An American farmer recently lost his legal battle with seed giant, Monsanto, after his attempt to work around Monsanto’s seed licensing program was found to infringe Monsanto’s IP.
The dispute made it all the way to the US Supreme Court, which found that the farmer’s reproduction of patented soybean seeds infringed Monsanto’s rights, on the basis that the doctrine of patent exhaustion does not extend to making new copies of the patented product.
Monsanto is a large chemical and technology company, which markets, among other products, Roundup Ready soybean, a genetically modified soybean that is resistant to exposure to glyphosate, the active ingredient in a number of herbicides, including Monsanto’s own Roundup. Roundup Ready soybean crops can be sprayed with Roundup, which eliminates weeds but leaves the crop unaffected. Monsanto’s Roundup Ready soybean is protected by two US patents, including a patent to the seed incorporating genetic modifications.
Roundup Ready soybean seeds are sold by Monsanto to farmers pursuant to a licensing agreement which allows the farmer to plant purchased seed (for a single season) and to then sell (or consume) the resulting crop. The agreement prevents farmers from saving harvested seed for replanting in subsequent seasons.
Unwilling to purchase seed from Monsanto each season, Mr Vernon Bowman, a 75 year old farmer from Illinois, purchased harvested seed intended for human and animal consumption and planted these seeds in his fields. He subsequently sprayed the resulting crop with a glyphosate herbicide to kill any non-resistant plants, allowing him to then select the surviving (Roundup Ready soybean) seed to replant and use in future seasons.
While Mr Bowman believed he had come up with a viable workaround to Monsanto’s licensing program, Monsanto thought otherwise and sued him for patent infringement.
At trial, the United States District Court rejected Mr Bowman’s argument that Monsanto’s patent rights had been ‘exhausted’ by the prior authorised sale of seed by Monsanto. This finding was upheld on appeal before the Court of Appeals for the Federal Circuit, which found that the doctrine of patent exhaustion did not extend to the creation of newly infringing articles.
What did the Supreme Court find?
The doctrine of patent exhaustion provides that the authorised sale of a patented article gives the purchaser of the article – and any subsequent owner – a right to use or resell that article. In a unanimous decision, the Supreme Court emphasised that this doctrine is limited to the particular article sold, and does not extend to subsequent reproductions or copies of the patented article.
A strong theme running through the Supreme Court’s decision is the principle that patent owners should receive fair and proper reward for their inventions and the Court stresses that this principle would be undermined if it was to accept the argument pressed by Mr Bowman that once there had been an authorised sale, he (and others) were free to do as they wished.
The Court also rejected Mr Bowman’s ‘blame-the-bean’ defence – which claimed that since soybeans naturally self-replicate, ‘“it was the planted soybean, not Bowman himself, that made replicas of Monsanto’s patented invention’ – finding, unsurprisingly in our view, that Mr Bowman was not simply a ‘passive observer’.
The Court also sought to emphasise that its decision was restricted to the facts of the case before them and would not necessarily apply to other patented self-replicating products.
The decision was no doubt a relief to Monsanto. In a press release, the company says:
“The Court’s ruling comes at a time when the role of technology and innovation in meeting the demands of our world has never been more important… Biotechnology-improved crops, one of which was at issue in this case, have been widely popular among both small-holder and large-scale farmers as the products enable them to create a sustainable future for their own farming operation by producing more food with fewer resources.”
The ability to protect certain agricultural innovations with intellectual property provides an incentive to invest in R&D. Unfortunately, it does mean that farmers have to enter into licensing agreements in order to plant biotechnology-improved crops.
The Supreme Court’s decision can be found here.