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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

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« Posner on IP Restricting Creativity | Main | On Bowman and How US Courts Work »

October 17, 2012

Supreme Court Grants Cert for Bowman v. Monsanto

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Posted by Alan Wexelblat

In another case that is potentially hugely important but flying mostly under everyone's radar, SCOTUS has agreed to hear one 74-year-old farmer's challenge to the biggest of the big in agribiz. Like the other stealth IP case this term (Kirtsaeng) part of the question at issue here is what constitutes "exhaustion", though in this case it's a patent that is being fought over. As usual let's start at the beginning.

Monsanto makes (among many other things) a patent-protected line of soybean seeds generally known by the phrase "Roundup Ready". These seeds are genetically modified to be resistant to Monsanto's popular Roundup herbicide, allowing farmers to plant and spray without fear that they'll kill off their own crops as they exterminate weeds. This combination has been very popular - so much so that over 90% of the commercially planted soybean crop (in the US) is Roundup Ready. But plants are not like other products in that they're self-replicating. A patented seed produces a plant that in turn produces... well, seeds, and the modification Monsanto made is passed down through generations so the seeds are also resistant. Allowing the re-use of those seeds would give farmers the ability to benefit repeatedly from Monsanto's patented innovation without paying (again) for it.

Monsanto therefore requires farmers who want to plant its seeds to sign an agreement saying they won't re-plant the seeds but instead will buy new seeds from Monsanto each planting. Bowman, the farmer in this case, realized that because Roundup Ready-derived seeds were so common he could just buy some local generic soybean seeds and be pretty sure the majority of them would contain the herbicide-resistant mutation. Of course, this is also much cheaper. So he did that, and Monsanto accused him of violating its patent; Bowman counter-argued that his use of the generic seeds was fair because of patenting's exhaustion doctrine.

The exhaustion doctrine says (more or less) that you can only sell a patented product once. As Timothy Lee notes in the linked story above, SCOTUS has already said that exhaustion applies in the case where you use a patented product inside something you sell - in the case of a patented chip sold on its own and then re-sold as part of an OEM computer. Bowman reasoned that since he had not violated his license - he replanted generic seeds, not the ones grown by the plants he signed for - then exhaustion would apply and the generic soybean seeds would be OK.

Monsanto disagreed, naturally (pun intended) and the CAFC ruled in their favor that in fact what Bowman was doing was manufacturing items covered by a patent. That is, each soybean plant is a factory of sorts and if Bowman used seeds with the Roundup Ready gene in them - regardless of where he got those seeds - then making more of a patented product is a patent infringement.

As Bloomberg notes, this is a potential bombshell for the genetic-seed industry. If they are forced to play by the rules that chipmakers and others have to play by then they'll have to change their entire business models. Given the degree to which Monsanto dominates the business you can see why they'd be reluctant to do that. Conversely, it seems contrary to ordinary sense to say that the simple act of planting a seed may be a patent violation. Dan Charles noted for NPR earlier this week that the trial judge was troubled by the basic issue: is the reach of gene patenting so long that a single company should be allowed to encumber an entire generic market?

I'm frankly baffled by why SCOTUS agreed to hear this case rather than letting the CAFC decision stand. And given the way that the Court's recent Mayo decision sowed (sorry, I couldn't resist that one either) confusion rather than giving clarity I'm afraid that a decision here will similarly muddy the waters further.

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