House Considers Alternative Patent Royalty Scheme for Genetically Engineered Seed

by McDonnell Boehnen Hulbert & Berghoff LLP

House of Representatives SealThe tendency for members of the House of Representatives to exhibit ignorance of the patent system, so amply demonstrated in the "debate" over H.R. 6621 at the end of the last Congress (see "Congressional Misunderstandings (Apparently) Motivate H.R. 6621"), persists in the 113th Congress.  The most recent example is H.R. 193, the ''Seed Availability and 5 Competition Act of 2013'' introduced on January 4th by Representative Marcy Kaptur, D-OH (9th District, which includes Toledo).  The seeming intent of the bill is to substitute government bureaucrats from the Departments of Agriculture and the Treasury for private patentees in enforcing patents on genetically engineered seed.  In addition to amounting to a compulsory license, Rep. Kaptur has evidently never considered that, sometimes, the scariest sentence in the English language is "I'm from the Federal government, and I'm here to help."  This is not surprising; Rep. Kaptur was recently elected to her 15th term, and her background is not in patent law or agriculture:  her professional training is in urban planning.

The bill requires "persons [farmers] who seek to retain seed harvested from the planting of patented seeds to register with the Secretary of Agriculture and pay fees set by the Secretary for retaining such seed, and for other purposes."  Specifically, any farmer who plants patented seed or seed "derived from" patented seed to retain the seed for replanting is subject to two requirements.  The farmer must submit a notice to the Secretary of Agriculture of the intent to retain patented seed for replanting, (§ 2(a)(1)) and to pay a fee established by the Secretary and dependent on the "type and quantity" of seed that can be retained and "any other information" the Secretary determines to be "appropriate" (§ 2(a)(2)).  The fee is paid to the Federal government (§ 2(b)) and deposited into a "Patented Seed Fund" established in the Treasury (§ 2(e)(1)(2)).  The fees will be refunded to any farmer who can establish that, after paying the fees, natural disaster or "related" circumstances prevented them from replanting the seed (§ 2(c)).

The monies collected from the farmers is then paid to the patent holders by the goverment (§ 2(d)).  The motivation for all these seeming legal and economic inefficiencies finally becomes evident in § 2(f), which provides that any farmer who complies with the provisions of the bill (if enacted) "shall not be bound" by any contractual, patent royalty, or licensing fees.

Kaptur, MarcyNot wishing to be considered un-American, Rep. Kaptur (at left) included in the bill a provision (§ 3) whereby the Treasury Department will collect a tariff amounting to the difference between the royalties or licensing fees imposed upon purchasers of patented seed in the U.S. and any lower royalties or licensing fees paid by purchasers of patented seeds in a foreign country and then imported into the U.S.  Those tariffs are paid into the Patented Seed Fund, presumably for payment to patent holders who have negotiated the lesser fees in the foreign country in the first place.

It is hard to know where to begin.  Clearly the political controversy engendered by the many patented seed cases brought by patentees against farmers over the past decade, and the recent kerfuffle produced by the Public Patent Foundation in its suit on behalf or "organic" farmers came to Rep. Kaptur's attention.  And in some ways this is a classic "split the baby" result, where the government (and its sensitivity to political considerations) can determine the "appropriate" royalty for replanted seed and distribute it to the patent holders.  The tariff provisions might also be seen as a boon to those patentees who were unable to obtain royalties or patent licensing fee abroad commensurate with the fees they collect from U.S. farmers.

But in reality, of course, the bill imposes a compulsory license on holders of genetically engineered seed patents, who have resisted the political pressure to permit farmers to replant seed instead of purchasing seed for each planting.  Although this has imposed legal and public relations costs on these patentees, the patent grant permits them to impose these restrictions (unless and until the Supreme Court decides otherwise in Bowman v. Monsanto).  But regardless of which side has the better policy argument in that debate, Rep. Kaptur's bill is not a remedy required by the politics or economics of the situation.  Indeed, it would just impose another government bureaucracy on U.S. agriculture that would not promote either agriculture or technological progress.

The bill has been referred to the House subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture for further consideration.

