Wednesday, February 20, 2013

Patent Rights, Exhaustion Doctrine, and Monsanto

On February 19, 2013, the Supreme Court heard oral arguments in Bowman v. Monsanto Co., involving an Indiana farmer who replicated Monsanto’s patented seeds them without paying the company a fee. Farmers who buy this patented seed must generally sign a contract promising not to save seeds from the resulting crop, which means the farmers must buy new seeds every year. Vernon Bowman had signed such contracts for his main crop but used what he thought was loophole: Rather than replant his own seed, he bought seed from a grain elevator filled with a mix of other farmers’ seeds.

The Roundup Ready soybean is the most popular variety in the U.S., so it was reasonably certain Bowman would receive mostly patented soybeans from the elevator. Mr. Bowman planted these seeds, then sprayed them with Roundup, so only the Roundup Ready soybean plants survived, and he saved those seeds for further plantings.

Mr. Bowman argued that the doctrine of patent exhaustion allowed him to do what he liked with products he had obtained legally. Under this doctrine, when an owner of intellectual property sells a copy of the property, the buyer is free to do what it wishes with the product. However, Justice Sonia Sotomayor noted, “The exhaustion doctrine permits you to use the good that you buy. It never permits you to make another item from that item you bought.”

The farmer’s lawyer said that companies could rely on contracts rather than patent law to protect their inventions. Justice Elena Kagan said, “It seems to me that that answer is purely insufficient in this kind of a case, because all that has to happen is that one seed escapes the web of these contracts, and that seed, because it can self-replicate in the way that it can, essentially makes all the contracts worthless.”

Justice Stephen G. Breyer said that there are lots of things someone could do with the seeds he had bought from the grain elevator. “You can feed it to animals, you can feed it to your family, make tofu turkeys … But I’ll give you two that you can’t do. One, you can’t pick up those seeds that you’ve just bought and throw them in a child’s face. You can’t do that because there’s a law that says you can’t do it. Now, there’s another law that says you cannot make copies of a patented invention.”

This intentional replication of the patented seeds infringes the patent, the same as someone makes thousands of copies of a CD he purchased. As Justice Breyer implied, this case really has nothing to do with the exhaustion doctrine and really is groping for a new doctrine or a new right for farmers to reproduce patented seed. This would make seed patents largely worthless.

As Chief Justice Roberts asked, “Why in the world would anybody spend any money to try to improve the seed if as soon as they sold the first one anybody could grow more and have as many of those seeds as they want?”

4 comments:

Parke Wilde said...

Just thinking this through ....

It seems significant that the infraction was purchasing and planting generic commodity soybeans.

Until Monsanto received the patent, such purchase and planting was legal. After the patent, the justices seem to be saying this same action became illegal.

One could say that Bowman's infraction is different because he applied Roundup to select the Roundup Ready seed. Would the planting of generic soybeans have been legal if he hadn't taken that extra step?

I don't like it that the justices are defining as illegal replication a process of planting that has farmers have done for thousands of years.

It's not Bowman's fault that Roundup Ready seeds dominate the commodity bin.

Neal Fortin said...

Parke,

Thank you for your comment.

Intellectual property was considered so important by the Founding Fathers, that they singled it out for mention and protection in the Constitution. By providing inventors limited time protection against unlicensed copying, we encourage more inventions. But patented protection is limited in time, so the inventions' benefits soon become part of the public domain. This system benefits all of society.

Farmers can continue to do what they have done for 10,000 years -- save their unpatented seeds and multiply them. What they cannot do, simply, is copy a novel seed that is patented unless they purchase a license.

Neal Fortin said...

P.S. Bowman's attorney argued that farmers buying commodity soybeans for planting was rare. Farmers can save their unpatented seed to plant the next year. However, Bowman clearly wanted the patented trait, rather than an traditional variety, because he treated the crop with Roundup.

Neal Fortin said...

According to The New York Times, the U.S. Supreme Court ruled unanimously on May 13 that farmers could not use Monsanto’s patented genetically-altered soybeans to create new seeds without paying the company a fee.
http://www.nytimes.com/2013/05/14/business/monsanto-victorious-in-genetic-seed-case.html?_r=1&