Supreme Court Finds for Monsanto in Seed Harvesting Case

16 May 2013 PharmaPatents Blog

In Bowman v. Monsanto Co., the Supreme Court held that the doctrine of patent exhaustion does not give a farmer who has bought patented seeds the right to “reproduce” them through planting and harvesting without the patent holder’s permission. This decision presents a straight-forward application of the patent exhaustion doctrine, and is refreshing in its recognition of the right of the patent owner to reap the rewards of its invention.

The Patents at Issue

The patents at issue are U. S. Patent No. 5,352,605 and RE39,247, relating to Monsanto’s Roundup Ready technology, including its Roundup Ready soybean seeds.

Roundup Ready soybean seeds are sold under a licensing agreement that “permits a grower to plant the purchased seeds in one (and only one) season.” In accordance with the agreement, the grower can consume the resulting crop or “sell it as a commodity (e.g., for consumption), usually to a grain elevator or agricultural processor,” but “may not save any of the harvested soybeans for replanting,” or “supply them to anyone else for that purpose.” Thus, if a grower wants to grow Roundup Ready soybean seeds in another season, he or she must purchase new seeds.

The Alleged Infringement

Bowman purchased Roundup Ready soybean seeds from Monsanto once, and planted and harvested them. He did not save and replant seeds from that harvest, but rather purchased seeds from a grain elevator (allegedly knowing that a substantial portion likely was  harvested from Roundup Ready soybean seeds), and planted, harvested, saved, and replanted and reharvested and resaved those seeds.

Monsanto alleged that this activity infringed its patents, while Bowman alleged that Monsanto’s patent rights were “exhausted” by the authorized sale of the harvested soybean seeds to the  grain elevator.

Patent Exhaustion

The Supreme Court summarized the doctrine of patent exhaustion as follows:

The doctrine of patent exhaustion limits a patentee’s right to control what others can do with an article embodying or containing an invention. Under the doctrine, “the initial authorized sale of a patented item terminates all patent rights to that item.” ….  And by “exhaust[ing] the [patentee’s] monopoly” in that item, the sale confers on the purchaser, or any subsequent owner, “the right to use [or] sell” the thing as he sees fit.

We have explained the basis for the doctrine as follows:

“[T]he 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 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. …. That is because the patent holder has “received his reward” only for the actual article sold, and not for subsequent recreations of it.

The Court noted that “the ‘well settled’ principle ‘that the exhaustion doctrine does not extend to the right to “make” a new product” … decides this case against [Bowman.]

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. …. But the exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto’s permission (either express or implied). …. Because Bowman thus reproduced Monsanto’s patented invention, the exhaustion doctrine does not protect him.

In a rare (at least in recent times) show of concern for the patent holder, the Court explained:

Were the matter otherwise, Monsanto’s patent would provide scant benefit. After inventing the Roundup Ready trait, Monsanto would, to be sure, “receiv[e] [its] reward” for the first seeds it sells. …. But in short order, other seed companies could reproduce the product and market it to growers, thus depriving Monsanto of its monopoly. And farmers themselves need only buy the seed once, whether from Monsanto, a competitor, or (as here) a grain elevator. The grower could multiply his initial purchase, and then multiply that new creation, ad infinitum—each time profiting from the patented seed without compensating its inventor. …. The exhaustion doctrine is limited to the “particular item” sold to avoid just such a mismatch between invention and reward.

The Court concludes:

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.

Supreme Court Steers Clear of Self-Replicating Technology

In reaching its decision, the Supreme Court rejected Bowman’s arguments that he was not liable for infringement because the seeds were “self-replicating.”

[W]e think that blame-the-bean defense tough to credit. Bowman was not a passive observer of his soybeans’ multiplication; or put another way, the seeds he purchased (miraculous though they might be in other respects) did not spontaneously create eight successive soybean crops. …. He purchased beans from a grain elevator anticipating that many would be Roundup Ready; applied a glyphosate-based herbicide in a way that culled any plants without the patented trait; and saved beans from the rest for the next season. He then planted those Roundup Ready beans at a chosen time; tended and treated them, including by exploiting their patented glyphosateresistance; and harvested many more seeds, which he either marketed or saved to begin the next cycle. In all this, the bean surely figured. But it was Bowman, and not the bean, who controlled the reproduction (unto the eighth generation) of Monsanto’s patented invention.

Thus, the Court expressly reserved for another day cases where a patented article’s “self-replication might occur outside the purchaser’s control,” or “might be a necessary but incidental step in using the item for another purpose.”

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