Somewhat lost in the hubbub over the Supreme Court's ruling in AMP v. Myriad was the Federal Circuit's decision, just a few days earlier, in Organic Seed Growers & Trade Ass'n v. Monsanto Co.  That case is the latest windmill tilt by Cardozo Law School's Public Patent Foundation (PubPat) over biotechnology patents, which it brought on behalf of "a coalition of [several dozen] farmers, seed sellers, and agricultural organizations."

The case involved a declaratory judgment action against 23 Monsanto patents* brought by plaintiffs who alleged that they were at risk of patent infringement liability due to "inadvertent" infringement of Monsanto's patents relating to recombinant seeds, specifically the company's Roundup Ready® seeds used with the glyphosate herbicide, Roundup®.  Plaintiffs alleged as their injury that they were at risk for inadvertent infringement, that they were forced to forego planting even conventional "corn, cotton, canola, sugar beets, soybeans, and alfalfa" due to the extent to which these crops were transgenic ("over 85-90% of all soybeans, corn, cotton, sugar beets, and canola grown in the U.S. contains Monsanto's patented genes") and that they were burdened by the cost and efforts they expended to avoid infringing.  Plaintiffs also noted that Monsanto has brought 144 infringement suits between 1997 and 2010, and settled ~700 more over that time.  Showing that PubPat had learned the lessons of the Myriad case regarding standing, "[a]t least one plaintiff [Bryce Stephens] declared that the fear of suit by Monsanto is the sole reason he refrained from cultivating organic corn and soybeans, and that he would resume growing those crops if that threat were eliminated."

Shortly after they initiated the lawsuit, plaintiffs asked Monsanto for an express covenant not to sue.  While demurring from supplying such a covenant, Monsanto referred plaintiffs to its website, wherein there was an explicit statement regarding "inadvertent" contamination and infringement:

It has never been, nor will it be Monsanto policy to exercise its patent rights where trace amounts of our patented seeds or traits are present in farmer's fields as a result of inadvertent means.

Moreover, Monsanto's attorneys by letter further expanded on the company's absence of any intent to sue plaintiffs:

Monsanto is unaware of any circumstances that would give rise to any claim for patent infringement or any lawsuit against your clients.  Monsanto therefore does not assert and has no intention of asserting patent-infringement claims against your clients.  You represent that "none of your clients intend to possess, use or sell any transgenic seed, including any transgenic seed potentially covered by Monsanto's patents."  Taking your representation as true, any fear of suit or other action is unreasonable, and any decision not to grow certain crops unjustified.

In view of these representations, the District Court found that plaintiffs did not have standing to sue under the Declaratory Judgment Act and dismissed the lawsuit.

The Federal Circuit affirmed, in an opinion by Judge Dyk joined by Judges Bryson and Moore.  The opinion set forth the "ground rules" of standing from the Supreme Court's decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007):

"Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment," citing Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941).

The Federal Circuit had applied these rubrics in implementing this precedent:

Although there is no bright-line rule applicable to patent cases, we have held that "Article III jurisdiction may be met where the patentee takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do," citing SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1380–81 (Fed. Cir. 2007)

Here, "the question in this case is not whether the appellants' subjective fear of suit by Monsanto is genuine, but whether they have demonstrated a "'substantial risk' that the harm will occur, which may prompt [them] to reasonably incur costs to mitigate or avoid that harm," citing Monsanto Co. v. Geertson Seed Farms, 561 U.S. ___, ___, 130 S.Ct. 2743, 2754–55 (2010).  The plaintiffs' asserted basis for their belief that they were at risk for infringement liability was "Monsanto's evident history of aggressive assertion of its transgenic seed patents against other growers and sellers"; however, simply a patentee's activities against other defendants are not always enough to confer jurisdiction, according to the panel opinion, relying on Arkema Inc. v. Honeywell Int'l, Inc., 706 F.3d 1351, 1356 (Fed. Cir. 2013), Micron Tech, Inc. v. MOSAID Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 2008), Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008), and Holder v. Humanitarian Law Project, 561 U.S. ___, 130 S.Ct 2705, 2717 (2010), and requires the court to look at the totality of the circumstances in each case.  Which, on these facts, required the court to assess whether Monsanto's "representations" regarding inadvertent infringers was sufficient to negate the company's "evident history of aggressive assertion" of it patents.

