United States Supreme Court Rules for Monsanto in Roundup Ready Patent Case

May 13, 2013

On May 13, 2013, the United States Supreme Court issued a unanimous ruling that a farmer who buys patented seeds may not reproduce them through planting and harvesting without the patent holder’s permission.  See Bowman v. Monsanto Co., 569 U.S. ___ (2013), (No. 11-796, May 13, 2013).  The case has important implications for the food and agriculture industry, specifically growers and seed research and development companies.

Facts
The case involved Monsanto’s “Roundup Ready” soybean seed – a patented seed genetically altered to withstand exposure to the herbicide glyphosate (including Monsanto’s own glyphosate product, Roundup).  Monsanto sells Roundup Ready seeds to growers who agree to a licensing provision that allows the grower to plant the seeds in one, and only one, season.  Under the agreement, the grower may not save any of the harvested soybeans for replanting, nor may the grower supply them to anyone else for that purpose.  This forces growers to repurchase new Roundup Ready seeds each season even though the patented glyphosate resistance is a genetic trait that is passed on from Roundup Ready seeds to the harvested soybeans.

The case before the Court was a patent infringement suit filed by Monsanto against a soybean farmer who planted Roundup Ready seeds without Monsanto’s permission.  The soybean farmer had visited a local grain elevator where he purchased commodity soybeans (the harvested crop intended for human or animal consumption).  Rather than consume or feed the soybeans, however, the farmer recognized the prevalent use of Roundup Ready seeds in the area and decided to plant the soybeans in his fields under the belief that the seeds were likely glyphosate resistant.  The farmer applied glyphosate herbicide to his field, killing the non-Roundup Ready crop.  At the end of the growing season, the farmer saved some of the seeds from the surviving crop for use during the following year.  The farmer ultimately harvested eight generations of Roundup Ready soybean crops without buying new seeds from Monsanto.

Holding
The outcome of the case turned on the doctrine of patent exhaustion, which provides that the authorized sale of a patented article gives the purchaser, or any subsequent owner, a right to use or resell that article.  The soybean farmer argued that patent exhaustion prohibited Monsanto from controlling the use of the seeds which had been sold to the grain elevator by other local growers.  In other words, the sale to the grain elevator extinguished Monsanto’s patent rights.

The Court rejected the farmer’s arguments.  Bowman, Slip Op. at 4-10.  Although patent exhaustion terminates the patent holder’s rights as to a patented item subject to a prior authorized sale, the doctrine does not allow the subsequent buyer to make new copies of the patented invention.  Thus, while the farmer could resell, consume, or feed the patented soybeans he purchased from the grain elevator, he could not make additional patented soybeans without Monsanto’s permission.  And by saving glyphosate resistant soybeans and re-planting them each year, the farmer was impermissibly replicating a patented product.  According to the Court, a contrary ruling would effectively eliminate the value of  Monsanto’s patent because a Roundup Ready seed could be replicated, then saved and replanted by farmers or resold by Monsanto’s competitors, all without compensating Monsanto.  Id., Slip Op. at 5-6.

The Court was no more impressed with the farmer’s argument that it was the planted soybean, not the farmer, that made replicas of Monsanto’s patented invention.  This “blame-the bean” defense was deemed not credible because the farmer controlled and actively participated in the reproduction process.  The farmer purchased the beans from a grain elevator anticipating that many would be Roundup Ready, applied glyphosate to cull plants without the patented trait, and saved surviving beans for next season.  Therefore, it was the farmer, not the bean, who caused the infringing replication.  The Court affirmed an award of $84,456 in damages to Monsanto.  Id., Slip Op. at 9-10.

Conclusion
The Supreme Court’s decision supports meaningful patent protection for developers of genetically modified seeds (including plant-incorporated protectants) that are capable of reproducing and passing patented traits to subsequent germinations.  The decision has important implications for farmers, as it makes clear that farmers cannot lawfully reproduce patented seeds through planting and harvesting without the patent holder’s permission.  This rule has greater certainty with respect to farmers who actively participate in the reproduction process.  Much less clarity, however, surrounds the impact on farmers whose crops become contaminated – through no fault of their own – by genetically modified seeds, pollen or other means, and then save harvested seeds with patented traits for use in subsequent growing seasons.  The Court’s opinion does not clearly answer whether patent holders like Monsanto would be able to bring successful infringement actions against such farmers who do not intend to acquire patented traits in their crops.

Indeed, the Court was careful to limit its holding to the facts of the case, and specified that the ruling does not address all cases involving self-replicating products (such as DNA molecules and some nanotechnologies).  In particular, the Court indicated two scenarios where a different result might be plausible: where the article’s self-replication occurs outside the purchaser’s control, or where replication is a necessary but incidental step in using the item for another purpose.  Id., Slip Op. at 10.  These remaining questions will likely undergo further judicial scrutiny as self-replicating technologies become ever more prevalent and complex.

Attorneys with Downey Brand’s Food & Agriculture Practice Group counsel growers as well as pesticide and biotechnology companies in an array of regulatory and litigation matters.  For more information, please contact Dale Stern.

The information in this newsletter is not intended to provide specific legal advice. You should consult with an attorney and not rely on any information contained herein regarding your specific situation.