Supreme Court Considers GM Crop Patent Case?

Can a farmer commit patent infringement just by planting soybeans he bought on
the open market? This week, the Supreme Court asked the Obama administration to
weigh in on the question. The Court is pondering an appeals court decision
saying that such planting can, in fact, infringe patents.

In 1994, the agricultural giant Monsanto obtained a patent covering a line of
“Roundup Ready” crops that had been genetically modified to resist Monsanto’s
Roundup pesticides. This genetic modification is hereditary, so future
generations of seeds are also “Roundup Ready.” Farmers had only to save a
portion of their crop for re-planting the next season, and they wouldn’t need to
purchase new seed from Monsanto every year. The company didn’t want to be in the
business of making a one-time sale, so when Monsanto sold “Roundup Ready”
soybeans to farmers, it required them to sign a licensing agreement promising
not to re-plant future generations of seeds.

However, farmers remain free to sell the soybeans they grow in the commodity
market, where most are used to feed people or livestock. Roundup Ready soybeans
have become extremely popular; they now account for 94 percent of all acres
planted in Indiana, for instance. Vernon Bowman, an Indiana farmer, was a
customer of Monsanto who realized that Roundup Ready soybeans had become so
common in his area that if he simply purchased commodity soybeans from a local
grain elevator, the overwhelming majority of those soybeans would be Roundup
Ready. Commodity soybeans are significantly cheaper than Monsanto’s soybeans,
and they came without the contractual restriction on re-planting.

So Bowman planted (and re-planted) commodity soybeans instead of using
Monsanto’s seeds. When Monsanto discovered what Bowman was doing, it sued him
for patent infringement.

Patent protection or freedom to farm?

Bowman argued his use of the seeds is covered by patent law’s “exhaustion
doctrine.” This doctrine, like copyright law’s first sale doctrine, holds that a
patent holder’s rights in a particular product are “exhausted” when the product
is sold to an end user. The Supreme Court beefed
up the exhaustion doctrine in 2008 when it held that LG could not “double
dip” on patent licensing fees—charging both chipmaker Intel and OEM Quanta
royalties for the same chip.

Bowman argued that when Monsanto sold seed to a farmer, it exhausted its
rights not only to that specific seed but to all of the seed’s descendants.
Since Bowman wasn’t required to sign a licensing agreement before buying
commodity seeds, he argued that he was free to plant the seeds and even to save
and re-plant each season’s crop for future seasons.

But Monsanto countered that each new generation of seeds is a separate
product and thus requires a separate patent license. In effect, Monsanto
contends that Bowman is illegally “manufacturing” infringing soybeans.