May 13, 2013

Supreme Court Decides Bowman v. Monsanto Co.

On May 13, 2013, the Supreme Court decided Bowman v. Monsanto Co., No. 11-796, holding that the patent exhaustion defense does not protect a farmer who buys and reproduces, through planting and harvesting, patented seeds without the patent holder's permission.

Monsanto invented a genetic modification to soybean plants that allows the plants to survive exposure to glyphosate, the active ingredient in many herbicides, including Monsanto's own Roundup. Monsanto markets these soybean seeds as "Roundup Ready" seed. Farmers planting the seed can use glyphosate-based herbicide to kill weeds without damaging their crops. Roundup Ready technology is covered by two patents issued to Monsanto.

A purchaser of Roundup Ready soybean seeds is required to assent to a special licensing agreement restricting the grower from planting the seed in more than one season. The resulting crop may be consumed or sold as a commodity, but the grower may not save any of the harvested soybeans for replanting. These restrictions reflect the ease with which new generations of genetically-identical Roundup Ready seeds could be produced by a grower so as to avoid buying Monsanto seed each season.

Petitioner Bowman is an Indiana farmer who purchased Monsanto Roundup Ready soybean seeds each year, planted them, and sold all of the harvest pursuant to the license agreement. But in his second, late-season, planting each year, rather than purchase additional seed from Monsanto, Bowman went to a grain elevator, purchased commodity soybeans intended for human or animal consumption, and planted them in his fields. He surmised that most other farmers also used Roundup Ready seeds and thus he could anticipate that the purchased soybeans would produce Roundup Ready plants. Bowman thereby produced his own Roundup Ready crop, and he saved seeds from that crop for use in the following year's late season planting. He did this each year until Monsanto discovered the practice.

Monsanto sued Bowman for patent infringement based on his reproduction of Roundup Ready soybean seeds. Bowman raised a patent exhaustion defense, arguing that Monsanto could not control his use of the soybeans because they were the subject of a prior authorized sale. This argument was rejected by the district court, and the Federal Circuit affirmed the district court decision.

The Supreme Court granted certiorari to "consider the important question of patent law raised in this case." The doctrine of patent exhaustion limits a patentee's right to control what others can do with an article embodying or containing an invention. An initial authorized sale of the patented item terminates all patent rights to that item and confers on the purchaser the right to use or sell the item as he sees fit. The purpose of the patent law is fulfilled with respect to an article when the patentee has received his reward by the sale of the article; once that purpose is achieved there is no basis for restraining the use and enjoyment of the item sold. Untouched, however, is the ability of the patentee to prevent a buyer from making new copies of the patented item. Indeed, the purchaser does not acquire any right to construct or reconstruct copies of the purchased item for his own use or for sale to another because the patent holder has only "received his reward" for the actual article sold and not for subsequent recreations of it. If the purchaser of an article could make and sell endless copies, the patent would effectively only protect the first sale.

The Supreme Court noted that Bowman's actions were precisely contrary to the patentee's right to prevent reconstruction of the patented item. By purchasing seed from a grain elevator, applying herbicide to cull the crop so that it included only Roundup Ready soybean plants, and harvesting and reusing the resulting seed, Bowman essentially was making a new product where the original product is a seed. Because he reproduced Monstanto's patented invention, the exhaustion doctrine does not protect him. The Supreme Court was unpersuaded by Bowman's principal argument that exhaustion should apply here because seeds are "self-replicating" products intended to be planted. Such an argument would impermissibly dilute the statutory patent monopoly limiting it to a single transaction rather than the 20-year statutory period. Nor is a seed self-replicating in the sense that the farmer is a passive observer of the soybean's multiplication—Bowman devised and executed a novel way to harvest crops from Roundup Ready seeds without paying the usual premium.

Finally, the Court specifically limited this holding to the situation before it, noting that "inventions are becoming ever more prevalent, complex, and diverse." In another case, an article'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.

Justice Kagan delivered the opinion for a unanimous Court.

Download Opinion of the Court

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