Bowman v. Monsanto Co.: Patent Exhaustion Does Not Permit Replication of Seeds

May 17, 2013

In a unanimous decision issued May 13, 2013, the Supreme Court ruled that the doctrine of patent exhaustion does not permit a farmer to reproduce patented seeds through planting and harvesting without the patent holder’s permission[1] The central issue was whether Indiana farmer Vernon Bowman infringed Monsanto’s patents[2] for herbicide-resistant soybean plants by replanting harvested seeds instead of buying new seeds from Monsanto for each crop.  Bowman argued that Monsanto’s claims were barred by the doctrine of patent exhaustion, which states that a patent holder cannot prohibit the use or resale of a patented article following its initial authorized sale.  The Court rejected Bowman’s argument and found that the exhaustion doctrine does not include the right to replicate a patented product—Bowman’s activities were not protected by patent exhaustion because Bowman planted and harvested Monsanto’s patented soybeans solely for the purpose replicating them.  The Court specifically limited its holding to the facts of this case and did not address the wider application of the exhaustion doctrine to other self-replicating technologies such as vaccines, cell cultures, and software. 

I.                   The Facts of Bowman v. Monsanto Co.

Monsanto filed suit against Bowman, alleging that Bowman infringed its patents on Roundup Ready® soybean seeds, which contain a genetic modification that allows them to survive exposure to the herbicide glyphosate.  Because the glyphosate resistance trait is passed from the planted seed to the harvested soybean, Monsanto sells the seeds subject to a licensing agreement that only permits farmers to plant the patented seed in a single growing season.  Under the agreement, growers may consume or sell the resulting crops, but may not save any of the harvested soybeans for replanting.      

Bowman purchased Roundup Ready® soybean seeds from an authorized Monsanto affiliate for his first crop of each growing season and followed the terms of Monsanto’s licensing agreement.  However, to reduce costs for his riskier second crop, Bowman purchased commodity soybeans from a grain elevator to use for seed.  These commodity soybeans had been planted and harvested by other farmers and then sold to the grain elevator.  Since the use of Monsanto’s Roundup Ready® technology is prevalent, the commodity soybeans contained a high proportion of seeds with the patented glyphosate resistance trait.  Bowman planted the commodity soybeans, treated the resulting crop with glyphosate to kill all plants without the Roundup Ready® trait, and harvested the crop in order to obtain soybean seeds containing the Roundup Ready® trait.  Bowman saved these seeds and replanted them without compensating Monsanto. 

After discovering this practice, Monsanto sued Bowman for infringing its patents on Roundup Ready® seed.  Bowman raised the defense of patent exhaustion, which gives the purchaser of a patented article, or any subsequent owner, the right to use or resell that article.  The district court rejected Bowman’s patent exhaustion defense and the Federal Circuit affirmed. 

II.                The Supreme Court’s Decision

The Supreme Court affirmed the Federal Circuit’s decision and held that patent exhaustion does not permit Bowman to reproduce Monsanto’s patented seeds through planting and harvesting without the Monsanto’s permission. 

The Court rejected Bowman’s argument that Monsanto could not control his use of the soybeans because they were the subject of a prior authorized sale (from local farmers to the grain elevator).  Under the exhaustion doctrine, the initial authorized sale of a patented article confers on the purchaser, or any subsequent owner, the right to use or resell the patented article.  For example, Bowman could have properly resold the patented soybeans that he purchased from the grain elevator, consumed them himself, or fed them to his animals.[3] However, the exhaustion doctrine does not permit an authorized purchaser to make additional copies of the patented article.[4] Consequently, the Court found that Bowman was not protected by the exhaustion doctrine because he reproduced Monsanto’s patented Roundup Ready® trait by planting and harvesting commodity soybeans and saving the resulting seeds for replanting. 

Bowman further argued that allowing Monsanto to patent naturally-replicating seeds would create an impermissible exception to the exhaustion doctrine.  The Court rejected this argument, noting that “it is really Bowman who is asking for an unprecedented exception” to the “well settled rule that the exhaustion doctrine does not extend to the right to ‘make’ a new product.”[5] Such an exception is undesirable on policy grounds because it would undermine the incentives to innovation that the patent system is designed to protect.  The Court concluded that “if simple copying were a protected use, a patent would plummet in value after the first sale of

the first item containing the invention.”[6] For example, if the exhaustion doctrine applied to self-replicating seeds, farmers would only need to purchase patented seeds once and then reproduce them each year without compensating the inventor.  The Court found this result to be impermissible because it would shorten the term of the patent monopoly from 20 years to a single transaction.[7]

The Court also rejected Bowman’s final argument that because soybeans naturally self-replicate unless stored in a controlled manner, it was the planted soybean and not Bowman himself that made replicas of Monsanto’s patented invention.  The Court found this “blame-the-bean” defense “tough to credit” because Bowman devised and executed a novel way to harvest crops from Roundup Ready® seeds without paying the usual premium.[8] Therefore, “it was Bowman, and not the bean, who controlled the reproduction . . . of Monsanto’s patented invention.”[9]

The Court specifically limited its holding to the facts of this case and did not resolve the larger issue of the proper application of the exhaustion doctrine to other self-replicating technologies—it is still an open question whether other self-replicating technologies such as live vaccines, cell cultures, and computer software are subject to the exhaustion doctrine. 

Authored by Michael A. Erbele of Merchant & Gould, P.C.   

 


 

[1]  Bowman v. Monsanto Co., No 11-796, slip op. at 4-7 (Sup. Ct. 2013).
[2] U.S. Patent Nos. 5,352,605 and RE39,247E.
[3] Bowman, slip op. at 4-5.
[4] Id. at 5. 
[5] Id. at 8 (internal quotation omitted).
[6] Id.
[7] Id.
[8] Id. at 9.
[9] Id. at 10.

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