U.S. Supreme Court Rejects Farmer’s Patent Exhaustion Defense in Monsanto Patent Infringement Suit

by: Kelly A. Williams, a shareholder at Picadio Sneath Miller & Norton, P.C.

SupremeCourtImage_1In Bowman v. Monsanto Co., the U.S. Supreme Court held that the patent exhaustion doctrine did not permit a farmer to reproduce patented seeds them through planting and harvesting.

Monsanto invented and patented a genetic modification that enables soybean plants to survive the application of many herbicides, including Monsanto’s Roundup.  Thus, farmers using these seeds can use certain herbicides to kill weeds without damaging their crops.  The seeds are known as “Roundup Ready” seed.

Monsanto requires growers who purchase the seed to sign a special licensing agreement that permits the grower to plant the purchased seeds in one, and only one, season.  The growers are prohibited from saving any of the harvested soybeans for replanting or giving them to anyone else for that purpose.   Consequently, a grower must buy seeds from Monsanto each season.

Bowman, an Indiana farmer, purchased the patented seeds each year for his first crop of the season, and in accordance with the license agreement, he used all of that seed for planting.  He then sold his entire crop to a grain elevator.  However, Bowman also planted a second crop of each season.  Because he believed late-season planting was risky, he did not want to pay the premium price for the Roundup Ready seeds.  He therefore went to a grain elevator, and purchased “commodity soybeans” intended for human or animal consumption and planted them.  Most of these commodity soybeans were grown from the Roundup Ready seeds.  When Bowman applied a herbicide, most of the new plants survived the treatment and produced a new crop of soybeans with the Roundup Ready trait.   Bowman saved the seed from that crop to plant his second crop the following year.  Bowman did this for eight growing seasons.  Monsanto found out and sued Bowman for patent infringement.

Bowman raised patent exhaustion as a defense, arguing that Monsanto could not control his use of the soybeans because they were the subject of a prior authorized sale from the grain elevator.  The Supreme Court rejected Bowman’s argument.  The court reasoned that the patent exhaustion doctrine, which provides that the initial authorized sale of a patented item terminates all patent rights in them, does not permit a buyer to make new copies of the patented item.  A second creation of the patented item calls the patent “monopoly” in play for a second time.  Here, Bowman was reproducing Monsanto’s patented invention, and the court held that the exhaustion doctrine did not protect him.  To hold otherwise, the Supreme Court explained, would result in Monsanto having a patent with little benefit because farmers could buy the seed only once and reproduce it.

Bowman tried to argue that seeds were special in that they were naturally self-replicating and that it was the soybean, not Bowman himself, that made the replicas of Roundup Ready seeds.  The court was not convinced by this “blame-the-bean” defense because Bowman was not a passive observer of his soybeans’ multiplication, having devised a novel way to replicate seeds from the soybeans.

The Supreme Court stressed that its holding was limited to addressing the specific situation before it, rather than other self-replicating products in the market.  The court recognized “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.”

Thus, the Supreme Court did not use the Monsanto case as an opportunity to give any kind of broad guidance on the patent exhaustion defense as it applies to self-replicating products.  This guidance will have to await another day.

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