The nation's farmers have experienced tremendous advances in seed technology in recent years, thanks in large measure to major expenditures for research and development in this area by Respondent Monsanto Co. and others. WLF is concerned that the extremely broad interpretation of the patent exhaustion doctrine espoused by Petitioner would, if accepted by the Court, throw into question the nation's ability to sustain those advances. That doctrine has never previously been understood to permit purchasers of a patented product to "use" the product to create an entirely new product on the template of the original.
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.
In the first part of its brief, the WLF briefly outlines the history of the patent exhaustion doctrine, noting that the doctrine "was born of a desire to promote efficiency in economic transactions," and that "[t]he courts concluded that the greatest efficiency could be achieved if, in general, patentees were required to be paid their entire royalty (i.e., the value added to the product by virtue of the patentee’s monopoly rights) at the time of first sale." The WLF brief explains that:
The exhaustion doctrine assumes that in an efficient market, the patentee on average will receive a fair royalty -- no more and no less -- each time one of his patented products is placed into the stream of commerce. That assumption cannot be squared with Bowman's contention, because if (as he contends) the purchaser of a single Roundup Ready® soybean seed can parlay that seed into a thousand new seeds, the commercial use of those thousand seeds will generate only one royalty for Monsanto.
In summarizing its argument that the patent exhaustion doctrine did not grant Mr. Bowman the right to make an unlimited number of new copies of the patented invention from commodity seed, the WLF writes that:
[C]ase law indicates that the patent exhaustion doctrine developed as a means of promoting efficiency in economic transactions and of preventing the patentee from imposing unreasonable restraints on trade as a means of deriving a profit in excess of what his invention warranted. It was never intended to protect purchasers, once they acquire title to a patented item, against all incursions on their "right" to do with as they please with their property.
Understood in that light, the patent exhaustion doctrine is inapplicable to this case. It would be applicable only if, as Bowman contends, his naked title to the commodity seeds (and to the infinite generation of soybeans seeds that might follow) were sufficient to permit him to do whatever he desires with his property. But simply because Bowman held title to the second-planting soybeans does not mean that the patent exhaustion doctrine gave him the unlimited right to make, sell, and use those soybeans. The patent exhaustion doctrine has always presupposed a "first sale" of some sort, and Monsanto never sold Bowman any rights with respect to the second-planting soybeans.
The WLF brief also argues that the Supreme Court's precedent on repair/reconstruction supports affirmance. While acknowledging "that there are many close cases, where the line between repair and reconstruction is not easily drawn," the WLF declares that "this is not a close case," adding that "[t]here is no plausible argument that the second-crop glyphosate-tolerant soybeans grown by Bowman were simply repaired versions of the commodity seed that he purchased from the grain elevator." Instead, the WLF brief states that "Bowman's careful cultivation of second-crop soybeans constituted the 'making' of a product that is protected by Monsanto's patents."
The WLF brief also addresses the arguments of several amici writing in support of Mr. Bowman, who "have largely ignored patent exhaustion case law and instead have focused on alleged environmental harms that supposedly flow from use of Roundup Ready® crops." Arguing that such allegations are not well-founded, the WLF counters that "[b]y enabling farmers to use glyphosate rather than other herbicides, Roundup Ready® technology offers several economic and environmental benefits," explaining that "Roundup Ready® technology has replaced more toxic pesticides, enabled farming practices that promote conservation, bolstered yield protection, and boosted farmers' incomes."
Patent Docs plans to review a number of the briefs filed in this case, including the briefs on the merits filed by the petitioner and the respondents, as well as several of the amicus briefs that were filed. According to an updated docket for this case on the Supreme Court website, amicus briefs have been filed by Knowledge Ecology International, the Automotive Aftermarket Industry Association et al., the American Antitrust Institute et al., the Public Patent Foundation, the Center for Food Safety and Save Our Seeds, the United States government, BayhDole25, Inc., the Intellectual Property Owners Association, CropLife America, BSA - The Software Alliance, the American Seed Trade Association, the Washington Legal Foundation, the Biotechnology Industry Organization, CropLife International, the American Intellectual Property Law Association, Ecomonists, law professor Christopher M. Holman, CHS Inc., Agilent Technologies, Inc., et al., Wisconsin Alumni Research Foundation, et al., the American Soybean Association, et al., and Pioneeer Hi-Bred International, Inc. Argument for the case is scheduled for February 19, 2013.
For additional information regarding this topic, please see:
• "U.S. Government Requests Argument Time in Bowman v. Monsanto -- at Monsanto's Expense," February 5, 2013
• "It Ain't Necessarily So Down on the Farm: Not All Farmers Agree with Farmer Bowman in Bowman v. Monsanto," January 31, 2013
• "BayhDol25 Files Amicus Brief in Bowman v. Monsanto," January 30, 2013
• "Government Sticks to Its Guns in Bowman v. Monsanto Amicus Brief," January 28, 2013
• "IPO Files Amicus Brief in Support of Respondents in Bowman v. Monsanto," January 24, 2013