Source: https://www.patentdocs.org/2011/09/monsanto-co-v-bowman-fed-cir-2011.html
Timestamp: 2019-04-19 10:29:23+00:00

Document:
Yesterday, the Federal Circuit once again upheld a judgment of infringement brought by Monsanto against a farmer who replanted its patented Roundup Ready® seed. As it had in Monsanto Co. v. McFarling, Monsanto Co. v. David, and Monsanto Co. v. Scruggs, the Court in Monsanto Co. v. Bowman rejected defendant's argument, here that Monsanto's infringement action should be dismissed under the doctrine of patent exhaustion. The difference is that this decision comes after the Supreme Court's opinion in Quanta Computer, Inc. v. LG Electronics, Inc., which might be expected to influence the outcome.
1. A chimeric gene which is expressed in plant cells comprising a promoter from a cauliflower mosaic virus, said promoter selected from the group consisting of a CaMV (35S) promoter isolated from CaMV protein-encoding DNA sequences and a CaMV (19S) promoter isolated from CaMV protein-encoding DNA sequences, and a structural sequence which is heterologous with respect to the promoter.
4. A plant cell which comprises a chimeric gene that contains a promoter from cauliflower mosaic virus . . . .
where the promoter is heterologous with respect to the structural DNA sequence and adapted to cause sufficient expression of the encoded EPSPS enzyme to enhance the glyphosate tolerance of a plant cell transformed with the DNA molecule.
116. A glyphosate-tolerant plant cell comprising a DNA sequence encoding and EPSPS enzyme having the sequence of SEQ ID NO: 70.
122. A seed of the plant of claim 116, wherein the seed comprises the DNA sequence encoding an EPSPS enzyme having the sequence of SEQ ID NO: 70.
128. A glyphosate[-]tolerant plant cell comprising the recombinant DNA molecule of claim 103.
129. A plant comprising the glyphosate[-]tolerant plant cell of claim 128.
(a) planting the crop seeds or plants which are glyphosate-tolerant as a result of a recombinant double-stranded DNA molecule being inserted into the crop seed or plant . . .
(b) applying to the crop and weeds in the field a sufficient amount of glyphosate herbicide to control the weeds without significantly affecting the crop.
(where the Federal Circuit's opinion italicized portions relating to the scope of the claims).
Pioneer Hi-Bred (Pioneer), one of Monsanto's licensed seed producers, sold seed to Bowman; these sales were subject to a Technology Agreement similar to the Agreements Monsanto typically requires for farmers who purchase its seed. Under the Technology Agreement, the licensed grower agrees: (1) "to use the seed containing Monsanto gene technologies for planting a commercial crop only in a single season"; (2) "to not supply any of this seed to any other person or entity for planting"; (3) "to not save any crop produced from this seed for replanting, or supply saved seed to anyone for replanting"; and (4) "to not use this seed or provide it to anyone for crop breeding, research, generation of herbicide registration data, or seed production." It was undisputed that Bowman complied with these provisions as to its "first planting" each year. Monsanto's complaint arose from farmer Bowman's "second planting," which was made using so-called "commodity seed" obtained from local grain elevators. Farmers under the Technology Agreement could freely sell seed to grain elevators for commodity use, which did not include replanting. However, since Farmer Bowman's "second planting" was riskier (in terms of potential yield) he decided to use commodity seed because it was significantly cheaper than Roundup Ready® seed. After planting this seed, Farmer Bowman tested this second crop for Roundup® resistance, and finding that substantial amounts of the seed were resistant, used Roundup® on these plantings and replanted this seed. Because the Technology Agreement did not cover this use, Monsanto did not allege breach of contract (as it was able to in other cases brought against farmers for improper replanting of Roundup Ready® seed).
