No patent exhaustion for replicant soybeans
The Federal Circuit has upheld a finding of patent infringement against a farmer who planted “next generation” Roundup Ready® soybean seeds derived from commodity seed he purchased from a grain elevator.
The case, Monsanto Co. v. Bowman, was decided September 21 and follows Monsanto victories in several similar cases.
The patents at issue are U.S. Patents No. 5,352,605 and No. RE39,247 (a reissue of 5,633,435) and cover aspects of the Roundup Ready® technology for creating genetically-engineered soybeans that are resistant to glyphosate-based herbicides, such as Monsanto’s Roundup®. The technology allows farmers to treat their fields with glyphosate-based herbicides without damaging their crops.
According to the circuit court’s opinion,
The invention of the ’605 Patent relates to the use of viral nucleic acid from the cauliflower mosaic virus (“CaMV”), a virus capable of infecting plant cells, as a vector for incorporating new genetic material into plant cells (a “transformation” of the plant cells). To accomplish this transformation, the CaMV promoter region is isolated from the CaMV genome and combined with a heterologous protein-encoding DNA sequence, forming a chimeric gene to be expressed in the plant cell.
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The invention of the ’247E Patent involves the transformation of plant cells—using, for example, the CaMV promoters disclosed in the ’605 Patent—to transform plant cells with novel proteinencoding gene sequences that encode for EPSPS, a glyphosate-tolerant enzyme. These genetically modified plants express EPSPS and exhibit glyphosate resistance.
Bowman, a farmer in Knox County, Indiana, purchased seeds containing the Roundup Ready® technology from Pioneer Hi-Bred, a Monsanto-licensed seed producer. Pioneer required Bowman to sign a technology agreement that prohibited him from, among other things, saving any of the resulting crop for replanting in future years.
Bowman also obtained seeds from Pioneer to plant a late-season second crop each year. However, because he considered this second crop riskier than the first, instead of buying expensive Roundup Ready® seeds Bowman bought cheaper “commodity” seeds.
Commodity seeds are a mix of seeds from different sources, including from farms that grow Roundup Ready® soybeans. Monsanto did not prohibit soybeans grown from its seeds from being sold as commodity seeds, and over 90 percent of Indiana’s soybeans are herbicide-resistant varieties. Bowman noticed that his second crop was also resistant to pesticides, and saved seeds from this second crop to replant in subsequent years.
Monsanto investigated Bowman’s planting activities and sued him, alleging infringement of the ‘605 and ‘257E patents. Monsanto confirmed that 300 acres of Bowman’s second-crop soybean seeds contained the patented technology. However, since the technology agreement only pertained to seeds purchased from Monsanto or a licensed dealer (but not to the commodity seeds), the terms prohibiting replanting did not apply and Monsanto could not allege breach of the agreement.
On Monsanto’s patent claims, Bowman argued that because the sale from the growers to Pioneer was authorized, and because the sale from Pioneer to Bowman was authorized, the doctrine of patent exhaustion applied, barring Monsanto from recovering for infringement. Under the exhaustion doctrine, the first sale of a patented item exhausts the patentee’s rights in that item, including the right to control how it may be used.
The district court disagreed with Bowman, granted summary judgment of infringement, and awarded Monsanto damages of over $84 thousand.
On appeal, the Federal Circuit held that the patent exhaustion doctrine did not apply where an infringer used a patented self-replicating technology:
Even if Monsanto’s patent rights in the commodity seeds are exhausted, such a conclusion would be of no consequence because once a grower, like Bowman, plants the commodity seeds containing Monsanto’s Roundup Ready® technology and the next generation of seed develops, the grower has created a newly infringing article. …“The fact that a patented technology can replicate itself does not give a purchaser the right to use replicated copies of the technology. Applying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder.”
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1068.pdf