Patent Exhaustion and Self-Replicating Technologies

13 May 2013 Personalized Medicine Bulletin Blog

Today in Bowman v. Monstanto Co., 569 U.S. __ (2013), a unanimous Supreme Court held that under the doctrine of patent exhaustion,the authorized sale of a patented article only gives the purchaser or any subsequent owner of the patented article the right to use or resell that article. It does not give the purchaser or any subsequent owner the right to make copies of the original article, even when the article being purchased inherently possesses the ability to make copies of itself.
Self-Replicating Seeds

The particular facts of the case relate to self-replicating soybean seeds that are resistant to Roundup, a popular herbicide. Bowman, a soybean farmer, purchased patented soybean seeds from a company affiliated with Monsanto. Monsanto holds the patent on the herbicide-resistant seeds. When purchasing the original seeds, Bowman agreed to Monsanto’s restriction against the use of seeds created from the planting and harvesting of them.

The Doctrine of Patent Exhaustion Does Not Apply

After planting, harvesting and selling the resulting seeds from the original purchase, Bowman purchased second generation seeds from a party not authorized by Monsanto to sell the patented seeds. He planted the second generation seeds and sold the resultant soybeans for a profit. Monsanto sued Bowman for for the unauthorized use of the patented (second generation) seeds. Bowman raised as his defense the doctrine of patent exhaustion. 

The Supreme Court held that the defense of doctrine of patent exhaustion does not apply to the facts of this case. Under the doctrine, the initial authorized sale of a patented item terminates all patent rights to that item. However, consistent with that rationale, the Supreme Court noted 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. Slip Op. at 4-5. The exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto’s permission whether expressly or impliedly granted. Slip Op. at 5.

Limited Application of the Doctrine

While the holding of the case could be applied to self-replicating technologies such as stem cells, recombinant genes and monoclonal antibody-producing hybridoma cells, the Supreme Court was careful to limit its holding to the particular facts of the case and expressly cautioned against its application to other self-replicating technologies such as in biotechnology and computer science.

“Our holding today is limited – addressing the situation before us, rather than every one involving a self-replicating product. 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.”

Slip Op. at 10.

A Careful Balance

That is not to say, however, that the Supreme Court would not hold similarly for self-replicating inventions in the field of biotechnology with a few tweaks. In explaining the rationale for its holding, the Supreme Court noted that purchaser of the patented soybean seed gets full value in the initial purchase by planting and harvesting the seeds and that the purchaser of the patented seeds has full control over its initial use. The Court indicated that this might not be the case where the article’s self-replication occurs outside the purchaser’s control. As an example, the Court noted that making a copy might be an essential step in the utilization of the patented technology. One could see how the purchase of a population of stem cells, such as a population of induced pluripotent stem cells for drug screening, might need to replicate or copy the originally purchased cells to use them for drug screening. The same facts could apply to the use of a plasmid or recombinant gene in the laboratory or for therapy. Thus, the Supreme Court has kept open the question of how far a patentee can extend the patent monopoly over self-replicating technologies in biotechnology. Even so, it is clear that the Supreme Court is aware that current innovations in biotechnology and information technology are raising difficult questions over the proper scope of patent rights, and that the rights of patent owners and the public must carefully balanced.

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