Monsanto, Myriad: Two US Legal Cases Shaking Biotech Industries

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The biotechnology industry has growing concerns over decisions to be taken this year by the United States Supreme Court in two cases involving the patenting of human genes and the exhaustion of patent rights in the context of easily reproducible products. Several areas of biotechnology could be affected by unfavourable decisions, provoking legal uncertainty and discouraging innovation, industry representatives said in a recent telephone conference. In the meantime, civil society stands fast in opposition.

On 14 February, the Biotechnology Industry Organization (BIO) organised a telephone conference to present “the broad-reaching impacts and implications of these two very different cases, each of which presents distinct questions of patent law that could affect the future of innovation in biotechnology.”

The two cases are Bowman v. Monsanto Co, and Association for Molecular Pathology v. Myriad Genetics (IPW, US Policy, 11 January 2013).

Bowman Case

The first case involves Vernon Bowman, a 75-year old farmer from Indiana. He was sued by Monsanto for infringing the company’s patents by planting a second generation of patented genetically-modified soybean plants. In their amicus curiae brief, Bowman’s lawyers explained that the farmer, in 2007, said  he bought soybeans from an elevator for planting and he did not know what variety  he had planted. The patent question is whether or not Monsanto’s patent rights in the seeds were exhausted after Bowman purchased them.

The Supreme Court is scheduled to hear oral arguments in this case on 19 February.

According to Hans Sauer, deputy general counsel for intellectual property at BIO, biotech companies are not concerned about what Bowman did but about the implications the case could have. The question is about biotech products is that they are easily replicable but difficult to create, he said.

This question applies to other biotech companies, not just the seed business, he said, such as live vaccines, synthetic cell lines, and stem cells, because those products are easily replicable. Small companies would particularly be exposed, he said. Bringing a new product to market entails a 5- to 10-year endeavour and millions of dollars. Legal uncertainty would raise “huge problems” for them to find capital and partners, Sauer said.

Agriculture is at the cutting edge of technology, said Gary Baise, counsel of record for the American Soybean Association, which filed an amicus curiae brief[pdf], along with some other national associations, such as corn, wheat and sugarbeet, asking that the judgment of the US Court of Appeal for the Federal Circuit be upheld. The Court of Appeal ruled in favour of Monsanto.

“Plant biotechnology is the future of American agriculture,” the amicus curiae brief said. IP is key to the industry and has generated major advances, said Baise, contributing to cost reduction, but also helping protect the environment, and reducing pollution and climate change.

He said farmers were prepared to pay more for patented seeds as since the introduction of biotechnology, the productivity “has risen enormously,” and farmland value has “skyrocketed in the US.”

Scott McBride, counsel of record for the Wisconsin Alumni Research Foundation, who submitted an amicus curiae brief [pdf] said the case had particular importance with regards to technology transfer, as a reversal of the previous judgment could impact the benefits to the public provided by the Bayh-Dole Act.

The Bayh-Dole Act of 1980 allowed universities conducting research with government funding to obtain specific rights in the inventions coming out of this research, and encouraged technology transfer from universities.

“Reversal in this case would weaken patent rights for artificial, progenitive [able to reproduce itself] technologies and upset the flourishing innovation system created by US patent law through the Bayh-Dole Act and technology transfer organisations,” says the amicus curiae brief. The fact that the Supreme Court took the case surprised many in the industry, he said.

Christopher Holman, from the University of Missouri, drew an analogy between the case and copyright law as applied to software and digital content. Unlike most inventions, Monsanto seeds are susceptible to duplication, he said, and the problem is that a small number of originals can provide an unlimited number of perfect copies, the same as for encoded music, he added.

Myriad Case: Broad Impact Feared by Industry

The other case is Association for Molecular Pathology v. Myriad Genetics in which the Supreme Court has to decide on the patentability of human genes (IPW, US Policy, 21 December 2012).

According to Sauer, the Myriad case is about a much broader proposition on the patentability of products modelled after products that can be found in nature, such as antibiotics, purified proteins, flavouring, fragrances, dyes, and enzymes.

The American Civil Liberties Union (ACLU), which filed the lawsuit with the Public Patent Foundation has “deliberately chosen a legal theory that will have the broadest possible impact on the patent system as a whole,” he said. They are urging a legal theory that would strike down a large number of patents that are under the same legal theory than Myriad, he added. Thousands of patents are involved, he said, and BIO members are very concerned about the legal theory that is at play.

