Farmer's Petition Granted By Supreme Court In Seed Patent Dispute

WASHINGTON, D.C. - The U.S. Supreme Court agreed Friday to weigh in on a dispute of "core practical importance to agriculture and of vital interest in patent law," according to a petition for certiorari (Vernon Hugh Bowman v. Monsanto Co., No. 11-796, U.S. Sup.; See 10/3/11, Page 9).

(Petition for certiorari available.  Document #16-121015-009B.)

Vernon Hugh Bowman, a 75-year-old farmer accused of infringement by Monsanto Co. in 2007, successfully persuaded the high court to address the question of whether the doctrine of patent exhaustion applies in the case of patented seeds even after an authorized sale and whether the Federal Circuit U.S. Court of Appeals erred in creating an exception to the doctrine for self-replicating technologies.

Herbicide Resistant

In 1994, respondent Monsanto received U.S. patent No. 5,352,605 for chimeric genes used to transform plant cells using viral promoters. The invention relates to the use of viral nucleic acid from the cauliflower mosaic virus (CaMV), a virus capable of infecting plant cells, as a vector for incorporating new genetic material into plant cells. 

Monsanto's "Roundup Ready" soybeans exhibit resistance to N-phosphonomethylglycine-based herbicides and are covered by the '605 patent as well as reissue patent No. RE39,247E; to that end,  Monsanto licenses producers to sell patented Roundup Ready seeds to growers pursuant to a "Technology Agreement" that requires growers to not save any crop seed for replanting.  Accordingly, a grower's use is restricted because the patented Roundup Ready genetic trait carries forward into each successive seed generation.

Field Investigation

Bowman purchased Roundup Ready seeds from Monsanto's licensed seed producer Pioneer Hi-Bred.  Bowman, pursuant to the Technology Agreement, did not save seed from his first crop during any of the seven years he used the Roundup Ready seed. In 1999, however, he purchased commodity seed from a local grain elevator for a late-season "second crop." Bowman applied glyphosate-based herbicide to the commodity seed fields to control weeds and to determine whether the plants would exhibit glyphosate resistance. After confirming that many of the plants were indeed resistant, Bowman saved the seed harvested from his second crop for replanting additional second crops in later years.

Monsanto performed a field investigation and later filed the instant lawsuit alleging infringement on the basis that Bowman's second-crop soybean seeds contained Roundup Ready technology.  U.S. Judge Richard L. Young of the Southern District of Indiana granted summary judgment in favor of Monsanto in 2009, which the Federal Circuit upheld in September 2011.

Important Legal Issue

In seeking review by the Supreme Court, Bowman argued in a December petition for certiorari that the Federal Circuit's "judicially created 'conditional sale' exemption" - which permits a patent holder to continue asserting its rights even after an authorized sale - is incorrect.  "Practically, this issue affects every farmer in the country and the method of planting that farmers such as Mr. Bowman have used for generations," Bowman states in his brief.

Additionally, the Federal Circuit's exemption conflicts with United States v. Univis Lens Co. (316 U.S. 241 [1942]), in which the Supreme Court held that exhaustion results from an authorized sale notwithstanding post-sale restrictions on end-purchasers, according to the petitioner.

"The Federal Circuit has departed from this rule since 1992 with the decision in Mallinckrodt, Inc. v. Medipart, Inc. (976 F.2d 700 [Fed. Cir. 1992]). And its decision in this case serves to completely eliminate exhaustion as a viable defense to patent infringement claims in the context of self-replicating technologies such as genetically modified seeds. Because this case presents an important legal issue from the Federal Circuit in conflict with this Court's precedents and of great practical importance to a wide swath of this country's economy, this Court should grant certiorari," Bowman wrote.

Correct Conclusion

Urging the court to instead stay out of the dispute, Monsanto in February argued that the conditional-sale doctrine was not relied upon by the Federal Circuit in affirming summary judgment.  Rather, Monsanto asserts in its respondent brief, the Federal Circuit "relied on the separate rationale that patent rights exist separately in each article embodying patented biotechnology, and so patent rights in an article are not exhausted unless that particular article is the subject of an authorized sale."

"Thus, the Federal Circuit ruled that, even if Monsanto's patent rights in the soybeans that Bowman purchased from a grain elevator were exhausted, that did not give Bowman the right to plant those soybeans to create a new generation of crops, because in doing so Bowman necessarily created new articles - another generation of soybeans - in which Monsanto retained its patent rights.  That conclusion is correct.  It is consistent with basic principles of patent law, under which the sale of an article embodying a patent, even if it exhausts the patentee's rights in that article, does not give the purchaser (or anyone else) the right to manufacture a new copy of that article," Monsanto maintains.

Bowman is represented by Edgar H. Haug of Frommer, Lawrence & Haug in New York and Mark P. Walters and Dario A. Machleidt of Lawrence & Haug in Seattle.  Daniel C. Cox, David B. Jinkins and Jeffrey A. Masson of Thompson, Coburn in St. Louis and Seth P. Waxman, Paul R. Q. Wolfson and Gregory H. Lantier of Wilmer, Cutler, Pickering, Hale and Dorr in Washington, D.C., represent Monsanto. 

(Additional documents available:  Respondent brief.  Document #16-121015-010B.  United States amicus curiae brief.  Document #16-121015-011B.)

[Editor's Note:  Lexis subscribers may download the document using the link above. The document(s) are also available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.]

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