December 16, 2013

The Soybean Seeds Saga: Bowman v. Monsanto Co. et al.

Dr. Hava Caner Ercegovic, Patent Attorney
Dr. Hava Caner Ercegovic

Patent Attorney

Reinhold Cohn & Partners

On May 13, 2013, the US Supreme Court laid down a unanimous decision1 siding with Monsanto2, ruling that Mr. Vernon Hugh Bowman, an Indiana farmer, infringed two of its patents covering genetically modified soybeans by using the patented soybeans to create new seeds, genetically identical to the patented seeds. According to the Court’s decision, the exhaustion of the patent right doctrine does not permit identically replicating a patent- protected product after its purchase.

The Beans

In its years of developing herbicides, Monsanto realized that some crops, such as soybeans, suffer tremendously from the effects of herbicides, which often inhibit the plant’s metabolism yielding to its death. In answering this problem, Monsanto has developed a variety of genetically engineered soybeans that are resistant to glyphosate, the active ingredient in many herbicides (including Monsanto’s own RoundupTM)3. Soybean seeds containing this altered genetic material were trade-named by Monsnato as Roundup ReadyTM seeds.

Consequently, the fields of genetically modified soybeans can be sprayed with RoundupTM, thereby killing any unwanted weeds without harming the soybeans.

Soybeans have unique “self-replicating” properties meaning that each new generation of soybeans is genetically identical to the seed from which it was grown.
Thus, it is possible to grow a subsequent generation of soybeans from harvested soybean seeds4.

The Business

Roundup ReadyTM soybeans hit the US market in 1996. Since then, 90% of American soybean farms use Monsanto’s Roundup ReadyTM seeds.

Monsanto has kept tight control over its product and has required farmers who want to plant its seeds to sign a technology licensing agreement that permits farmers to plant the purchased seed in one, and only one, growing season. Growers may consume or sell the resulting crops, but may not save any of the harvested soy¬beans for replanting. According to Monsanto, the use restriction (or license limitation) is binding on subsequent purchasers.

The Patents

In order to protect its invention, Monsanto filed and was granted two US patents (RE39,247E and US 5,352,605) covering in their claims the DNA molecule encoding a glyphosate-tolerant enzyme, plant cells containing that DNA molecule, plants containing such cells, seeds of such plants and the method of producing such plants.

Mr. Hugh Bowman Goes to Washington

Mr. Hugh Vernon Bowman, a farmer from Indiana, purchased Roundup ReadyTM soybean seed for his first crop of each growing season from a company associated with Monsanto and followed the terms of the licensing agreement.

However, Bowman looked for ways to reduce costs for his riskier late-season planting. In order to do so, Bowman purchased soybeans intended for consumption from a grain elevator , knowing that a portion of these soybeans is the genetically modified, Roundup ReadyTM soybeans. After planting these seeds, he treated the plants with glyphosate, killing all plants that grew out of non-Roundup ReadyTM seeds, harvested the resulting soybeans and saved some of these harvest¬ed seeds to use for his late-season planting in the subsequent season. These harvested seeds were in fact Roundup ReadyTM seeds. Bowman has confessed to planting, regrowing and saving the seeds of eight crops.

After discovering this, Monsanto sued Bowman, arguing that by planting the product of Monsanto’s herbicide-resistant seeds instead of purchasing new ones, Bowman infringed Monsanto’s US patents and was in violation of the Technology Agreement for the seeds.

In his defense, Bowman contended that Monsanto’s patent rights were exhausted once he bought the beans; and, therefore, use of progeny seeds is an expected use of the product. In particular, Bowman argued that his purchase was secondary; i.e. the seeds were the subject of a prior authorized sale (from local farmers to the grain elevator), thus not limited under Monsanto’s Technology Licensing Agreement.

The Doctrine of Patent Exhaustion

US patent case law has created the doctrine of Patent Exhaustion. According to this doctrine, a patentee has limited rights to control what others can do with a purchased product that is covered by a patent. Under the doctrine, “the initial authorized sale of a patented item terminates all patent rights to that item.”6 The sale confers on the purchaser, or any subsequent owner, the right to use or sell the product as he sees fit.

The Decision

The District Court rejected Bowman’s argument of patent exhaustion, and awarded damages to Monsanto in the amount of $84,456. The Federal Circuit affirmed, reasoning that Patent Exhaustion did not protect Bowman because he had “created a newly infringing article.” Upon appeal, the Supreme Court granted Vernon Bowman’s petition for a writ of certiorari (judicial review).

The Supreme Court explained that “…the purpose of the patent law is fulfilled with respect to any particular article when the patentee has received his reward . . . by the sale of the article; once that purpose is realized the patent law affords no basis for restraining the use and enjoyment of the thing sold.”

Consistent with that rationale, the Court clarified the fact that the doctrine restricts a patentee’s rights only as to the “particular article” sold. It leaves untouched the patentee’s ability to prevent a buyer from making new copies of the patented item.

According to the Supreme Court, identically reproduc¬ing a patented article does not constitute an exhausted use according to the Doctrine: “If simple copying were a protected use, a patent would plummet in value after the first sale of the first item containing the invention.”

Accordingly, the Supreme Court concluded that Bowman’s actions did not fall under the Patent Exhaustion Doctrine and infringed on Monsanto’s patent rights.

Nevertheless, the Supreme Court was extremely cautious in limiting the holding of the decision only to cases in which self-replicating products are involved.

The Court recognized that such inventions are becoming ever more prevalent, complex, and diverse, especially in cases in which the article’s self-replication might occur outside the purchaser’s control, or in cases in which self-replicating is a necessary but incidental step in using the item for another purpose.

In spite of the Court’s caution and limitations, this decision may have implications in other intellectual property realms, including biotechnology, software-related inventions and copyright. It is clear that US courts will not heed unconditionally to the exhaustion of right argument and try to assess, on a case-by-case basis, both the intentional act of infringement by a purchaser and the loss of constitutional IP protection provided by law.

1 Certiorari to the United States Court of Appeals for the Federal Circuit no. 11–796.

2 A multinational agricultural biotechnology corporation, headquartered in Missouri, USA.

3 Such genetically engineered soybean plants contain in their cells a plasmid that confers the glyphosate resistance.

4 Although this requires substantial human intervention – soybean seeds must be cleaned, conditioned and carefully stored to be suitable for planting.

5 A grain elevator is an entity that purchases grains from farmers and sells it for consumption. Under US Law, a grain elevator cannot package or market its grains for use as agricultural seed.

6 Quanta Computer, Inc. v. LG Electronics, Inc., 553 U. S. 617, 625 (2008) and United States v. Univis Lens Co., 316 U. S. 241, 249–250 (1942)

This article is provided for general information only. It is not intended as legal advice or opinion and cannot be relied upon as such. Advice on specific matters may be provided by our group’s attorneys.

Contact Us
Newsletter Sign Up