Kalen Lumsden is a JD candidate at Osgoode Hall Law School.
In Monsanto v. Bowman, No. 2010-1068 , Fed. Cir. 2011., decided September 21, 2011, a farmer appeals an adverse judgment after Monsanto had sued him for patent infringement because he had attempted to exploit a perceived loophole in his licensing agreement. The central issue of the case was how the doctrine of patent exhaustion applied to self-replicating technologies. Specifically, Monsanto’s Roundup Ready® genetically modified soybeans.
Monsanto had developed a series of herbicide resistant, genetically modified soybeans, registered under the name Roundup Ready®, for which they had been issued two patents from the United States Patent and Trademark Office. All Roundup Ready® soybeans sold to growers, either directly by Monsanto or through seed producers, is sold under a licence called the Monsanto Technology Agreement. The agreement had provisions covering the patented biotechnologies and restricted a grower to a single season. It also limited them to:
(1) use the seed containing Monsanto gene technologies for planting a commercial crop only in a single season
(2) not supply any of this seed to any other person or entity for planting
(3) not save any crop produced from this seed or provide it to anyone for crop breeding, research, generation of herbicide registration data, or seed production.
The only exception to the single season restriction is that the second-generation progeny of the Roundup Ready® seed could be sold to local grain elevators without restriction on the elevator’s subsequent sale of the seed, which were typically sourced from several places and were a mix of varieties. They were sold as feed or as a commodity.
Bowman had purchased licensed Roundup Ready® seed, signed the purchase agreement and planted them as his first crop of the season from 1999-2007. To save money on the riskier second crop of the 1999 season, Bowman purchased commodity seed from a local grain elevator. After applying the herbicide to which the Roundup Ready® soybeans were genetically resistant, Bowman discovered many of the commodity seeds he had purchased contained the genetic resistance. He then kept the second crop harvested seed for replanting as a second crop in subsequent years.
In 2007, Monsanto sued Bowman alleging patent infringement of two patented genes in the Roundup Ready® soybeans. Violation of the Technology Agreement was not alleged because it did not extend to seed purchased as a commodity.
Bowman argued that Monsanto’s patent rights where exhausted when seed was sold as an undifferentiated commodity by a grain elevator and that sale of second-generation seed is authorized under the Technology Agreement. Furthermore, Bowman pushed for a robust interpretation of the patent exhaustion doctrine that would “encompass the progeny of seed and other self-replicating biotechnologies.”
Monsanto argued that its patent rights in the seed were not exhausted because of a provision in the licensing agreement stating that “licensed seed never be sold for planting.” Additionally, Monsanto argued that “Bowman is nevertheless liable for infringement by planting those seed because patent protection is ‘independently applicable to each generation of soybeans (or other crops) that contain the patented trait” and that “under Bowman’s analysis, patent protection for self-replicating inventions would be eviscerated.”
The appeal court found that the doctrine of patent exhaustion did not bar Monsanto’s infringement claim and that the fact that a technology is self-replicating does not give a purchaser a right to use the replicated copies. While farmers may use commodity seed as feed, planting them constitutes patent infringement.