Legal Alert: Monsanto Ruling Protects Innovators of Self-Replicating Biotechnology

On May 13, 2013, a unanimous U.S. Supreme Court held in Monsan to v. Bowman that the doctrine of patent exhaustion does not permit a farmer to reproduce patented seeds for planting and harvesting without the patent holder's permission, thus affirming the U.S. Court of Appeals for the Federal Circuit's finding in favor of Monsanto. This decision highlights the similarity between impermissibly replicating an invention and making use of a self-replicating technology, but also relies on the limitations present in the original sales contract to maintain control over subsequent unlicensed uses of the technology.

Patent infringement arises when one “makes, uses, offers to sell, or sells” a patented invention without authority from the patent holder. However, once the first authorized sale of the patented product has occurred, the patent holder’s rights with respect to that invention may be exhausted, and the purchaser is free to use or resell the purchased product as it wishes. The legal theory of patent exhaustion, also known as the “first sale” doctrine, attempts to strike a balance between the incentives to invent by protecting a patentee’s limited monopoly rights, while encouraging competition in secondary markets for patented articles by limiting the patentee’s downstream market power.

Traditional patent exhaustion theory permits subsequent uses and resales of a patented invention. However, courts generally have not extended this protection to permit making additional copies of the patented invention itself. That is, the law does not protect an authorized purchaser from subsequently making the patented invention without authority from the patent holder. Farmer Bowman had argued that the invention at issue was the genetic engineering of the herbicide-resistant trait for the Roundup Ready® seeds that was initially made in the laboratories of Monsanto, and so his planting and harvesting of the modified seeds was not an unauthorized making or copying of that invention. Monsanto instead argued that the invention was "made" each time a seed produced a new plant yielding further seeds.

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