Supreme Court Rules in Favor of Monsanto – The Doctrine of Patent Exhaustion Does Not Apply in a Patent Infringement Action Where the Accused Products are Reproduced Through Planting and Harvesting without the Patent Holder’s Permission
Today’s unanimous ruling by the Supreme Court sends a message to would be copiers of self-replicating products, such as Monsanto’s genetically modified, Roundup Ready soybean seeds – and that message is — tread carefully.
Indiana farmer, Vernon Hugh Bowman, purchased Monsanto’s patented soybean seeds pursuant to a license that permitted Bowman to plant the seeds in one and only one growing season. The license expressly prohibited Bowman from saving any of the harvested soybeans for replanting in subsequent growing seasons. Monsanto’s patented soybeans are of value to farmers because they can survive exposure to herbicide glyphosphate weedkiller treatments, such as Roundup®. Bowman purchased Monsanto’s soybeans each year for his main spring crop, but choose a less expensive source of soybean seeds for his late-season crop, which often had a much lower yield than the spring crop. Knowing that farmers in his area mainly plant soybeans having Monsanto’s Roundup Ready gene, Bowman purchased soybeans intended for consumption from a local grain elevator, where local farmers drop off their harvest. Bowman proceeded to plant those soybeans, treat them with glyphosphate to kill off the plants that did not carry the Roundup Ready gene, harvest the remainder, and save some of the harvested seeds for use in his late-season crop.
After learning of this practice, Monsanto sued Bowman for patent infringement. Bowman raised the defense of patent exhaustion, arguing that Monsanto could not control his use of the soybeans because they were the subject of a prior authorized sale (from local farmers to the grain elevator). The doctrine of patent exhaustion gives the purchaser of a patented article, or any subsequent owner, the right to use or resell that article without liability for patent infringement. The District Court rejected Bowman’s defense and awarded Monsanto damages in the amount of $84,456. The Federal Circuit affirmed on the grounds that Bowman had “created a newly infringing article” and that the right to use a patented article following an authorized sale “does not include the right to construct an essentially new article on the template of the original, for the right to make the article remains with the patentee.” Monsanto Co. v. Bowman, 657 F. 3d 1341, 1348 (Fed. Cir. 2011). The Supreme Court upheld the Federal Circuit’s decision stating:
In the case at hand, 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.
The Court clarified the doctrine of patent exhaustion stating that while it “restricts a patentee’s rights only as to the ‘particular article’ sold; it leaves untouched the patentee’s ability to prevent a buyer from making new copies of the patented item.” 569 U.S. ____ (2013) (slip op. at p. 3-4). The Court reasoned that “if simple copying were a protected use, a patent would plummet in value after the first sale of the first item containing the invention. The undiluted patent monopoly, it might be said, would extend not for 20 years (as the Patent Act promises), but for only one transaction.” Id. at p.8. Taking a rather novel position, Bowman argued that the soybeans naturally self-replicate and, as a result, it was the bean itself, and not he who made replicas of Monsanto’s patented invention. The Supreme Court rejected that argument stating “we think that blame-the-bean defense [is] tough to credit. Bowman was not a passive observer of his soybeans’ multiplication; or put another way, the seeds he purchased . . . did not spontaneously create eight successive soybean crops. . . . it was Bowman, and not the bean, who controlled the reproduction (unto the eighth generation) of Monsanto’s patented invention.” Id. (slip op. at 9-10).
The Court was careful to limit its holding to address the specific self-replicating situation before it. However, this case is a clear victory for biotechnology entrepreneurs with patents on self-replicating products who seek to limit use of the products beyond the first sale.
Written By: Robert A. McKinley
Posted: May 13th, 2013 under Patent.