Supreme Court rules for chemical giant in seed patent case

Posted: May 14, 2013

Written by

Jeremy P. Jacobs, Greenwire

The Supreme Court today rebuffed an Indiana farmer's challenge to Monsanto Co.'s patents for its genetically modified soybean seeds that now permeate American agriculture.

In a unanimous ruling, justices held that the St. Louis chemical giant's patents remain in effect for seeds that were the second generation -- or progeny -- of Monsanto's herbicide-resistant soybeans.

The patents, wrote Justice Elena Kagan, did not expire after the first seeds were planted, as farmer Vernon Hugh Bowman had contended.

"Under the doctrine of patent exhaustion, the authorized sale of a patented article gives the purchaser, or any subsequent owner, a right to use or resell that article," Kagan wrote. "Such a sale, however, does not allow the purchaser to make new copies of the patented invention."

From 1999 to 2007, Bowman, now 75, purchased Monsanto's Roundup Ready seeds, which are genetically modified to resist glyphosate. Bowman used the seeds on a 300-acre farm in Sandborn, Ind., that he inherited from his father.

Bowman bought the seeds from a Monsanto-authorized dealer and, consequently, the transaction had a licensing agreement attached to it. That document said a farmer may only plant the seeds once -- they cannot save them, plant their offspring or sell them. Farmers can, however, sell them to grain elevators, where they are typically used for animal feed.

To save money for his second seeding of the season, which often yields less, Bowman bought those seeds from a grain elevator and planted them. The technique saved him about $30,000 (Greenwire, Feb. 15).

In October 2007, Monsanto sued Bowman for planting what amounted to second-generation Roundup Ready seeds that he got from the grain elevator. Monsanto contended that Bowman had violated the company's patents, while Bowman argued that those patents were exhausted after the first planting.

Monsanto won, and a lower court slapped Bowman with an $85,000 penalty. Notably, the U.S. Court of Appeals for the Federal Circuit, which handles patent cases, carved out an exemption to the so-called doctrine of patent exhaustion for self-replicating technologies, such as biotechnology.

At arguments in February, justices seemed skeptical of Bowman's position and only lightly questioned Monsanto's attorney, a typical sign of which way they are leaning.

Monsanto executives made the case that if Bowman won, it would strike a significant blow to their ability and willingness to invent new self-replicating technologies because they wouldn't be able to place terms on their use (Greenwire, Feb. 19).

Kagan appeared sympathetic to that view, writing in a short, 10-page opinion that patent exhaustion does not give a customer the right to make a new product.

"If the purchaser of that article could make and sell endless copies, the patent would effectively protect the invention for just a single sale," Kagan wrote. "[T]he exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto's permission (either express or implied)," she added. "And that is precisely what Bowman did."

Kagan also said that if the patents were exhausted, there is little stopping Monsanto customers from reproducing the seeds "ad infinitum -- each time profiting from the patented seed without compensating its inventor."

Monsanto welcomed that aspect of the ruling.

"The court's ruling today ensures that longstanding principles of patent law apply to breakthrough 21st century technologies that are central to meeting the growing demands of our planet and its people," David Snively, Monsanto's general counsel, said in a statement. "The ruling also provides assurance to all inventors throughout the public and private sectors that they can and should continue to invest in innovation that feeds people, improves lives, creates jobs, and allows America to keep its competitive edge."

The case, Bowman v. Monsanto, had been closely watched by opponents of genetically modified crops who criticize the amount of control seed companies like Monsanto exert over farmers. Indeed, Monsanto has aggressively prosecuted farmers across the country for violating license agreements. The company has filed nearly 150 cases against farmers and won every case that has gone to trial.

Jacob Sherkow, a Stanford Law School fellow who specializes in patent law, said the ruling is "a blow for the anti-GMO crowd."

"The court makes clear that patents on seeds and other agriculture genetically modified material will continue to go forward," he said. "And companies will have the certainty of investment."

Legal experts had also posited that the court's ruling could have a broad impact on industries beyond agriculture where self-replicating technologies are common, such as software.

Kagan cautioned against that interpretation today.

"Our holding today is limited -- addressing the situation before us, rather than every one involving a self-replicating product," she wrote.

However, Sherkow noted that the ruling could still affect other industries and the court's focus on "making" goods that would otherwise be patented is actually "pretty broad."

"People are going to use this [ruling]," he said, "because it's another avenue for lawyers to make their case."

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