Monsanto patent case attracts broad audience

News
Feb 22, 2013

It's not often an agricultural issue draws the attention of software companies, entertainment firms, research institutions both public and private, libraries, repair shops, and countless others.

But when patent law and Monsanto´s revolutionary Roundup Ready techonology is involved, heads are sure to turn.

On Tuesday, Feb. 19, the Supreme Court heard a 70-minute session of oral arguments on Bowman v. Monsanto. The case-the final appeal of a case which started back in 2009-involves an Indiana farmer, Vernon Bowman, and seed company Monsanto. Though a ruling is not expected until sometime this summer, the justices' tone suggested continued support for Monsanto's claim of copyright infringement.

The whole situation started back in 1999 when Bowman bought commodity soybeans from a local grain elevator to use for double-crop beans following a winter wheat crop. Suspecting most of the beans he bought for seed were the product of Monsanto's Roundup Ready technology, he sprayed the crops with the herbicide and saved seeds from the successful harvest. This continued until 2007.

During this time, however, Bowman-who had purchased Monsanto's soybean seeds under the usual contract including the payment of fees in the past-had repeatedly corresponded with Monsanto over a six-year period, according to DTN's Chris Clayton and Todd Neeley. The correspondence was largely Bowman questioning the legality of Monsanto's patents once a farmer initially bought patented Roundup Ready seeds. Following Monsanto's declaration that, under licensing agreements, farmers were not authorized to transfer seeds or resell them, the company began investigating Bowman's soybean crops.

"I saved seed for five or seven years before Monsanto got a hold of me," he said. "I was determined that I wouldn't let them run over me. Farmers have always been allowed to go to the elevator and purchase grain and turn it into seed."

According to Monsanto, Bowman effectively reaped the benefit of its technology while circumventing the fees required in the contracts farmers sign when buying its seed. The company sued him for patent infringement. The U.S. District Court of S.D. Indiana ruled in favor of Monsanto and ordered Bowman to pay the company $84,456. Bowman appealed the ruling and took the issue to the U.S. Court of Appeals. They upheld the lower court's ruling.

During the session held Tuesday, Bowman's lawyer, Mark P. Walters, argued that the case was a matter of "patent exhaustion," which refers to the limited ability of patent holders to receive royalties on a product following its initial sale. Bowman's and Walters' position is that, since Bowman at one point paid the fee to use Monsanto's Roundup Ready soybean seed, and that he legally purchased soybeans to use as seed from the elevator, then later used the products of that purchase, the matter is one of property rights.

"The reach of Monsanto's theory," Walters said in opposition to Monsanto's position, "is that once that seed is sold, even though title has passed to the farmer, and the farmer assumes all risks associated with farming, that they can still control the ownership of that seed, control how that seed is used."

By all indication, the justices were not convinced. "The exhaustion doctrine permits you to use the good that you buy," said Justice
Sonia Sotomayor. "It never permits you to make another item from that item you bought."

Justice Stephen Breyer similarly was not won over by the patent exhaustion frame, telling Walters, "You know there are certain things that the law prohibits. What it prohibits here is making a copy of the patented invention. And that is what he [Bowman] did."

Walters argued that the examples of copying an item were not relevant in Bowman's situation given the unique nature of seeds to
replicate themselves. He addressed the fact the justices were not noting that difference and making an exception for self-replicating
inventions and suggested it was an overstep of the court's authority.

"You're modifying this court's case law substantially, and that's something that ought to be done in Congress," he said.

Additionally, he argued a ruling in Monsanto's favor would put every farmer in the country at risk of the company's whims and warned against "choosing patent rights over private property rights."

Lawyers representing Monsanto argued against the patent exhaustion position of Bowman.

"Our view is the law is very clear that you are not authorized to use the seeds in this manner and you are certainly not authorized to
make copies," said Dave Snively, general counsel for Monsanto.

Seth Waxman, a former U.S. solicitor general and now Washington lawyer representing Monsanto, said if Bowman's claim were
upheld, the value of Monsanto's patented product would be gone "the very first time it sold a seed."

Legal representatives from the U.S. government were of a similar mind.

"The exhaustion doctrine has always been limited to the particular article that was sold, and we are talking about a different article
here," said Assistant Solicitor General Melissa Arbus Sherry. "And it's never extended to the making of a new article."