The District Court granted summary judgment of patent infringement and entered judgment against Farmer Bowman in the amount of $84,456.20. In a decision by Judge Linn, joined by Judges Bryson and Dyk, the Court rejected farmer Bowman's arguments that were predicated directly on the Supreme Court's Quanta decision. In Quanta, the Supreme Court reiterated its "substantial embodiment" test to apply the patent exhaustion principle, which applied to both composition and method claims (reversing the Federal Circuit as to method claim exhaustion), citing Ethyl Gasoline Corp. v. United States, 309 U.S. 436 (1940), and United States v. Univis Lens Co., 316 U. S. 241 (1942). Specifically, the Court stated the standard that sales that "substantially embody" the patents in suit will be sales that exhaust the patent right to obtain royalties, citing Univis. The immediately evident application of this decision to biotechnology patent claims include cases, as in Monsanto, where a patented article has the biological property of replication, where the license precludes use of replicates of the article after purchase. Although critically important economically (since it is clear that Monsanto would not be in the seed business for very long in the absence of these restrictions), the rubrics for applying patent exhaustion set forth in the Court's Quanta decision could be applied to Monsanto's claim. For example, it is without question that the seeds "embody" (figuratively and literally) the "essential features" of the patented invention, and thus the types of limitations Monsanto (and other seed producers) have placed on replanting of their patented seeds implicate the application of these standards to Monsanto's claims.
The Federal Circuit did not see it this way. Farmer Bowman argued that exhaustion applied to all Roundup Ready® soybean seeds, including those present in grain elevators as undifferentiated commodity. "Sales of second-generation seeds by growers to grain elevators, and then from grain elevators to purchasers (like Bowman) are authorized according to the terms of Monsanto's [T]echnology [A]greement, and are thus exhausting sales . . . under the Supreme Court's analysis in Quanta [Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008)]," according to farmer Bowman.
In response, Monsanto argued that sale of soybeans are not "authorized" when those soybeans are replanted (i.e., used as seed rather than as commodity grain). Monsanto further argued that, even if sale to grain elevators resulted in exhaustion, infringement occurred when the seed was replanted because "patent protection 'is independently applicable to each generation of soybeans (or other crops) that contains the patented trait,'" arguments Monsanto had previously (successfully) made in other infringement actions. Monsanto also urged that J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001), was controlling for patent exhaustion in seeds, specifically that exhaustion "must be limited to the seeds sold." In this regard, Monsanto urged the portion of the J.E.M. opinion that stated that "there are no exemptions for research or saving seed under a utility patent." Id. at 143 (emphases added).
The Federal Circuit agreed that patent exhaustion did not apply. It distinguished McFarling as not implicating the doctrine, rather being directed towards enforcement of the Monsanto Technology Agreement. Citing the McFarling opinion, the panel stated that "[t]he 'first sale' doctrine of patent exhaustion . . . [wa]s not implicated, as the new seeds grown from the original batch had never been sold. The price paid by the purchaser 'reflects only the value of the 'use' rights conferred by the patentee.'" Id. at 1299 (citing B. Braun Med., Inc. v. Abbott Labs., 124 F.3d 1419, 1426 (Fed. Cir. 1997)).
Turning to the specific facts in this case, the Court stated that the important consideration is that "the grower has created a newly infringing article" when commodity seed was planted by farmer Bowman and the "next generation" of seeds comprising Monsanto's Roundup Ready® technology were produced. "The fact that a patented technology can replicate itself does not give a purchaser the right to use replicated copies of the technology," according to the opinion, and "[a]pplying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder," citing Scruggs, 459 F.3d at 1336. According to the opinion, the right to use patented technology upon purchase "do[es] not include the right to construct an essentially new article on the template of the original, for the right to make the article remains with the patentee," citing Jazz Photo Corp. v. Int'l Trade Comm'n, 264 F.3d 1094, 1102 (Fed. Cir. 2001). The opinion applied the "substantial embodiment" test with regard to separate generations of seed, stating that present seed does not "substantially embody" "all later generation seeds," because with regard to the commodity seeds "nothing in the record indicates that the 'only reasonable and intended use' of commodity seeds is for replanting them to create new seeds, citing Quanta, 553 U.S. at 631 and noting that other uses for commodity seed existed (such as use as feed). "While farmers, like Bowman, may have the right to use commodity seeds as feed, or for any other conceivable use, they cannot 'replicate' Monsanto's patented technology by planting it in the ground to create newly infringing genetic material, seeds, and plants."
