Marcia Coyle is chief Washington correspondent for American Lawyer affiliate The National Law Journal.
The U.S. Supreme Court on Tuesday appeared skeptical of an Indiana farmer’s claim that Monsanto lost its right to control the use of its herbicide-resistant soybean after the first sale of that self-replicating seed.
The case, Bowman v. Monsanto, has potential implications for a wide range of industries and has drawn amicus briefs from intellectual property lawyers, biotechnology companies, agricultural organizations, food-safety groups and others.
"Why in the world would anybody spend any money to try to improve the seed if as soon as they sold the first one, anybody could grow more and have as many of those seeds as they want?" asked Chief Justice John Roberts Jr.
Roberts was questioning Mark Walters, a partner in the Seattle office of Frommer Lawrence & Haug who is counsel to the farmer, Vernon Bowman. Monsanto sued Bowman in 2007 for infringing its patents on genetically modified glyphosate-resistant soybeans. More than 90 percent of soybeans sold in the United States are covered by the patents.
Farmers who want to buy the seeds must sign a binding technology license agreement allowing them to use the seeds for one crop only. The soybeans self-pollinate, and later generations have the identical genetic code that offers resistance to the weed-killing herbicide. Farmers can sell the next-generation seeds to a commodity market, such as a grain elevator, but they cannot save them and replant them, according to the agreement.
Bowman purchased Monsanto’s Roundup Ready seeds for his winter planting. He then bought a second, and cheaper, set of seeds from a grain elevator for a second planting. He assumed that since Monsanto’s seeds had deep market penetration, the second set from the grain elevator would be dominated by the herbicide-resistant seeds. He found that to be true after planting them and using the weed killer.
The U.S. Court of Appeals for the Federal Circuit, affirming the district court, rejected Bowman’s argument that the judicially created doctrine of patent exhaustion applies to cut off Monsanto’s patent rights. The circuit court held that the progeny of Monsanto’s soybean are new articles of manufacture, and patent law prohibits Bowman from making a copy of a patented article.
"The reach of Monsanto’s theory is that once that seed is sold, even though title has passed to the farmer, and the farmer assumes all risks associated with farming, that they can still control the ownership of that seed, control how that seed is used," Walters said.
"If exhaustion is eliminated for the progeny seed, then you are taking away the ability of people to exchange these goods freely in commerce. You have essentially a servitude on these things that are exchanged, and every grain elevator who makes a sale is infringing," he argued.
Justice Stephen Breyer told Walters the problem was not the purchase of the seeds from the grain elevator but the use of those seeds to produce a third generation. "You know, there are certain things that the law prohibits," he said. "What it prohibits here is making a copy of the patented invention. And that is what [Bowman] did. So it’s generation three that concerns us."
Walters said the case was unique to the court because it involved the doctrine of patent exhaustion in the context of self-replicating technologies. Under Monsanto’s argument, he said, there would never be an end to its control, and that is an argument for an exception to the doctrine of patent exhaustion. Congress should make that decision, he said.
"The policy that underlies this court’s cases is fundamentally a choice about the purchaser’s rights in that personal property over the patentee’s rights in the monopoly to use that monopoly and increase its sales," Walters argued. "This court has always chosen the purchaser’s rights over the patentee’s rights to increase sales. And we’re just asking you to make the same choice here."
Assistant to the Solicitor General Melissa Arbus Sherry, supporting Monsanto, told the justices that Bowman’s argument would limit the Patent Act’s 20 years of exclusivity essentially to one and only one sale. "It would be near impossible to recoup your investments with that first sale and so the more likely consequence is that research dollars would be put elsewhere," she said.
"That’s a pretty horrible result," Justice Antonin Scalia said, "but let me give you another horrible result." If the court agrees with the government, he said, "farmers will not be able to do a second planting by simply getting the undifferentiated seeds from a grain elevator, because at least a few of those seeds will always be patented."
The solution for farmers like Bowman, said Monsanto’s counsel, Seth Waxman of Wilmer Cutler Pickering Hale and Dorr, is "to simply buy conventional seed, multiply it, 20, 30, 40, 50, 80 times in a single generation and save 1/80th of it to replant in his second crop, if he doesn’t want to buy Roundup Ready technology for his second crop and use the glyphosate aerially."