Pay Me for My Magic Soybean Seeds! • 2011 09 27 MagicSoybeanSeeds
The crop patent wars have been raging for well over a decade. They’ve included multi-court patent, trade secret, and antitrust litigations between biotech giants Monsanto, Bayer Bioscience, and Syngenta—the dominant players in the agro-biotech market.

For this battle, in one corner, we have Monsanto, which sells genetically modified crop seeds and technology with desirable traits like large yields or resistance to herbicides used to control crops. In the other corner, we have the farmers (growers) who buy these expensive seeds, subject to strict limitations on reuse, planting environment, and resale.

A number of growers responded to these take-it-or-leave it technology agreements by refusing to abide by them or trying to exploit potential loopholes. Unfortunately, they run the risk of losing their license and paying a lot of money for patent infringement. Here’s the story of a farmer who found a potential loophole . . . and used it. Did he triumph over the biotech giant?

Monsanto Co. v. Vernon Hugh Bowman, No. 2010-1068 (Fed. Cir. Sept. 21, 2011) (Judges Bryson, Linn, and Dyk)

This is not the first Monsanto patent infringement lawsuit against a grower that has made it to the Federal Circuit. Monsanto is known in the industry to be aggressive about enforcing its agreements and intellectual property rights against growers and seed producers. On two prior occasions, the Federal Circuit decided the patent infringement and licensing issues in favor of Monsanto.

But this case is different—it involves genetically modified seeds purchased from grain suppliers who are authorized to purchase them from growers who grew Monsanto’s seeds under a license.

So what did Monsanto think of Bowman’s growing practices? It did not appreciate them and sued Bowman for infringement of two Monsanto patents on technology related to soybeans that can withstand Monsanto’s herbicides (ever heard of Roundup®?). One patent covers genes and other genetic material used to insert desirable genetic information into the plant genes at the right location so that they will express the desired real-world (phenotypic) traits. The second patent covers plant cell genes that contain inserted genes that are used to create a protein that imparts glyphosphate-resistance to crop plants.

Protection Against the Weed Killer

If a crop is glyphosphate-resistant (which is not naturally occurring), growers can treat their fields with Monsanto’s Roundup® or another glyphosphate-based herbicide to kill weeds without damaging crops.  Glyphosphate inhibits an enzyme (called EPSP synthase) that the weeds need in order to grow and causes them to wither and die after the herbicide is applied. Crops that are glyphosphate-resistant produce their own enzyme that performs the function of EPSP synthase but is not inhibited by glyphosphate.

For over 15 years, using two technology agreements, Monsanto has let certain growers purchase crop seeds that contain its patented technologies. Monsanto also grants a license to certain seed producers to allow them to insert the genetic trait into seeds that they, in turn, sell to growers. Monsanto also allows growers to sell second-generation seeds (which are produced by a plant grown from a genetically modified seed) to local grain elevators without placing any restrictions on their subsequent use or sale of those seeds to others.

Pioneer Hi-Bred (a seed producer) sold Mr. Bowman (a grower in Indiana) Roundup Ready® brand seeds, subject to the standard technology agreement restrictions. Bowman used these seeds to plant a first crop each year and never saved the second-generation seeds from the first crops for replanting. But since 1999, he purchased less expensive seeds from a local grain elevator and used them for a second, late-season crop planting.

Given that over 90% of Indiana’s acres of soybeans have been planted using herbicide-resistant varieties, he successfully applied glyphosphate to the second-planting crops and found that many of the plants were resistant. From 2000 to 2007, he also saved the seeds from this second crop for replanting additional second crops in later years.

Monsanto sued him for patent infringement because of his activities associated with his second crop plantings.

What’s the Deal With the Second- and Third-Generation Seeds?

Bowman represented himself at the trial level against a team of lawyers for Monsanto. The trial judge decided that he infringed Monsanto’s patents at the summary judgment stage of the case.

The Federal Circuit agreed. It concluded that Bowman has a patent infringement problem related to the second and subsequent generation seeds that he planted or grew from the seeds he purchased from the grain elevator. Once he planted these glyphosphate-resistant seeds, he created a new infringing soybean plant that was not authorized by Monsanto through any technology agreement.

The court also decided that the first-sale doctrine, which exhausts the patentee’s rights after the first uncontrolled sale of a patented item, does not protect Bowman. It refused to apply it to this “self-spawning” patented technology that can replicate itself after planting; to do so would “eviscerate the rights of the patent holder.” The court also rejected Bowman’s view that a licensed seed essentially covers all the later generation seeds and plants that come from it. The grain elevator seeds are useful for a variety of purposes that do not involve replanting, such as livestock feed.

Monsanto’s Notice of Infringement

Bowman also argued that Monsanto could not recover damages for any activities that predate the lawsuit because it failed to give him notice of his infringement.

Under U.S. patent laws (35 U.S.C. § 287(a)), a patent owner’s damages are limited if it fails to mark patent-protected products with information about the patents that cover them or give actual notice of its belief that the infringing activity is occurring. The Federal Circuit, however, concluded that Bowman had notice from a letter that Monsanto sent to him in 1999. That letter informed Bowman of Monsanto’s patents and its belief that planting unlicensed seeds covered by a patent would infringe them. The fact that the letter did not mention commodity seeds did not sway the court. It discussed Roundup Ready® seeds, which would include any glyphosphate-resistant seeds that he purchased and used during the second plantings.

Between a Rock and a Hard Place

Mr. Bowman and other growers feel that they have no choice but to purchase expensive genetically modified seeds to compete, yet they have no real bargaining power to negotiate the terms of those purchases and restrictions on use of the technology after the initial purchase. I imagine the pricing and cost pressures on their businesses are tremendous. However, there are important practical reasons why companies prohibit planting of second or later generation seeds and put other seemingly onerous restrictions on growers. For instance, they don’t want growers to unwittingly introduce mutations into the seed population that ruin or neutralize the desired trait. It’s a tough situation, with a tough ending for Bowman.

Here’s the Bowman opinion.