US Supreme Court Rules In Favour Of Monsanto In Patent Exhaustion Case

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The United States Supreme Court found today that a farmer who buys patented seeds may not reproduce them through planting and harvesting without the right holder’s permission. The case, known as Bowman v. Monsanto, revolved around patent exhaustion. The Supreme Court was to decide whether patent exhaustion applied to patented seeds after their authorised sale.

According to the ruling of the Supreme Court [pdf], “Under the doctrine of patent exhaustion, the authorized sale of a patented article gives the purchaser, or any sub­sequent owner, a right to use or resell that article. Such a sale, however, does not allow the purchaser to make new copies of the patented invention.”

“The question in this case is whether a farmer who buys patented seeds may repro­duce them through planting and harvesting without the patent holder’s permission. We hold that he may not,” said Justice Kagan, delivering the opinion of the court.

The case pitted a US farmer against agro-industry giant Monsanto on the issue of patent exhaustion in patented seeds. Vernon Bowman, a US farmer, was originally sued by Monsanto for infringement of its patented technology. The Indiana farmer, who had acquired a mix of commodity soybean seeds from a local grain elevator containing Monsanto patented seeds, planted the seeds, then sprayed them with the herbicide glyphosate to which Monsanto “Roundup Ready seeds” are resistant. He then harvested the seeds and replanted some of them. This constituted patent infringement, according to Monsanto (IPW, US Policy, 5 March 2013).

The Vernon Hugh Bowman v. Monsanto Company and Al. case was heard by the Court of Appeals for the Federal Circuit, which ruled in favour of Monsanto.

Bowman, who bought Roundup Ready soybean seeds every year for his first crop of the season, found he did not want to pay premium price for his second crop of each season, as he considered the late season planting risky, according to the opinion of the court.

Grain elevators carry a mix of seeds coming from different local farms and are mainly used for human and animal consumption. Since most of those local farms use Roundup Ready soybean seeds, the Court found that Bowman “could anticipate that many of the purchased soybeans would contain Monsanto’s patented technology.”

According to the Court’s opinion, the argument of patent rights exhaustion brought forward by Bowman, saying that the rights were exhausted because they were subject of a prior authorised sale from the local farmers to the grain elevators, was dismissed by the district court, which awarded US $84,456 in damages to Monsanto. This decision was upheld by the Federal Circuit court on the reasoning that Bowman had “created a newly infringing article.”

Under the patent exhaustion doctrine, the court said, “Bowman could resell the patented soybeans he purchased from the grain elevator; so too he could consume the beans himself or feed them to his animals.”

In that case, “Monsanto, although the patent holder, would have no business interfering in those uses of Roundup Ready beans. But the exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto’s permission (either express or implied).”

At question was also the broader issue of self-replicating items. In this instance, the Supreme Court said inventions that could lead to self-replicating products “are becoming ever more prevalent, complex and diverse.” In some cases, they said, the product’s self-replication “might occur outside the purchaser’s control. Or it might be a necessary but incidental step in using the item for another purpose.” This directly refers to copyrights and the copy of computer program on a computer necessary to run the programme, as this is not considered as copyright infringement, they said.

“In the case at hand,” the court said, “Bowman planted Monsanto’s patented soybeans solely to make and market replicas of them, thus depriving the company of the re­ward patent law provides for the sale of each article. Patent exhaustion provides no haven for that conduct. We accordingly affirm the judgment of the Court of Appeals for the Federal Circuit.”

Monsanto Hails Decision

In a release today, Monsanto said the US Supreme Court in a unanimous ruling “affirmed its support for protecting U.S. innovations that are a critical part of supporting the world’s growing needs.”

The Supreme Court’s decision, they said, “affirms the basic purpose of the U.S. patent system – providing an incentive to innovate by providing inventors a meaningful opportunity to recover costs on their R&D investments.”

David Snively, Monsanto executive vice president, secretary, and general counsel, said, “The Court’s ruling today ensures that longstanding principles of patent law apply to breakthrough 21st century technologies that are central to meeting the growing demands of our planet and its people,” according to the release.

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

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