High Court Won’t Chuck Farmer’s Monsanto Debt

     WASHINGTON (CN) – An Indiana farmer owes Monsanto more than $84,400 for infringing its patent by saving genetically engineered seeds, the Supreme Court ruled Monday.
     In addition to selling a glyphosate-based herbicide called Roundup to farmers who want to keep weeds out of their crops, Monsanto also has genetically modified certain plants to make them resistant to the poison.
     Seed producers who insert the Roundup Ready genetic trait into their plants license the technology from Monsanto.
     Farmers buy these seeds from the Monsanto-licensed producers and sign a limited-use license. Since successive crops would carry the genetic trait, Monsanto’s agreement requires the farmer to use the seed containing Monsanto gene technologies for only a single season of planting a commercial crop.
     It also forbids the farmer from reselling the seeds or from saving the seed or any crop produced from it for replanting.
     Farmers also cannot use the seed or provide it to anyone for crop breeding, research, generation of herbicide registration data or seed production.
     Monsanto authorizes growers to sell second-generation seed to local grain elevators as a commodity, however, without restricting grain elevators’ subsequent sales of that seed.
     Vernon Hugh Bowman, a Knox County, Ind., farmer, had bought the Roundup Ready seeds from licensed producer Pioneer Hi-Bred every year from 1999 through 2007, signing the technology agreement Pioneer proffered.
     He never saved seed from his first crop during any of those years.
     That first year, Bowman also purchased less expensive commodity seed from a local grain elevator, Huey Soil Service, for a risky late-season planting.
     Commodity seeds are a mixture of undifferentiated seeds harvested from various sources, including from farms that grow Roundup Ready soybeans and those that do not.
     Monsanto insists that its contract does not prohibit unrestricted seed sales to grain elevators as a commodity.
     Bowman had sprayed herbicide on his fields that year and discovered that many of his plants were, indeed, resistant.
     In each subsequent year, from 2000 through 2007, Bowman treated his second crop with glyphosate-based herbicide. Each time, Bowman saved the seed harvested from his second crop for replanting additional second crops in later years.
     Monsanto contacted Bowman in winter 2006 to investigate his planting activities, about which he had been open and honest.
     After investigating eight of Bowman’s fields, totaling 299.1 acres, in 2007, it confirmed that Bowman’s second-crop soybean seeds grown from the commodity seeds contained the patented Roundup Ready technology.
     A federal judge granted Monsanto summary judgment of infringement in 2009 and awarded the company $84,456.20 in damages. The Federal Circuit affirmed , leading Bowman to petition the high court for certiorari.
     The unanimous Supreme Court affirmed Monday.
     “Under the patent exhaustion doctrine, 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,” Justice Elena Kagan wrote for the court. “Monsanto, althoughthe 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). And that is precisely what Bowman did. He took the soybeans he purchased home; planted them in his fields at the time he thought best; applied glyphosate to kill weeds (as well as any soy plants lacking the Roundup Ready trait); and finally harvested more (many more) beans than he started with. That is how ‘to “make” a new product,’ to use Bowman’s words, when the original product is a seed. Because Bowman thus reproduced Monsanto’s patented invention, the exhaustion doctrine does not protect him.” (Parentheses in original.)
     “Were the matter otherwise, Monsanto’s patent would provide scant benefit,” Kagan added. “After inventing the Roundup Ready trait, Monsanto would, to be sure, ‘receiv[e] [its] reward’ for the first seeds it sells. But in short order, other seed companies could reproduce the product and market it to growers, thus depriving Monsanto of its monopoly. And farmers themselves need only buy the seed once, whether from Monsanto, a competitor, or (as here) a grain elevator. The grower could multiply his initial purchase, and then multiply that new creation, ad infinitum – each time profiting from the patented seed without compensating its inventor. Bowman’s late-season plantings offer a prime illustration. After buying beans for a single harvest, Bowman saved enough seed each year to reduce or eliminate the need for additional purchases. Monsanto still held its patent, but received no gain from Bowman’s annual production and sale of Roundup Ready soybeans. The exhaustion doctrine is limited to the ‘particular item’ sold to avoid just such a mismatch between invention and reward.”
     Kagan emphasized that protecting copying as a patent use would undermine the 20-year monopoly promised by the Patent Act after just one transaction.
     The court also said that its ruling does not keep farmers from making appropriate use of the Roundup Ready seed they buy.
     “No sane farmer, after all, would buy the product without some ability to grow soybeans from it,” Kagan wrote. “And so Monsanto, predictably enough, sells Roundup Ready seed to farmers with a license to use it to make a crop. Applying our usual rule in this context therefore will allow farmers to benefit from Roundup Ready, even as it rewards Monsanto for its innovation.”
     By limiting consideration to the Bowman’s soybean crop, the court did not address how it would rule in a case where self-replication of a seed “might occur outside the purchaser’s control.”
     “We need not address here whether or how the doctrine of patent exhaustion would apply in such circumstances,” Kagan concluded. “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.”
     Monsanto previously said that nearly 94 percent of Indiana’s acres of soybeans planted in 2007 were planted using herbicide-resistant varieties.
     In the ‘605 patent, issued in 1994, Monsanto uses viral nucleic acid to transform a plant cell’s new genetic material.
     To accomplish this transformation, Monsanto isolates a section of the genome for the acid, which is found in a virus that infects plant cells known as cauliflower mosaic. Then this region is combined with a heterologous protein-encoding DNA sequence, forming a chimeric gene to be expressed in the plant cell.
     The ‘436 patent, issued in 2006, uses the aforementioned patent to transform plant cells with novel protein-encoding gene sequences that encode for EPSPS, a glyphosate-tolerant enzyme. These genetically modified plants express EPSPS and exhibit glyphosate resistance.

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