According to Holman, one of the major problems is the scope of the patent claim. The Myriad case is going to the Supreme Court, but “the lower courts dealing with this case have not done the job of figuring out what the claim actually covers,” he said. This has led to a lot of confusion and misinformation, as “there is some unwarranted assumption that any sort of gene patent covers any sort of use, or research, which is not the case at all,” he added.

The Supreme Court is scheduled [pdf] to hear oral arguments in the case on 15 April.

Civil Society Different Stand on Both Cases

On the Bowman case, the Public Patent Foundation (PUBPAT) said in its amicus curiae brief that the Court of Appeal’s decision created an exemption from patent exhaustion for self-replicating technologies that departs from the established law and sound patent policy.

“The doctrine of exhaustion provides a necessary limit on the ability of patentees to pervert markets beyond the scope of their patents. Sophisticated patent owners like Monsanto can be expected to take limits on their patent rights, including exhaustion, into account when designing their business models,” they said in their brief.

In its amicus curiae brief [pdf], Knowledge Ecology International said the patent exhaustion doctrine has existed in the US for over 150 years. An exception for self-replicating technologies “creating inexhaustible patent rights, will harm downstream users who may have no notice that they are using patented technology,” they said.

In the Myriad case, KEI said in its amicus curiae brief [pdf] that “By design, gene patents are used to block secondary testing as well as research and development on diseases or diagnostics related to the patented sequences.”

“The negative impact of patents has been justified on the grounds that they are the only instrument that can adequately protect investments in research and development for new medical technologies. This assumption is false and a wide range of public policy instruments … are either currently in use, or have been proposed, to stimulate research and development for new medical products,” they said.

Agrichemical Companies Going after Farmers, Report Says

In the meantime, the Center for Food Safety and Save Our Seeds (SOS) on 12 February issued a report titled “Seed Giants vs. U.S. Farmers” [pdf]. The report says that, “Agrichemical companies devote “significant resources toward investigating and prosecuting farmers for alleged seed patent violations.” Their investigations and lawsuits, the report says, “reflect a David versus Goliath scenario” as most farmers do not have the means to get legal representation and are “often forced to accept confidential out-of-court settlements.”

As of December 2012, Monsanto had filed 142 alleged seed patent infringement lawsuits involving 410 farmers and 56 small farm businesses in 27 US states, the two non-governmental organisations said, alleging that sums awarded to Monsanto in 72 recorded judgments exceed US$ 23 million.

Monsanto is not alone is that fight. The report says DuPont “hired at least 45 farm investigators in 2012 to examine planting and purchasing records of Canadian farmers and to take samples from their fields to send to DuPont for genetic analysis.”

“USDA data show that since the introduction of GE [genetically engineered] seed, the average cost of soybean seed to plant one acre has risen by a dramatic 325 percent,” with similar trends for corn and cotton seeds. The report also says that agronomists around the world are worried about a “growing epidemic of weeds that have evolved resistance to glyphosate.”

According to the report, “To exert greater control over their patented material, seed companies rely on contracts with farmers known as technology use agreements. These agreements include a variety of provisions that require company access to farmers’ records, dictate farming practices, and open the door for on-site investigations.

The ongoing case of Organic Seed Growers & Trade Association v. Monsanto filed by PUBPAT, about farmers concerned about being sued because of genetically modified organisms contamination of their fields, had been dismissed in February 2012, following a motion to dismiss filed by Monsanto. The case has been taken to the Court of Appeals for the Federal Circuit, which scheduled oral arguments to be heard on 10 January 2013. The transcript of the oral arguments is here.

A decision is expected in spring of 2013 (IPW, IP Law, 30 March 2011).

All amicus curiae briefs in the Bowman v. Monsanto case and the amicus curiae briefs in the Myriad case can be found on the Supreme Court of the US blog, Scotusblog.

Catherine Saez may be reached at info@ip-watch.ch.

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Comments

  1. says

    If public funds (derived from federal grants) are used to derive data that leads directly to scientific and/or engineering innovation, is there not also a consideration for public investment in such innovation? Where is the return to that collective investment? Especially where such interest may be attached directly to the health and welfare of citizens affected? Where can private profit be insured at the expense of the public welfare at large, when public investment is involved? I make the case that this amounts to theft with regard to publicly invested funds. Law may state whatever legislated interest may determine, but public welfare is insured by the constitution of the United States and any law framed against and contrary to that guarantee should not be enforced or allowed to stand.

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