May 14, 2013
As previously reported, yesterday the U. S. Supreme Court issued an opinion clarifying the doctrine of patent exhaustion. In Bowman v. Monsanto Co., a unanimous Court held that patent rights were not exhausted in soybeans harvested from genetically modified seeds sold by Monsanto.
Glyphosate is the active ingredient in several herbicides used to kill weeds, including Monsanto’s Roundup herbicide. Monsanto developed genetically modified soybean seeds that can withstand exposure to glyphosate, and markets these seeds as “Roundup Ready.” Monsanto sells the Roundup Ready seed only to purchasers who agree not to save any harvested seeds for replanting in a subsequent growing season. Absent the agreement, a farmer could harvest and replant glyphosate-resistant seeds because glyphosate resistance is passed on from the planted seed to the harvested soy bean.
Monsanto received a number of patents relating to the Roundup Ready technology, including two patents directed toward glyphosate-resistant seeds.
The petitioner, Bowman, purchased harvested soybeans that had been grown by other farmers using Roundup Ready seeds and sold to a grain elevator. The seeds were intended for consumption and not replanting. Bowman nonetheless planted these seeds in his fields and later harvested glyphosate-resistant soybeans, which he continued to replant and harvest over the course of the next eight years. After discovering this practice, Monsanto sued Bowman for patent infringement.
Bowman raised the defense of patent exhaustion, asserting that Monsanto could not control his use of the soybeans because they were the subject of a prior authorized sale. The district court rejected this argument and awarded damages to Monsanto. On appeal, the Federal Circuit held that patent exhaustion did not protect Bowman because he had “created a newly infringing article” rather than use an article sold by Monsanto. The Federal Circuit further explained that the right to use a patented article “does not include the right to construct an essentially new article on the template of the original.” The Supreme Court granted certiorari on the issue of patent exhaustion.
The Court began by explaining that 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.” The doctrine, however, “restricts a patentee’s rights 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.” For example, observed the Court, “the purchaser of the patented machine . . . does not acquire any right to construct another machine either for his own use or to be vended to another. . . . That is because the patent holder has ‘received his reward’ only for the actual article sold and not for subsequent recreations of it. . . . If the purchaser of that article could make and sell endless copies, the patent would effectively protect the invention for just a single sale.”
Based on this analysis, the Court held that the harvested soybeans did not constitute the actual article sold by Monsanto, and rejected Bowman’s arguments of patent exhaustion. The Court observed that Bowman could resell the patented soybeans he purchased, could consume the beans himself, or could feed them to his animals. “But,” held the Court, “the exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto’s permission (either express or implied).” The Court also held that this conclusion applied irrespective of how Bowman had acquired the seeds.
Bowman then asserted that because the seeds naturally self-replicate or “sprout” unless stored in a controlled manner, it was the planted soybean, and not Bowman “that made replicas of Monsanto’s patented invention.” The Court stated that the “blame-the-bean defense” was “tough to credit.” It noted that Bowman was not a passive observer, and that eight successive soybean crops did not happen on their own. Bowman purchased the seeds from the grain elevator, planted the seeds, tended and treated them, and also harvested them. “In all this, the bean surely figured. But it was Bowman, and not the bean, who controlled the reproduction (unto the eighth generation) of Monsanto’s patented invention.”
The Court stated that its opinion was “limited—addressing the situation before us, rather than every one involving a self replicating product.” The Court also recognized that related inventions were becoming “ever more prevalent, complex, and diverse” and that other situations might resolve differently. Nonetheless, the Bowman decision provides some clarification of the doctrine of patent exhaustion.
For more information on this decision, please contact Fitch Even partner Eric L. Broxterman, the author of this alert.
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