The Federal Circuit Court of Appeals has determined that farmers who plant the progeny of genetically engineered (GE) soybean seeds protected by U.S. patents have infringed those patents even where the progeny are derived from commodity seed purchased from a grain elevator. Monsanto Co. v. Bowman, No. 2010-1068 (Fed. Cir., September 21, 2011). The defendant farmer purchased GE seeds from a Monsanto licensee and signed a technology agreement that restricted him from saving any crop produced from the seed for replanting. He purchased and planted seeds containing Monsanto’s Roundup Ready® technology as his first crop in each growing season from 1999 through 2007. He did not save seed from his first crop during any of those years.
In 1999, the defendant also purchased commodity seed from a local grain elevator for second-crop, or late-season, planting. Because late-season crops are riskier, the farmer bought the less expensive commodity seed for planting. He found that many of these plants were glyphosate-resistant, as were the GE seeds he had purchased from a Monsanto licensee. From 2000 through 2007, he continued to treat his second-crop with glyphosate-based herbicide and, unlike his first crop, the farmer saved the seed harvested from his second crop for replanting additional second crops in later years. He also apparently supplemented his second-crop planting supply with occasional additional purchases of commodity seed from the grain elevator. He was open about these practices in correspondence with Monsanto representatives.
Monsanto sued the defendant for patent infringement in 2007, and, upon investigating eight of his fields, or about 299 acres, confirmed that his second-crop soybean seeds, the progeny of the commodity seeds, contained Roundup Ready® technology. According to the court, the farmer’s technology agreement extended only to seeds purchased from Monsanto or a licensed dealer, and, thus, his use of the commodity seeds was not within the agreement’s scope. Also, “Monsanto did not allege infringement or breach of the Technology Agreement with respect to [the defendant’s] planting of first-generation seeds purchased from [the licensee].” A federal district court granted Monsanto’s motion for summary judgment and awarded the company nearly $84,500. The defendant appealed, arguing that “Monsanto’s patent rights are exhausted with respect to all Roundup Ready® soybean seeds that are present in grain elevators as undifferentiated commodity.”
Monsanto argued that licensed growers’ sales of second-generation seeds to grain elevators as commodity seeds does not exhaust the company’s patent rights under the express conditions of the technology agreement. According to the company, “a grower’s sale of harvested soybeans to a grain elevator is not an ‘authorized sale’ when it results in those soybeans subsequently being planted.” The appeals court agreed, noting, “Even if Monsanto’s patent rights in the commodity seeds are exhausted, such a conclusion would be of no consequence because once a grower, like [the defendant], plants the commodity seeds containing Monsanto’s Roundup Ready® technology and the next generation of seeds develops, the grower has created a newly infringing article.”