WASHINGTON, D.C. - (Mealey's) A soybean farmer accused of
infringing a patented pesticide-resistant seed was defeated May 13 in his
efforts to avoid liability via the patent exhaustion doctrine, when the U.S.
Supreme Court deemed the doctrine inapplicable to the dispute (Vernon Hugh
Bowman v. Monsanto Co. et al., No. 11-796, U.S. Sup.; See 3/4/13, Page 4) (lexis.com subscribers may access Supreme Court briefs and the opinion for this case).
Justice Elena Kagan, writing for a unanimous court,
opined that although petitioner Vernon Hugh Bowman argued that the doctrine
should apply "because he is using seeds in the normal way farmers do," it is
actually Bowman who has asked for an exception to the "well-settled rule that exhaustion
does not extend to the right to make new copies of the patented item."
"If Bowman was granted that exception, patents on seeds
would retain little value," she added.
At issue in the dispute is U.S. patent No.
5,352,605, owned by respondents Monsanto Co. and Monsanto Technology LLC
(Monsanto, collectively) and relating to chimeric genes used to transform plant
cells using viral promoters. The invention specifically relates to the use of
viral nucleic acid from the cauliflower mosaic virus, 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. The company 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.
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. However, in 1999, Bowman 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.
After performing a field investigation, Monsanto sued Bowman in 2007 in the
U.S. District Court for the Southern District of Indiana, alleging patent
infringement on the basis that Bowman's second crop of soybean seeds contained
Roundup Ready technology. Monsanto moved for summary judgment; in response,
Bowman argued that Monsanto's patent rights to the seeds he purchased from the
grain elevator and their progeny were exhausted. In 2009, the District Court
granted Monsanto's motion, entering judgment in the respondent's favor in the
amount of $84,456.20. In September 2011, the Federal Circuit U.S. Court of
Appeals upheld the ruling, rejecting Bowman's patent exhaustion defense. The
appellate panel further found that by planting commodity seeds and harvesting
their progeny, Bowman "created a newly infringing article."
Bowman filed a petition for writ of certiorari
with the Supreme Court, seeking review of the Federal Circuit's patent
exhaustion ruling on grounds that "this issue affects every farmer in the
country and the method of planting that farmers such as Mr. Bowman have used
for generations." In October 2012, the Supreme Court granted the petition.
Bowman's brief on the merits presented the following question: "Whether
the Federal Circuit erred by (1) refusing to find patent exhaustion in patented
seeds even after an authorized sale and by (2) creating an exception to the
doctrine for self-replicating technologies."
Rejecting Bowman's contention, the Supreme Court found as
an initial matter that the patent exhaustion doctrine restricts a patentee's
rights only as to the "particular article" sold. Accordingly, the doctrine
"leaves untouched the patentee's ability to prevent a buyer from making new
copies of the patented item." When he planted and harvested Monsanto's
patented seeds, the petitioner "made additional copies" of Monsanto's invention
"and his conduct thus falls outside the protections of patent exhaustion,"
according to the Supreme Court.
"Under the patent exhaustion doctrine, Bowman could
resell the patented soybeans he purchased from the grain elevator; so too he
could consume the beans himself or feed them to his animals. Monsanto, although
the patent holder, would have no business interfering in those uses of Roundup
Ready beans. But the exhaustion doctrine does not enable Bowman to make
additional patented soybeans without Monsanto's permission (either express or
implied). And that is precisely what Bowman did," the Supreme Court added.
Furthermore, Bowman's claim that the doctrine applies
because "seeds are meant to be planted" must fail because a patentee retains an
"undiminished right" to prohibit others from making the thing that a patent
protects, according to the ruling. Were the Supreme Court to hold otherwise, "a
patent would plummet in value after the first sale of the first item containing
the invention," Justice Kagan noted.
"The undiluted patent monopoly, it might be said, would
extend not for 20 years (as the Patent Act promises), but for only one
transaction. And that would result in less incentive for innovation than
Congress wanted. Hence our repeated insistence that exhaustion applies only to
the particular item sold, and not to reproductions. Nor do we think that rule
will prevent farmers from making appropriate use of the Roundup Ready seed they
buy. Bowman himself stands in a peculiarly poor position to assert such a claim.
As noted earlier, the commodity soybeans he purchased were intended not for
planting, but for consumption," the Supreme Court held.
Lastly, the Supreme Court clarified that its holding is
limited to "the situation before us, rather than every one involving a
"We recognize that such inventions are becoming ever more
prevalent, complex, and diverse. In another case, the article's
self-replication might occur outside the purchaser's control. Or it might be a
necessary but incidental step in using the item for another purpose. . . . We
need not address here whether or how the doctrine of patent exhaustion would
apply in such circumstances. In the case at hand, Bowman planted Monsanto's
patented soybeans solely to make and market replicas of them, thus depriving
the company of the reward patent law provides for the sale of each article. Patent
exhaustion provides no haven for that conduct. We accordingly affirm the
judgment of the Court of Appeals for the Federal Circuit," the Supreme Court
Bowman is represented by Edgar H. Haug, Steven M.
Amundson, Vicki M. Franks, Jonathan A. Herstoff and Andrew M. Nason of Frommer
Lawrence & Haug in New York and Mark P.
Walters, Dario A. Machleidt and Eric A. Lindberg of the firm's Seattle office. Monsanto is represented by
Seth P. Waxman of Wilmer Cutler Pickering Hale and Dorr in Washington
and Daniel C. Cox of Thompson Coburn in St. Louis. Melissa Arbus Sherry of the
U.S. Department of Justice in Washington
represents the government.
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