Monsanto (at oral argument) defined "inadvertent" infringers to be those whose crops become accidentally contaminated and who don't spray their fields with Roundup (consistent with their position in Bowman).  The District Court, the parties, and the panel accepted as inevitable that the plaintiffs' crops would be contaminated with Monsanto's recombinant seed, based on the predominance (~50% on average, with some crops comprising 90%) of such seeds in the seed stock of many conventional crops, stemming from "windblown pollen or seeds from genetically modified crops or other sources" (a high standard in view of their counsel's assertion, at oral argument in the Bowman case, that it would take winds such as those in Hurricane Sandy to blow a transgenic soybean seed onto a farmer's field).

The opinion also notes that "[t]here is [] a substantial risk that at least some of the appellants could be liable for infringement if they harvested and replanted or sold contaminated seed" despite the opinion also stating that "the [Supreme] Court's recent decision in Bowman v. Monsanto Co. leaves open the possibility that merely permitting transgenic seeds inadvertently introduced into one's land to grow would not be an infringing use."  The Federal Circuit's own precedent is to the contrary, such that "one who, within the meaning of the Patent Act, uses (replants) or sells even very small quantities of patented transgenic seeds without authorization may infringe any patents covering those seeds," according to the opinion, citing SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1336, 1339–40 (Fed. Cir. 2005); Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282, 1299 (Fed. Cir. 2009); and Embrex, Inc. v. Serv. Eng'g Corp., 216 F.3d 1343, 1352–53 (Fed. Cir. 2000), regarding the non-existence of "de minimis infringement" (none of these cases involved seeds or other "self-replicating" technologies).  Accordingly, the Court assumed inadvertent infringement would likely occur.

But these technical considerations were not the issue; it was standing, not the merits, that was before the Court.  The question was whether Monsanto's "representations" that it will not sue for inadvertent infringement were sufficient to "moot any potential controversy" and thus defeat standing.  The Court looked for guidance from the Supreme Court's recent Already, LLC v. Nike, Inc. case, where an express covenant not to sue from a trademark owner defeated declaratory judgment jurisdiction.  568 U.S. ___, ___, 133 S.Ct. 721, 732 (2013).  Thus the Federal Circuit was faced with determining whether an express covenant was required or if Monsanto's reassurances would do.

The Court found that they would.  "Taken together, Monsanto's representations unequivocally disclaim any intent to sue appellant growers, seed sellers, or organizations for inadvertently using or selling 'trace amounts' of genetically modified seeds," the panel found, wherein the panel interpreted "trace amounts" to be approximately one percent.  "We conclude that Monsanto has disclaimed any intent to sue inadvertent users or sellers of seeds that are inadvertently contaminated with up to one percent of seeds carrying Monsanto's patented traits," said the Court.

Important to the panel decision was the effect of judicial estoppel on Monsanto and its representations to the Court that it had "no intention of asserting patent-infringement claims" against plaintiffs or other "inadvertent" infringers.  The opinion set forth the "main factors" that raise the estoppel:

(1) a party's later position is "clearly inconsistent" with its prior position, (2) the party successfully persuaded a court to accept its prior position, and (3) the party "would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped," citing New Hampshire v. Maine, 532 U.S. 742, 750–51 (2001).

Any future lawsuit brought by Monsanto against these plaintiffs would satisfy "all three [of these] factors," according to the Court.  Somewhat wryly, the opinion notes that this conclusion was "wisely acknowledged" by Monsanto's counsel at oral argument.

