is a clear cut owner
    2. CONS
      1. It may take a lot of money
      2. It may take a lot of time to process the patent fight
    3. PROS on RELATIONSHIPS
      1. Chetan would have the support of this employees and their relationship would be stronger because they know he is fighting for their business and their relationship
    4. CONS on RELATIONSHIPS
      1. Chetan and OOPs would be fighting in a court of law
      2. OOPs might have more resources and if they won the case, their relationship would be highly damaged
    5. PROS on VENTURES
      1. Chetan, if he wins the case, could potentially win the entire business back for himself
      2. OOPs, it they won the case, they could open up in the new markets.
    6. CONS on VENTURES
      1. Chetan, if he loses the case, would lose everything
      2. OOPs they lost the case, they would have to start over and find a new way of sourcing their pesticides
      3. If OOPs won the case and opened in the markets, they might have backlash from the consumers.

BEST SOLUTION:

I think that the best solution is Solution 3. Chetan should definitely fight against the patent. Despite the cost or the time it may take, I think that he owes it to his family, his country, his customers, and to himself to fight for what is his. I think that Chetan has a good chance of winning the case because when we researched the different cases in which patents were pending, all of them failed because you cannot patent a naturally occurring organism in nature. This is different than the other potential solutions because with the other two solutions, Chetan still doesn’t have his freedom to run the company the way that he sees fit or he has to obey the ‘rules and regulations’ of OOPS. With this solution, even though there’s a small chance that Chetan does not win the case, if he does, then not only is it beneficial for Chetan, it also supports the Indian government because it allows them to continue employing their locals. 

IMPLICATIONS:

The implications of this solution would be that 

VENTURE WISE:

  • The venture for Tom would be disturbed because Chetan would be fighting back against the patent and if he won, Tom would no longer be able to do the kind of business that he wanted to in this region. 

SOCIALLY:

  • Socially this decision might band together the local businesses because they would all want Tom’s patent to be denied because if Tom was able to keep his patent, it would mean that Tom would be the only one allowed to sell these pesticides which would obliterate a lot of the local businesses. 
  • The local consumers might be happier as well because they would want to support their local business owners and this way they might get cheaper costs as well.

ECONOMICALLY:

  • This would increase India’s natural economy because the business would be from directly in the country. The local businesses would be selling the products that they want making prices based on the local economy and it would stimulate internal competition rather than external competition with an American business.
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