The Seed Giant Stands Tall: The Supreme Court Rules in Favor of Monsanto

This Spring has been fruitful for seed giant, Monsanto. We reported earlier that Monsanto and rival DuPont entered into technology licensing agreements, ending nearly four years of patent and antitrust litigation. On Monday, May 13, Monsanto’s cornucopia arrived, with the Supreme Court ruling unanimously in its favor.

This case revolved around the question of whether the doctrine of patent exhaustion allowed a farmer who bought patented seeds to, without permission, reproduce the seeds through planting and harvesting. The seeds in question were glyphosate herbicide-resistant soybean seeds, covered under two patents issued to Monsanto. The glyphosate resistance is an inheritable trait that is passed on from generation to generation. Monsanto sold these seeds under special licensing agreements that allowed end users to plant the seeds in one season. The end user was authorized to consume or sell the resulting crops, but under agreement, was prohibited from planting the seeds from this second generation. Subsequent plantings would require subsequent purchases of the seeds. Therefore, an end user, not complying with the terms of the licensing agreement, could, through planting and harvesting, generate an infinite number of herbicide resistant soybean plants (and seeds) from a single seed. This would effectively end run a patent holder’s exclusionary rights to the invention.

Petitioner Vernon Bowman, an Indiana farmer, purchased the patented seeds each year for his first crop of planting seasons. However, for his late-season plantings starting in 1999, Bowman purchased seeds, normally intended for livestock feed or human consumption, from a grain elevator. Due to the widespread use of the Monsanto-patented seeds, it was reasonable to anticipate that some of the seeds purchased from the grain elevator would also have the patented herbicide-resistance. These late-season plantings were treated with glyphosate herbicide, and seeds from the surviving plants (presumably with the patented herbicide-resistance) were saved for future plantings. This process was repeated for a total of eight generations of soybean crops.

In 2007, Monsanto sued Bowman for patent infringement for these unauthorized plantings and saving of seeds. Bowman raised the doctrine of patent exhaustion as a defense, claiming that purchase of seed from the grain elevator was a prior authorized sale. The District Court rejected Bowman’s arguments, awarding Monsanto over $84,000 in damages for Bowman’s unauthorized use of the Monsanto’s patented seed technology. In 2011, the CAFC unanimously affirmed the District Court decision, explaining that although patent exhaustion allows for certain uses by an end user, the act of planting patented seeds for the purpose of generating more seed was an unauthorized replication.

The Supreme Court affirmed the Federal Circuit in an opinion delivered by Justice Kagan, holding that while the patent exhaustion doctrine would allow a farmer to resell or consume patented seeds purchased from a grain elevator, it would not allow a farmer to reproduce the seeds without the patent holder’s permission. The Court also rejected Bowman’s “blame-the-bean” argument that seeds naturally self-replicate and thus it was the seeds and not Bowman that made the replicas, noting that Bowman was not a passive observer, but instead, had intent, and carried out actions to select and harvest more patented seeds.

Stressing that the holding was limited to this particular situation, the Supreme Court left open the question of patent exhaustion for other patented, self-replicating technologies. However, it is likely that a patent exhaustion defense will fail to germinate in situations where an end user intentionally, and with some degree of control, causes an unauthorized replication to occur.