One drawback to the Court's certainty regarding this conclusion is the limitation in Monsanto's representations that only individuals producing crops having only "trace amounts" produced from infringing recombinant seed would fall within the scope of those representations, including the company's reluctance to include within their commitment not to sue crops having greater than such trace amounts but that were not produced using Roundup® treatment.  While the panel noted that "we cannot conclude that Monsanto has disclaimed any intent to sue a conventional grower who never buys modified seed, but accumulates greater than trace amounts of modified seed by using or selling contaminated seed from his fields," none of the plaintiffs was willing to allege that they did, would or planned to "fall outside Monsanto's representations" to the Court in this regard.  All plaintiffs alleged that they were "using their best efforts" not to produce crops comprising more than "trace amounts" of recombinant seed, and thus they did not allege activities that would put them at patent infringement risk -- a requirement for the plaintiffs to have standing under Supreme Court (Already) as well as Federal Circuit precedent (e.g., Benitec Austl., Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1346–50 (Fed. Cir. 2007)).

Finally, the Court found that allegations of a "chilling effect" or other subjective apprehensions of patent infringement liability risk were not sufficient to confer standing, because they did not amount to "a claim of specific present objective harm or a threat of specific future harm," citing Laird v. Tatum, 408 U.S. 1, 13–14 (1972) or a "substantial risk" of liability:

The appellants have not made that showing here, because the future harm they allege -- that they will grow greater than trace amounts of modified seed, and therefore be sued for infringement by Monsanto -- is too speculative to justify their present actions.  Parties "cannot manufacture standing merely by inflicting harm on themselves based on their fears of hypothetical future harm," citing Clapper v. Amnesty Int'l USA, 568 U.S. ___, _____, 133 S.Ct. 1138, 1151 (2013)

Because the Court found that Monsanto had made binding representations that removed any risk of suit against plaintiffs who produced crops comprising trace amounts of Monsanto's recombinant seed, and that plaintiffs had made no allegations that they had any "concrete plans or activities" to make, use or sell greater than trace amounts of Monsanto's seed, these plaintiffs had failed to show any risk of suit and thus "lacked an essential element of standing" required by the Declaratory Judgment Act.

At least until the Supreme Court decides to grant certiorari.

Organic Seed Growers & Trade Ass'n v. Monsanto Co. (Fed. Cir. 2013)
Panel: Circuit Judges Dyk, Bryson, and Moore
Opinion by Circuit Judge Dyk

* U.S. Patent Nos. 5,322,938 ("DNA sequence for enhancing the efficiency of transcription"); 5,352,605 ("Chimeric genes for transforming plant cells using viral promoters"); 5,362,865 ("Enhanced expression in plants using non-translated leader sequences"); 5,378,619 ("Promoter for transgenic plants"); 5,424,412 ("Enhanced expression in plants"); 5,463,175 ("Glyphosate tolerant plants"); 5,530,196 ("Chimeric genes for transforming plant cells using viral promoters"); 5,554,798 ("Fertile glyphosate-resistant transgenic corn plants"); 5,593,874 ("Enhanced expression in plants"); 5,641,876 ("Rice actin gene and promoter"); 5,659,122 ("Enhanced expression in plants using non-translated leader sequences"); 5,717,084 ("Chimaeric gene coding for a transit peptide and a heterologous peptide"); 5,728,925 ("Chimaeric gene coding for a transit peptide and a heterologous polypeptide"); 5,750,871 ("Transformation and foreign gene expression in Brassica species"); 5,859,347 ("Enhanced expression in plants"); 6,025,545 ("Methods and compositions for the production of stably transformed, fertile monocot plants and cells thereof"); 6,040,497 ("Glyphosate resistant maize lines"); 6,051,753 ("Figwort mosaic virus promoter and uses"); 6,083,878 ("Use of N- (phosphonomethyl) glycine and derivatives thereof"); 6,753,463 ("Transformed cotton plants"); 6,825,400 ("Corn plants comprising event PV-ZMGT32(nk603)"); RE38,825 ("Glyphosate tolerant plants"); and RE39,247 ("Glyphosate-tolerant 5-enolpyruvylshikimate-3-phosphate synthases").