Monsanto Avoids Declaratory Judgment Action Brought by Organic Farmers

13 June 2013 PharmaPatents Blog

In Organic Seed Growers and Trade Association v. Monsanto Co., the Federal Circuit dismissed the plaintiffs’ declaratory judgment action against Monsanto, but in so doing held that Monsanto would be judicially estopped from asserting its patents against these farmers for inadvertent infringement that results in the production, use, or sale of only trace amounts of infringing seed.

The Patents at Issue

The seventy-five-plus plaintiffs in this case include farmers, seed sellers, and agricultural organizations, who sought declaratory judgments of non-infringement and invalidity with respect to 23 Monsanto patents related to Monsanto’s “Round Up Ready” technology. The appellants “do not want to use or sell transgenic seed” incorporating Monsanto’s technology, but are concerned that their crops could be contaminated with transgenic seed, and that Monsanto then would charge them with patent infringement.

After filing suit, the plaintiffs asked Monsanto for covenants-not-to-sue. Monsanto refused this request, and referred them to a statement on its website:

It has never been, nor will it be Monsanto policy to exercise its patent rights where trace amounts of our patented seeds or traits are present in farmer’s fields as a result of inadvertent means.

(This statement is item 10 of 10 in “Monsanto’s Commitment: Farmers and Patents”)

Monsanto also advised them:

Monsanto is unaware of any circumstances that would give rise to any claim for patent infringement or any lawsuit against your clients. Monsanto therefore does not assert and has no intention of asserting patent-infringement claims against your clients. You represent that “none of your clients intend to possess, use or sell any transgenic seed, including any transgenic seed potentially covered by Monsanto’s patents.” Taking your representation as true, any fear of suit or other action is unreasonable, and any decision not to grow certain crops unjustified.

As characterized by the Federal Circuit:

According to Monsanto, a covenant not to sue is unnecessary because it would not have an incentive to bring suit in the first place because it could not collect significant damages for low levels of inadvertent infringement.

Declaratory Judgment Jurisdiction

The Federal Circuit opinion provides this legal background:

 The Declaratory Judgment Act, 28 U.S.C. § 2201(a), provides that

In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.

The declaratory judgment plaintiff bears the burden of showing the existence of an “actual controversy,” … that is, “any controversy over which there is Article III jurisdiction.”…. As the Supreme Court explained in MedImmune, Inc. v. Genentech, Inc., “‘[b]asically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’” …. Thus, the question in this case is not whether the appellants’ subjective fear of suit by Monsanto is genuine, but whether they have demonstrated a “‘substantial risk’ that the harm will occur, which may prompt [them] to reasonably incur costs to mitigate or avoid that harm.”

The court noted the following facts underlying the alleged controversy:

  • Monsanto has never specifically alleged that [the plaintiffs] infringe its patents, nor threatened suit against them.
  • Monsanto has a history of aggressive assertion of its transgenic seed patents against other growers and sellers (144 suits and 700 settlements)
  • Monsanto has a narrow view of what constitutes an “inadvertent infringer” that excludes “those growers whose crops become accidentally contaminated, and who do not treat their fields with Roundup, but who, knowing of the contamination, harvest and replant or sell the seeds.”
  • The recent Supreme Court decision in Monsanto v. Bowman and other decisions from the Federal Circuit leave open the possibility that inadvertent infringers could be liable for patent infringement.
  • The plaintiffs do not allege that they have detected contamination in their crops.
  • The district court held that it is likely inevitable that conventional crops will be contaminated by trace amounts of windblown pollen or seeds from genetically modified crops or other sources.
  • Monsanto acknowledges that conventional crops could be exposed to “cross-pollination from nearby fields where biotech crops are grown,” … and that they “might inadvertently contain traces of Monsanto biotech genes (because, for example, some transgenic seed or pollen blew onto the grower’s land).”
  • An amicus cites a study finding that, despite stringent precautionary measures meant to prevent any commingling of modified and conventional seed crops, a large majority of conventional seed samples have become contaminated by Monsanto’s Roundup resistance trait.

However, the court avoided balancing these factors by focusing on Monsanto’s assurances:

Despite this possibility of infringement, the question is whether Monsanto is correct that its representations moot any potential controversy.

Reviewing the statements on the Monsanto website and the representations Monsanto made to the plaintiffs, the court concluded:

Taken together, Monsanto’s representations unequivocally disclaim any intent to sue appellant growers, seed sellers, or organizations for inadvertently using or selling “trace amounts” of genetically modified seeds. …. We conclude that Monsanto has disclaimed any intent to sue inadvertent users or sellers of seeds that are inadvertently contaminated with up to one percent of seeds carrying Monsanto’s patented traits.

 The Federal Circuit also provided this somewhat circular explanation:

While Monsanto’s representations are not a covenant not to sue, they have a similar effect. If we rely on Monsanto’s representations to defeat the appellants’ declaratory judgment claims (as we do), those representations are binding as a matter of judicial estoppel. It is well established that a party who successfully argues one position is estopped from later adopting a contrary position in a case involving the same patent.

 Although the court recognized that “Monsanto has not disclaimed any intent to sue a conventional grower who never buys modified seed, but accumulates greater than trace amounts of modified seed by using or selling contaminated seed from his fields,” none of the plaintiffs had alleged that they fall outside of Monsanto’s “trace amounts” disclaimer. Thus, the narrow scope of Monsanto’s disclaimer did not support declaratory judgment jurisdiction.

The Federal Circuit concluded:

 In sum, Monsanto’s binding representations remove any risk of suit against the appellants as users or sellers of trace amounts (less than one percent) of modified seed. The appellants have alleged no concrete plans or activities to use or sell greater than trace amounts of modified seed, and accordingly fail to show any risk of suit on that basis. The appellants therefore lack an essential element of standing. The district court correctly concluded that it lacks Declaratory Judgment Act jurisdiction.

Where Does This Leave Other Farmers?

Usually when a case is dismissed for lack of jurisdiction, one can conclude that the plaintiffs should not have brought suit in the first place, but here it seems that the plaintiffs had to bring this case in order to obtain this result. The statement that Monsanto made to the plaintiffs may not have been enough to prevent declaratory judgment jurisdiction if Monsanto had not relied on it in its efforts to dismiss this case for lack of jurisdiction! Thus, the Federal Circuit decision here seems to be as narrow as Monsanto’s waiver–Monsanto may not be judicially estopped from asserting its patents against other organic farmers who inadvertently infringe the Monsanto patents in trace amounts.

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