Bowman v. Monsanto Case Study

The Aereo case may be a demonstration about how a larger force in the market uses intellectual property arguments to shut down a competition. This sort of behavior is not limited to copyright cases though. Recently the Supreme Court unanimously decided to rule in favor of Monsanto in a patent infringement case the company filed against one of its customers, a soybean farmer in Indiana. To understand why seed growing was worth the time of the highest court in the land, we need to explain a key aspects of patents and how it is balanced against the public interest.

The case needed to be decided on patent infringement because the doctrine of exhaustion prevented a violation of the contract. Plaintiff Monsanto patented a soybean plant that is resistant to the Roundup Ready herbicide, which Monsanto also makes. To be clear, you are allowed to patent a plant (other than a tuber like a potato or Jerusalem artichoke) as long as you can reproduce it asexually, so you need to prove that you are able to make an exact genetic replica of plant. Defendant Vernon Bowman regularly bought the patented soybean crop from Monsanto and contractually agreed that he would not replant that crop. This is key to Monsanto’s business model because of patent exhaustion, a subject I covered tangentially when I wrote about the Kirtsaeng v. Wiley copyright case. Once you purchase a patented product, you allowed to do whatever you want to that particular product, but you cannot reproduce the product without the permission of the patent owner. While Bowman did not replant the seeds Monsanto gave him, Bowman purchased additional soybean seeds from a grain elevator, a place where farmers sold crops intended for human or animal consumption instead of agricultural planting. The defendant reasoned that he did not want to pay Monsanto the premium for the second crop of the season since planting the second crop was more risky. Most of the soybeans from the grain elevator had the patented trait Bowman desired, and the grain elevator did not have the contractual obligation to Monsanto that Bowman did. Therefore the court decided that, because the defendant had replicated the patented plant in planting the crop from the grain elevator, defendant was infringing on Monsanto’s patent.

The Court balances patent rights against the public interest of actually using the inventions by arguing that replanting does not exhaust the patent rights given the reasonable alternatives. Bowman tried to argue that, because seeds are meant to be replanted and be self-replicating, the replanting of the seeds should exhaust the patent rights on the plant. This argument was unpersuasive because of Monsanto’s reasonable offer of licensing the patented plants specifically for planting crops. If Monsanto could not control the replanted plants, then Monsanto would lose revenue as farmers would just save some of the crop plants and plant those instead of buying more from the company. Bowman’s other argument for the exhaustion was that the seeds themselves infringed because the seeds were the ones to self-replicate. In copyright law, Congress codified the essential step defense, in which a software user does not infringe copyright if the user copies a program with the new copy only being used “as an essential step in the utilization of the computer program in conjunction with a machine” (17 USC § 117(a)(1). Since Bowman did not actually replicate the soybeans when he planted them, the essential step was the self-replication of the crop, so the plant infringes without Bowman’s participation. However, Bowman picked out the crops from the grain elevator, tested them for the herbicide resistance trait, and planted the second crop accordingly. Therefore, Bowman was actively engaging in replicating the patented plant, and Bowman infringed on Monsanto’s patent rights.

In Bowman v. Monsanto, the Supreme Court ruled as other courts had below it that replanting a patented plant does not exhaust the rights of the patent holder. The self-replicating feature of plants is old and widely known, but that does not allow actors to try and avoid paying the patent owner for the patented product because patent owners have the government granted right to profit off of their work for a limited amount of time in exchange for a disclosure of the invention to the public. The Court mentioned that the holding only applies to plants and not other potentially self-replicating products like software, so we need another case to decide how patent or copyright exhaustion applies in other industries. Time will tell how the marketplace will react to Monsanto’s desire and legal right to control the sale and use of their products. That is all for now, but there are still a few more intellectual property cases to discuss from the last Supreme Court term. I might even cover some appeals court rulings as they relate to software companies and copyrights.

SCOTUS Blog Link

http://www.scotusblog.com/case-files/cases/bowman-v-monsanto-co/

 

Supreme Court Opinion

http://www.supremecourt.gov/opinions/12pdf/11-796_c07d.pdf

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About Simon Linder

I am a registered patent agent in the Silicon Valley area. I specialize in local intellectual property issues and talk about them on my blog.
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