Today, in Bowman v. Monsanto Co., the Supreme Court determined that the doctrine of patent exhaustion did not permit a farmer who buys patented seeds to reproduce them through planting and harvesting without the patent holder's permission, affirming the Federal Circuit's decision that such activities amount to the creation of a newly infringing article. Writing for a unanimous Court, Justice Kagan begins a concise 10-page opinion by noting 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."
The case arose as the result of a farmer (Mr. Bowman) replanting Monsanto's patented Roundup Ready® seed. Mr. Bowman had purchased the seed from one of Monsanto's licensed seed producers, with the sale being subject to a Technology Agreement that permitted Mr. Bowman to, inter alia, "use the seed containing Monsanto gene technologies for planting a commercial crop only in a single season" and "not save any crop produced from this seed for replanting, or supply saved seed to anyone for replanting." While Mr. Bowman complied with these provisions with respect to a first planting, Mr. Bowman used cheaper "commodity seed" (i.e., seed obtained from local grain elevators) in a second planting. After planting the commodity seed, Mr. Bowman tested the second crop for Roundup® resistance, and found that substantial amounts of the seed were resistant. He then used Roundup® on these plantings and replanted this seed. The District Court granted summary judgment of patent infringement and entered judgment against Mr. Bowman, and the Federal Circuit affirmed (see "Monsanto Co. v. Bowman (Fed. Cir. 2011)").
With regard to Mr. Bowman's argument that the doctrine of patent exhaustion prevented Monsanto from controlling his use of soybeans he obtained from the grain elevator because they were the subject of a prior authorized sale (i.e., from local farmers to the grain elevator), Justice Kagan counters that "the exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto's permission" (emphasis in opinion). Noting that the exhaustion doctrine restricts a patentee's rights only as to the particular article sold, the opinion indicates that the doctrine "leaves untouched the patentee's ability to prevent a buyer from making new copies of the patented item." Justice Kagan explains that:
[This] is because the patent holder has "received his reward" only for the actual article sold, and not for subsequent recreations of it. . . . 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."
"Unfortunately for Bowman," the opinion continues, "that principle decides this case against him." As Justice Kagan notes, Mr. Bowman "took the soybeans he purchased home; planted them in his fields at the time he thought best; applied glyphosate to kill weeds (as well as any soy plants lacking the Roundup Ready trait); and finally harvested more (many more) beans than he started with." Therefore, because Mr. Bowman reproduced Monsanto's patented invention, the opinion concludes that the exhaustion doctrine does not protect him.
The opinion demonstrates an appreciation of the impact Mr. Bowman's activities would have on Monsanto if such activities were found to be protected under the exhaustion doctrine:
[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.
With regard to Mr. Bowman's argument that he was merely using the Roundup Ready® seeds in the normal way that farmers do -- by planting them -- and that by interfering with that use, Monsanto was creating an impermissible exception to the exhaustion doctrine for patented seeds and other self-replicating technologies, Justice Kagan notes 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." Returning to the impact of Mr. Bowman's activities on Monsanto, the opinion states that:
[O]nce again, if simple copying were a protected use, a patent would plummet in value after the first sale of the first item containing the invention. The undiluted patent monopoly, it might be said, would extend not for 20 years (as the Patent Act promises), but for only one transaction. And that would result in less incentive for innovation than Congress wanted. Hence our repeated insistence that exhaustion applies only to the particular item sold, and not to reproductions.
Justice Kagan concludes the opinion, however, by noting that the Court's holding "is limited -- addressing the situation before us, rather than every one involving a self-replicating product." She adds that:
We recognize that such inventions are becoming ever more prevalent, complex, and diverse. In another case, the article's self-replication might occur outside the purchaser's control. Or it might be a necessary but incidental step in using the item for another purpose. . . . We need not address here whether or how the doctrine of patent exhaustion would apply in such circumstances.
Bowman v. Monsanto Co. (2013)
Opinion of the Court by Justice Kagan