The Federal Circuit thus has once again affirmed that patent exhaustion applies to seeds that are sold and not to progeny seeds that were not sold by the patent owner or not made by authority of the patent owner (for self-replicating seeds). The patency of these distinctions await possible Supreme Court review.
"The Federal Circuit thus has once again affirmed that patent exhaustion applies to seeds that are sold and not to progeny seeds that were not sold by the patent owner or not made by authority of the patent owner (for self-replicating seeds). The patency of these distinctions await possible Supreme Court review."
Very much agree. How this distinction survives Quanta (or at least SCOTUS' view in Quanta that the doctrine of patent exhaustion should be applied broadly) escapes me. But so far, SCOTUS has yet to grant a petition for cert. in any of these Monsanto "Round-Up Ready" seed cases.
After the 5,352,605 patent expires this October, will the farmers be able to obtain "generic" roundup resistant seeds? Or will they have to buy it from Monsanto the last year and keep some for planting the next year. If there is no generic, Monsanto would have no incentive to lower the price.
Which article was actually sold by Monsanto?
There is something fundamentally wrong with this decision.
Perhaps a notion from plant patents should have come into play - there is a reason why only non-self-reproducing plant patents are allowed.
I understand the rationale of the Federal and Supreme Courts notion that patent exhaustion does not apply when replicable living organisms are purchased for the specific purpose of replicating those traits. I have no sympathy for someone who does this.
What happens, however, where the patented gene passes to another's living organism by natural means. For example a patented pig or ram enters my field through no fault of my own? Wind driven pollination? Flying insect pollination? Seeds blown onto my land in a windstorm? Seeds blowing or washed onto my land after blowing off passing trucks? I realise that I could sue the patent owner for loss caused by having to eradicate the patented gene from my stock or property. But is there a duty of care on my part to identify the fact that my animals or fields have been contaminated? I would be interested in hearing the opinions of patent boffins on this type of situation.
Please go read Seth Waxman's filings in the Organic Grower v Monsanto case - Monsanto will not sure for any of the possible infringements and noone will thus have standing to bring the case - because the case is essentially a law school paradigm and not a real world question or concern.
The farmers cannot have the cake and eat it too. They oppose any "terminator"-type technology that restricts such multiplication of patented trait. They also don't like the restricted use rights.
How is that any different than say, one buys a patented eraser. You can use it, chop it up into small pieces and sell. But you cannot go and try to make the same. The fact that seeds can be easily replicated should not be the reason that the subsequent generations fall under the exhaustion doctrine.
As long as the GM farmer can sue the neighboring non-GM farmer for diluting his transgenic trait, then we can have this discussion.
Monsanto has made public statements (in addition to its court filings) eschewing lawsuits against farmers once the patent(s) expire. As I understand it, Monsanto will also continue to make seeds available, which will then (after the first harvest) be available for replanting. Assuming Monsanto doesn't raise the price of Roundup the costs should come down.
"Monsanto will not sure for any of the possible infringements and noone will thus have standing to bring the case - because the case is essentially a law school paradigm and not a real world question or concern."
Until "6 and Kev LLC" enters the seed market with supar innovative seeds you mean.
We plan to sue the pants off these poor farmers.
The Monsanto agreement also obligates farmers to buy seeds with Monsanto technology for planting, only from Monsanto-licensed dealers. I wonder why Monsanto didn't go after Bowman for breaching that provision of the agreement.

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