Monsanto Averts Declaratory Judgment Suit

13 June 2013 Personalized Medicine Bulletin Blog

On June 10, 2013, the U.S. Court of Appeals for the Federal Circuit held that Monsanto’s representation that it would not pursue farmers and seed sellers for patent infringement if they inadvertently use Monsanto’s patented genetically modified seeds and plants is sufficient to deny a coalition of farmers, seed sellers and agricultural organizations the juristictional basis to challenge Monsanto’s patented seed technology. In Organic Seed Growers and Trade Ass’n. v. Monsanto Co.,  2012-1298 (Fed. Cir. 2013), the Federal Circuit noted that Monsanto’s binding assurances to appellants that it would not take legal action against growers whose crops might inadvertently contain trace of Monsanto’s patented technology and appellants’ failure to allege any circumstances placing them beyond the scope of those assurances removed any risk of suit against appellants as users or sellers of trace amounts (less than one percent) of the patented technology. In reaching this conclusion, the Federal Circuit reaffirmed that de minimis use can still give rise to infringement liability and provides patentees a strategy to avoid patent challenges without a covenant not to sue.

Inadvertent Use of Self-Replicating Technologies

Appellants originally sought declaratory judgments of non-infringement and invalidity with respect to twenty-three patents owned by Monsanto Co. and Monsanto Technology, LLC (“Monsanto”) that cover Monsanto’s genetically modified seeds and plants that are resistant to the herbicide glyphosate, the active ingredient in Monsanto’s popular herbicide sold under the trade name Roundup. The appellants were joined in the suit by the Public Patent Foundation of the Benjamin N. Cardoza School of Law.

Monsanto sells the patented technology and licenses others to grow and sell seed under a limited-use license permitting licensees to plant, harvest and sell a single generation of the patented seeds. It was undisputed that Monsanto enforced its intellectual property. Between 1997 and 2010, Monsanto pursued over 800 claims for unauthorized use of its patented seeds.

The appellants did not want to use the patented seeds but were concerned that their crops and seeds would be contaminated with the patented seeds and that as a result, they would be sued by Monsanto for patent infringement. The appellants alleged that they their fear of suit prevented them from planting crops that may have become contaminated by Monsanto’s seeds. At one point, appellants asked Monsanto for a written covenant not to sue. Monsanto refused their request and directed appellants to its website wherein Monsanto noted that it would not exercise its patent rights where trace amounts of the patented seeds or traits are present in farmer’s fields as a result of inadvertent means. The district court ruled in favor of Monsanto who argued that the court had no jurisdiction because appellants lacked an essential element of standing – a live case or controversy.

Appellants’ Subjective Fear of Suit Is Not Enough

The Federal Circuit affirmed the district court’s holding that appellants had not demonstrated that their fear of suit does not rise to an actual controversy between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. The court noted that even though some of the appellants could be liable for infringement if they used or sold the patented seeds or plants (even very small quantities of the patented technology) Monsanto’s explicit representations not to take legal action against inadvertent use of the technology is essentially equivalent to a covenant not to sue. The appellants also failed to show that their possible use would fall outside the disclaimed minimal use. 

Thus this case provides patentees a road map to avoid unwanted validity challenges from potential plaintiffs who may seek to invalidate patents that are unlikely to be asserted against them sans a convent not to sue.

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