Issues of innovation

The primary arguments of Waxman, Snively, and Sherry against Walters' and Bowman's position of patent exhaustion rest on the purpose of patents-to foster and support innovation. "In order to encourage investment, the Patent Act provides 20 years of exclusivity," Sherry explained. She said Walters' interpretation of patent exhaustion would reduce the 20-year term of a patent to one and only one sale. "It would be near impossible to recoup your investments with that first sale and so the more likely consequence is that research dollars would be put elsewhere."

Chief Justice John G. Roberts Jr. pressed Walters on this matter. "Why in the world would anybody spend any money to try to improve the seed if as soon as they sold the first one, anybody could grow more and have as many of those seeds as they
want?"

Snively framed the case for innovation in terms of history versus modern demands, arguing that the protection of a patent-holder's
rights must be defended for the greater good.

"Twenty-first century science is really revolutionizing agriculture and medicine, and other things. Innovation is really going to be slowed if you can do an end-around and let 18th century doctrine interfere with 21st century technology."

Growing associations for various crops around the country have been mixed on issues of this sort. Organic farming organizations have
taken issue with Monsanto and its patents and several have had run-ins with the company in court. Others, however, support the current intellectual property rights system because of its fostering of improved product.

Groups like the American Soybean Association, National Wheat Growers Association and American Sugarbeet Growers Association
submitted a joint brief on the case, asking the Supreme Court to uphold the lowercourt ruling.

"Upholding that decision will ensure that technological innovation in crop breeding and genetic traits continues unhindered, thereby
leading to the development of more productive, manageable, and environmentallysustainable varieties."

Nathan Fields, director for biotechnology and economic analysis of the National Corn Growers Association, said in a statement on the current case, "We don't want anything that would weaken crop technology and development."

Waxman, too, spoke about the necessity of the patent protection and its value to innovation and improving the product.

"Without the ability to limit reproduction of soybeans containing this patented trait," he said, speaking of the Roundup Ready
technology, "Monsanto could not have commercialized its invention and never would have produced what is, by now, the most popular agricultural technology in America. This is probably the most rapidly adopted technological advance in history. The very first Roundup Ready soybean seed was only made in 1996. And it now is grown by more than 90 percent of the 275,000 soybean farms in the United States."

The matter of Monsanto's ubiquity in the world of seed production of major crops did get some attention from the court. As has been mentioned, the overwhelming majority of the U.S.'s soybeans come from Monsanto seed. And the company has similar strong market share in other crops, most notably corn.

Justice Elena Kagan voiced concerns about the potential of Monsanto's widespread use to "make infringers out of everybody."

"Seeds can be blown onto a farmer's farm by wind, and all of a sudden you have Roundup seeds there and the farmer is infringing."

Ripple effects

The fact Bowman's case was even accepted by the Supreme Court has drawn more than a bit of curiosity. One possible reason is the
ever-increasing number of cases dealing with patent law, intellectual property rights, and private property and resale rights in a world
of rapid-fire technological advancements, clever hackers, file-sharing technology and the countless other ways modern-day realities
are leaving ownership laws and the concept of property behind. The decision on this case will have widespread impact on countless other industries, and they are taking note.

The case could affect inventors of self-replicating or easily-replicated technologies, such as software producers, to other areas of bioengineering. Representatives from the biotechnology and software industries, as well as research institutions, submitted briefs in
support of Monsanto.

On the other side, however, producers of replacement parts for automobiles, computers, and printers, and the American Antitrust
Institute argued against supporting the lower-court decision, saying it would restrict how patented products are used by their legal
purchasers.

Groups such as the Automotive Aftermarket Industry Association, the Automotive Parts Remanufacturers Association and the International Imaging Technology Council submitted their own brief. They argued the entire aftermarket industry could be jeopardized if the Supreme Court rules in favor of Monsanto and sets that sort of legal precedent on post-sale patent conditions.

"Millions of businesses and consumers use online commerce to resell anything from used parts to a fleet of cars," the resellers stated in their brief, as reported by DTN. "Sellers and purchasers are entitled to know if they have the right to resell, purchase and use what they buy, free from the threat of infringement suits."

Entertainment media producers-music, movie, television, video games, ebooks- have long been dealing with issues of this sort given the overwhelming ease of property replication in the digital world and have an interest in the court's decision on this case.

Even potentially surprising venues have a stake in the outcome of the Bowman v. Monsanto case. Public and academic libraries have
long been beset with problems and uncertainty regarding ownership rights and resale rights of their digital catalogs as the technological ability to copy and transfer ebooks has outpaced the legal ability to deal with the transactions. The ruling of this case could set the stage for more tangible systems to deal with intangible property. - Kerry Halladay, WLJ Editor

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