In the Courts: Monsanto v. Bowman: Supreme Court upholds patent holders’ rights

By Theresa M. Bevilacqua, Partner, and Kristin Stastny, Associate, Dorsey and Whitney LLP, Minneapolis, USA

On May 13, 2013, the United States Supreme Court announced its decision in the case of Bowman v. Monsanto Co., Case No. 11-796. The Court’s unanimous ruling expressed strong support for the protection of the intellectual property (IP) involved in agricultural biotechnology.

At issue in the case were Monsanto’s patented Roundup Ready soybeans, a soybean variety that is genetically modified to have a resistance to the herbicide glyphosate, commonly known as Roundup. Monsanto, as the inventor and patent holder of Roundup Ready soybeans, sells the seeds subject to a limited licensing agreement, whereby farmers are permitted to plant the purchased seed in only one growing season. Growers may then sell or consume the resulting crop, but may not replant it.

(Photo: istockphoto franckreporter)

Vernon Bowman, a farmer in Indiana, purchased Roundup Ready soybean seeds each year for his first crop of the season from a company affiliated with Monsanto. In compliance with the licensing agreement, Bowman used all of the seed for planting, and then sold all harvested seed to a grain elevator, which would typically resell the crop to an agricultural processor for animal or human consumption. For his second planting, which was late season and therefore more risky, Bowman would purchase significantly less expensive “bin-run soybeans” (soybeans that have been harvested and delivered to a grain elevator and comingled with other soybeans of the same kind, type and quality).

Bowman purchased these bin-run soybeans, intended for human or animal consumption, from a grain elevator and planted them in his fields. Because the soybeans purchased from the grain elevator were harvested largely from fields planted with Roundup Ready soybeans, many of the seeds Bowman planted contained the Roundup Ready trait. Bowman would then apply a glyphosate-based herbicide to the fields to determine which plants contained the Roundup Ready trait and save seed from this harvest for replanting the following year.

Courts reject farmer’s defense

Bowman continued this practice for eight planting cycles before Monsanto discovered the practice and sued Bowman in district court for patent infringement. In response, Bowman raised the defense of “patent exhaustion,” which gives the purchaser of a patented article, and any subsequent owner, the right to use or resell the article but does not permit the purchaser to make new copies of the patented product. The District Court rejected this defense, and the Federal Circuit affirmed, holding that patent exhaustion did not protect Bowman, because he had “created a newly infringing article.” Monsanto Co. v. Bowman, 657 F. 3d 1341 (Fed. Cir. 2011).

In its decision, the Supreme Court affirmed that a farmer who buys patented seeds may not reproduce them through planting and harvesting without the patent holder’s permission. As the Court noted, were this not the case, an inventor’s patent would provide little benefit. “[I]f simply copying were a protected use, a patent would plummet in value after the first sale of the first item containing the invention. . . . And that would result in less incentive for innovation than Congress wanted.” Bowman v. Monsanto at 8.

Patent exhaustion not applicable

The doctrine of patent exhaustion “limits a patentee’s right to control what others can do with an article embodying or containing an invention. Under the doctrine, the initial authorized sale of a patented item terminates all patent rights to that item.” Id. at 4. However, the doctrine “restricts a patentee’s right only as to the ‘particular article’ sold; it leaves untouched the patentee’s ability to prevent a buyer from making new copies of the patented item.” Id. at 5. Applying this doctrine to the facts presented, the Court concluded that: “Under the patent exhaustion doctrine, Bowman could resell the patented soybeans he purchased from the grain elevator; so too could he consume the beans himself or feed them to his animals. Although it was the patent holder, Monsanto would have no business interfering in those uses of Roundup Ready beans. However, the exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto’s permission.” Id.

The Court also rejected the argument that its ruling would prevent farmers from making appropriate use of the Roundup Ready seed they buy. Dorsey client CHS, a cooperative operating grain elevators in 16 states, submitted an amicus brief, noting that Mr. Bowman’s practice of buying bin-run soybeans is atypical and fraught with other issues for the farmer, the grain elevator and the seed companies. The Court noted that Bowman’s practice of purchasing commodity soybeans from a grain elevator to grow a new crop was not the ordinary practice among farmers. “[I]n the more ordinary case, when a farmer purchases Roundup Ready seed qua seed – that is, seed intended to grow a crop – he will be able to plant it.” Id. at 9.

Narrow but significant decision

Although Justice Kagan, writing for the Court, emphasized that the decision was narrow, the implications for agricultural biotechnology are significant. The decision provides clarity to the application of patent law in the unique context of biotechnology crops, where the patented technology is naturally self-replicating. Under the Court’s decision, the rule that patent exhaustion applies only to the item sold – not to reproductions – applies fully to patented seeds that naturally self-replicate.

Full Supreme Court decision