The United States Supreme Court recently heard oral arguments in the case opposing a US farmer to agro-industry giant Monsanto on the issue of patent exhaustion in patented seeds. Lead lawyers in the case and others offered comments on the heels of the hearing, while the Supreme Court Justices are considering the arguments and are expected to reach a decision sometime this spring.

The case pitting US farmer Vernon Bowman against agro-industry giant Monsanto revolves around patent exhaustion. The question [pdf] that the US Supreme Court has to consider is, “Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?”

An audio recording and a transcript of the hearing is available on the Supreme Court website.

On 19 February, only hours after the hearing, the Programme on Information Justice & Intellectual Property of the American University Washington College of Law, along with the Federal Circuit Bar Association, organised a post-argument discussion with several speakers, among which were Paul Wolfson, lawyer at Wilmer Cutler Pickering Hade and Door LLP, counsel for Monsanto, and Mark Walters, lawyer at Frommer Lawrence & Haug LLP, counsel for Bowman.

In the post-argument discussion, the lawyers from both sides echoed the arguments presented before the Supreme Court.

The Vernon Hugh Bowman v. Monsanto Company and Al. case was originally brought by Monsanto, which sued the farmer for infringement of its patented technology. Bowman acquired a mix of commodity soybeans seeds from a local grain elevator containing Monsanto patented seeds. After spraying his field with the herbicide glyphosate to which Monsanto “Roundup-ready seeds” are resistant, he harvested the seeds and replanted some of them, thus infringing the patent, according to Monsanto, which set up a website dedicated to the case. Bowman also bought high quality seeds every year from Pioneer Hi-Bred Limited, which commercialises Monsanto patented soybeans according to its amicus curiae brief [pdf].

The Supreme Court took the case after a ruling by the Court of Appeals for the Federal Circuit, which ruled in favor of Monsanto. According to Monsanto, the patents in the technology expire in 2014.

Industry Perspective, Monsanto Argument

The biotech industry is concerned about a weakening of IP protection if the Supreme Court rules in favour of the farmer (IPW, US Policy, 18 February 2013).

At the heart of the problem are products that are self-replicating, such as seeds. The industry is also worried about other areas such as vaccines and stem cells, some even introducing the idea that the case could have possible repercussions on copyright law.

According to Wolfson, the problem resides in the fact that the technology is replicable. Monsanto and other inventors “want their inventions to be widely used but how do you do that in a way so that the inventor does not immediately loses control over his invention,” he asked.

Monsanto wants its “invention to be adopted into the customary channels of commerce,” he said, and added that companies like Monsanto “are not trying to force all of the business relations in agriculture to be rearranged.” According to sources, close to 90 percent of soybean seeds sold in the US are Roundup ready.

“Some things were necessary for Monsanto to do in order to make sure that the invention could be commercialised in a way that would be in line with giving inventors an incentive,” Wolfson said. “In particular, it requires that farmers not replant their crop after having harvested it.”

“Once you allow somebody to reproduce your invention then you are essentially putting your customers in competition with yourself,” and there is “no possible way that you could recoup your investment by charging it onto the sale of the very first bag [of seeds].”

Bowman Lawyer Claims Exhaustion of Patent Rights After Sale

According to Walters, the concerns of inventors on exhaustion and self-replicating technology are legitimate, but the key question is whether those issues should be addressed under patent law or under contract law, adding that for their part, they would favour contract law, as this would get rid of the “innocent infringer problem.”

He said the Bowman case is a good illustration of somebody who thought when he went to the grain elevator that “surely Monsanto cannot claim to own the rights on the elevator grains” which are so mixed up. “Everybody’s seed is in there,” he said.

According to Walters’ oral argument in front of the Supreme Court, if there is no exhaustion of rights on the progeny seeds, “you have essentially a servitude … and every grain elevator who makes a sale is infringing.”

He also said at the hearing that in that case “the only way to use the invention … is to plant it and to grow more seeds.” So, he said, “if you don’t apply the Exhaustion Doctrine and allow someone to use it, you’re choosing patent rights over personal property rights, and that’s never been done in 150 years of this Court’s exhaustion case law.”

Amanda Cohen Leiter, associate professor of law at the Washington College of Law, said it appeared during the hearing that the Chief Justice, from the first question, seemed to agree that the exhaustion doctrine when applied to self-replicating technology really undermines the central function of patents, which is to incentivise innovation.

The notion that seeds are bought for the sole purpose of planting and by way of consequence growing other plants and seeds that would necessarily produce an infringing product was a concept with which the justices seemed to grapple, she said. The same was true for the potential consequences of a ruling on inadvertent infringement, such as in the case of “a kid planting a seed for a science fair project,” she said. The challenge is to try to find a middle ground between incentivising invention without creating “all these unintentional infringers,” she said.

Seth Greenstein, counsel at Constantine Cannon LLP, submitted an amicus curiae brief [pdf] on behalf of the Automotive Aftermarket Industry Association, the Automotive Parts Remanufacturers Association, and the International Imaging Technology Council. He said the case could have implications in the automotive industry, as the issue of patent exhaustion “is crucial to auto part manufacturers or imaging technology companies,” such as companies producing inkjet or toner cartridges.

The issue is of particular importance in the repair versus reconstruction debate, in which in the case of repair there are no further rights, while reconstruction is potentially an infringement, he said. Patent owners have some business motivation to stay in competition in the aftermarket, he added.

Patent Proponent Discusses Impact of Decision

Separately, Cheryl Milone, CEO and founder of Article One Partners, gave Intellectual Property Watch her views on the broader issues at stake in the case.

Article One Partners is a platform using crowdsourcing to collect information on prior art relating to the claims of novelty for selected patents, and relies on a global online community and financially rewards the best researchers for their work, she said. According to the website, anyone can sign up to be part of the platform’s research community, and the platform seeks to improve patent quality.

In Milone’s view, “The Bowman v. Monsanto case is interesting because it lies at the intersection between patent law which provides exclusionary right to a patent owner to keep others from making, using or selling the patented technology, and the access to agricultural products. It is a difficult question because of those competing dynamics.”

If the Supreme Court rules in favour of Bowman, she said, “that would mean a softening of the protection provided by patent rights and would raise issues about whether companies would continue to invest in creating breakthrough agricultural products.”

“Solving the problem of the mixing of seeds at the level of the elevator is a more productive question than trying to expand or contract legal theories,” she said. “The distribution mechanism for mixing seeds could be tailored so that the percentage of patented seeds compared to non-patented seeds could be determined and that the price be adjusted accordingly.”