In a concise unanimous decision1, the Supreme Court of the United States has ruled in favor of Monsanto against a farmer who reproduced patented seeds by planting and harvesting second generation seeds without Monsanto's permission. The Court affirmed the previous Federal Circuit's infringement decisions that, by these activities, the farmer had "created a newly infringing article" and ruled that "[u]nder the doctrine of patent exhaustion, the authorized sale of a patented article gives the purchaser, or any subsequent owner, a right to use or resell that article" but that such sale "does not allow the purchaser to make new copies of the patented invention".
By way of background, Respondent Monsanto invented and patented genetically modified Roundup Ready® soybean seeds which allows them to survive exposure to the herbicide glyphosate. These seeds are sold under a licensing agreement that permits farmers to plant the purchased seed in one, and only one, growing season. Under the agreement, farmers may not save any of the harvested seeds for replanting, nor may they supply them to anyone else for that purpose. Mr. Bowman (a farmer in Indiana) complied with these provisions with respect to the first planting. Thereafter, he obtained cheaper "commodity seeds" from local grain elevators for a second planting and found that substantial amounts of the seed were Roundup Ready® resistant. He then harvested those resistant seeds and used them for subsequent plantings. After discovering this practice, Monsanto sued Bowman for patent infringement. Bowman raised the defense of patent exhaustion which gives the purchaser of a patented article, or any subsequent owner, the right to use or resell that article.
The U.S. Supreme Court did not accept Bowman's defense and ruled that "the exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto's permission" (emphasis in opinion). The Court explained that the doctrine restricts a patentee's rights only as to the particular article sold, it leaves untouched the patentee's ability to prevent a buyer from making new copies of the patented item:
"If the purchaser of that article could make and sell endless copies, the patent would effectively protect the invention for just a single sale. Bowman himself disputes none of this analysis as a general matter: He forthrightly acknowledges the "well settled" principle "that the exhaustion doctrine does not extend to the right to 'make' a new product".
The opinion also recognizes a need for a narrow interpretation of the exhaustion doctrine in order to properly compensate patentees when the invention relates to self-replicating products:
"[I]n 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".
Regarding Mr. Bowman's argument that exhaustion should apply because seeds are meant to be planted and that allowing Monsanto to interfere with that use would create an impermissible exception to the exhaustion doctrine for patented seeds and other self-replication technologies. The Supreme Court noted that "it is really Bowman who is asking for an unprecedented exception ─ to what he concedes is the 'well settled' rule that 'the exhaustion doctrine does not extend to the right to 'make' a new product."
Comment: The holding is good news for the biotechnology industry, especially for inventors developing genetically modified self-replicating products. By allowing re-creation of their patented invention without further compensation could mean scant benefit for their inventive work. Although the Court indicated that their opinion addresses a particular situation, rather than every one involving a self-replicating product, it is reasonable to believe the conclusions would also apply to other types of patented seeds, patented plants, patented microorganisms and even patented animals.
Footnotes
1. See the 10-page opinion (PDF) (Bowman v. Monsanto Co., U.S., No 11-796, 5/13/2013).
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