Supreme Court conundrum: How far does a soybean seed patent go?

January 17, 2013

Vernon Hugh Bowman is the rare Indiana soybean farmer destined for immortality as a U.S. Supreme Court caption.

Bowman had the temerity to attempt to outwit Monsanto, the giant agriculture company that, as you surely know, invested hundreds of millions of dollars and years of research in the creation of soybean seeds that are genetically modified to withstand the herbicide glyphosate, which Monsanto markets as Roundup. The genetically modified seeds, according to the Supreme Court brief Monsanto filed Wednesday, have been such a hit with farmers that more than 90 percent of the U.S. soybean crop begins with Monsanto’s Roundup Ready seeds. Given that every soybean plant produces enough seeds to grow 80 more plants — and that soybeans grown from Roundup Ready seeds contain the genetic modification of glyphosate resistance — Monsanto has insisted that farmers sign licensing agreements with strict restrictions. Soybean producers are only supposed to use the Roundup Ready seeds they buy to grow crops in a single season, and they’re forbidden from planting second-generation seeds harvested from first-generation crops.

The licensing agreements do contain an exception, though: Farmers are allowed to sell the second-generation seeds to grain elevators, which, in turn, are permitted to sell a mixture of undifferentiated seeds as “commodity grain.” Monsanto contends that commodity grain should be used for feed, not cultivation. But Bowman figured that the mixture sold by grain elevators probably contained mostly Roundup Ready seeds, so for several years, after harvesting his first crop (planted with authorized, Monsanto-licensed seeds), he planted a second crop with commodity grain. When he treated the second crop with herbicide, he was proved right — most of the plants were resistant.

Monsanto took grave exception to Bowman’s ingenuity and sued him for infringing its Roundup Ready patents by using, without authorization, seeds that embodied its technology. The farmer argued that under the doctrine of patent exhaustion, as interpreted most recently by the Supreme Court in the 2008 case of Quanta Computer v. LG Electronics, Monsanto only had the right to control use of the first-generation seeds. Using second-generation seeds, the farmer said, was akin to reselling a patented product you’d already paid for. U.S. District Judge Richard Young of Indiana disagreed. He granted summary judgment to Monsanto and awarded the company about $85,000 in damages.

Bowman revived his patent exhaustion argument at the Federal Circuit Court of Appeals, which has already twice upheld Monsanto’s right to bar farmers from planting second-generation seeds they’ve harvested from their own first-generation Roundup Ready crops. Not surprisingly, the appeals court sided with Monsanto and said the company’s patent rights were not exhausted in the first-generation harvest. But the Federal Circuit’sSeptember 2011 decision was notable for an additional affirmation of Monsanto’s rights. Even if patent exhaustion did apply, the appeals court held, Bowman infringed anew when he grew a crop that embodied Monsanto’s patented technology. Any other interpretation, the court said, would eviscerate Monsanto’s rights as a patent holder.

The Supreme Court had declined to review those two previous Federal Circuit decisions approving Monsanto’s restriction on the use of Roundup Ready seeds, but the justices granted Bowman’s cert petition in October 2012. His lawyers at Frommer Lawrence & Haug filed their merits brief in December, and Monsanto filed its reply on Wednesday.

The farmer and the corporate giant can’t even agree on precisely what question the case presents. Bowman asserted that the issue is the Federal Circuit’s refusal to abide by Supreme Court precedent, which, according to the farmer, dictates that patent rights are exhausted after the authorized sale of a patented product. (It’s always a good strategy to tell the Supreme Court that the Federal Circuit is disobeying its directives on the scope of patents.) Bowman’s brief went even further and accused the Federal Circuit of usurping Congress and making new law that carves out “an exception to the doctrine of patent exhaustion for self-replicating technologies.

Monsanto, which is represented by Supreme Court veteran Seth Waxman of Wilmer Cutler Pickering Hale and Dorr, said in Wednesday’s brief that the issue is a patent holder’s right to impose restrictions on the use of its technology, which extends to unauthorized copies of patented products. Monsanto’s brief warns that if the justices adopt Bowman’s position — that (as Monsanto articulates it) “patent law treats as per se unenforceable all restrictions imposed by license on the use of a patented article following an authorized sale” — the biotech industry will be devastated.

Monsanto is a vigorous enforcer of its patent rights, so Bowman has attracted considerable amicus support from public interest groups. The U.S. government, on the other hand, sided with Monsanto in the amicus brief it filed last week, arguing that Bowman was misinterpreting the doctrine of patent exhaustion. “Under longstanding principles of patent exhaustion, an initial authorized sale of an article embodying the patented invention exhausts the patentee’s exclusive rights to control the use and sale of that article,” the Justice Department said. “It does not, however, exhaust the patentee’s right to exclude others from making a new article embodying the same patented invention. Accordingly, even if respondent’s patent rights in the commodity seed had been exhausted, petitioner acquired no right to use that seed to make newly infringing seed.”

Though it has received considerably less attention than the Myriad gene patent case, which the Supreme Court is also hearing this term, Bowman v. Monsanto implicates similar big-picture concerns about the scope of patent rights and the impact of those rights on critical research. Whatever you think about genetically modified food, this is a case to watch.

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