Text of the bill:


To require persons who seek to retain seed harvested from the planting of patented seeds to register with the Secretary of Agriculture and pay fees set by the Secretary for retaining such seed, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,


This Act may be cited as the ''Seed Availability and 5 Competition Act of 2013''.


    (a) REGISTRATION.—Any person who plants patented seed or seed derived from patented seed may retain seed from the harvest of the planted seed for replanting by that person if that person—
        (1) submits to the Secretary of Agriculture notice, in such form as the Secretary may require, of the type and quantity of seed to be retained and any other information the Secretary determines to be appropriate; and
        (2) pays the fee established by the Secretary pursuant to subsection (b) for the type and quantity of seed retained.
    (b) FEES.—The Secretary of Agriculture shall establish a fee to be paid by a person pursuant to subsection (a)(2) based on the type and quantity of seed retained.  The Secretary shall deposit amounts collected pursuant to subsection (a)(2) in the Patented Seed Fund established under subsection (e)(1).
    (c) REFUNDS.—The Secretary of Agriculture may refund or make an adjustment of the fee paid pursuant to subsection (a)(2) when the person is unable to plant or harvest the retained seed as a result of a natural disaster or related condition and under such other circumstances as the Secretary considers such refund or adjustment appropriate.
    (d) DISTRIBUTIONS.—The Secretary of Agriculture shall pay the collected fees to the appropriate patent holders, at a frequency that the Secretary determines is appropriate, from the Patented Seed Fund established under subsection (e)(1), taking into consideration the possibility of refunds pursuant to subsection (c).
        (1) ESTABLISHMENT.—There is established in the Treasury of the United States a fund to be known as the ''Patented Seed Fund'', consisting of such amounts as may be received by the Secretary and deposited into such Fund as provided in this section.
        (2) ADMINISTRATION.—The Fund shall be administered by the Secretary of Agriculture and all moneys in the Fund shall be distributed solely by the Secretary in accordance with this section and shall not be distributed or appropriated for any other purpose. Amounts in the Fund are available without further appropriation and until expended to make payments to patent holders.
    (f) INAPPLICABILITY OF CONTRACTS AND PATENT FEES.—A person who retains seed under subsection (a) from the harvest of patented seed or seed derived from patented seed shall not be bound by any contractual limitation on retaining such seed, or by any requirement to pay royalties or licensing or other fees, by reason of the patent, for retaining such seed.
    (g) DEFINITION.—In this section, the term ''patented seed'' means seed for which a person holds a valid patent.


    (a) TARIFF.—In any case in which—
        (1) genetically modified seed on which royalties or licensing or other fees are charged by the owner of a patent on such seed to persons purchasing the seed in the United States is exported, and
        (2) no such fees, or a lesser amount of such fees, are charged to purchasers of the exported seed in a foreign country, then there shall be imposed on any product of the exported seed from that foreign country that enters the customs territory of the United States a duty determined by the Secretary of the Treasury, in addition to any duty that otherwise applies, in an amount that recovers the difference between the fees paid by purchasers of the seed in the United States and purchasers of the exported seed in that country.
    (b) DEPOSIT OF DUTIES.—There shall be deposited in the Patented Seed Fund established under section 2(e)(1) the amount of all duties collected under subsection (a) for distribution to the appropriate patent holders in accordance with section 2(d).
    (c) DEFINITIONS.—In this section—

        (1) the term ''genetically modified seed'' means any seed that contains a genetically modified material, was produced with a genetically modified material, or is descended from a seed that contained a genetically modified material or was produced with a genetically modified material; and
        (2) the term ''genetically modified material'' means material that has been altered at the molecular or cellular level by means that are not possible under natural conditions or processes (including recombinant DNA and RNA techniques, cell fusion, microencapsulation, macroencapsulation, gene deletion and doubling, introducing a foreign gene, and changing the positions of genes), other than a means consisting exclusively of breeding, conjugation, fermentation, hybridization, in vitro fertilization, tissue culture, or mutagenesis.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McDonnell Boehnen Hulbert & Berghoff LLP | Attorney Advertising

Written by:

McDonnell Boehnen Hulbert & Berghoff LLP

McDonnell Boehnen Hulbert & Berghoff LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.