In February, the Supreme Court heard oral arguments in the case of an Indiana soybean farmer, Vernon Hugh Bowman, who says he has the right to plant second-generation herbicide-resistant soybean seeds without paying a royalty to Monsanto, the biotech company that created and owns the invention. Monsanto's seeds are Roundup Ready, which means that they resistant to the company's popular herbicide glyphosate, known as Roundup. This technology makes it much easier and cheaper for farmers to control weed infestations in their fields.
Bowman is asserting the legal doctrine of patent exhaustion. After the first sale of a patented item, the purchaser may use and dispose of that item in any way she chooses; the royalty payment associated with the individual item entirely compensates the patent holder. If you buy a patented screwdriver, for example, you can resell it without owing the patent holder any royalties.
In this case, Bowman each year purchased herbicide-resistant soybean seed covered by Monsanto's patent for a first planting. Bowman, like nearly a quarter of a million American farmers, signed each time the standard technology agreement in which purchasers agree "to use the seed containing Monsanto gene technologies for planting a commercial crop only in a single season." The agreement also requires farmers not to supply it to anyone else for planting, not to save any seeds produced for replanting, and not to use or provide to anyone else the seeds for crop breeding, research, or seed production.
In 1999, Bowman also bought commodity soybean seeds from a local grain elevator and planted them as a late-season second crop. Since late-season plantings are riskier, Bowman wanted to avoid paying for higher-priced commercial seeds. He expected that the commodity seeds he purchased from the grain elevator would mostly be Roundup Ready and, in fact, he successfully sprayed that crop with Roundup. He then saved seeds from that late-season crop and replanted them for many years, supplementing his subsequent late-season plantings with additional purchases of commodity grains. Bowman did not hide what he was doing. In fact, he forthrightly explained his practices in correspondence with Monsanto's representatives.
In 2009, Monsanto sued Bowman in Federal District Court for infringing its patents. Bowman essentially argued that when the grain elevator sold him seeds, it was in the same position as the owner of a properly purchased patented screwdriver reselling it to another consumer. In its summary judgment against Bowman, the Federal District Court for Southern Indiana found that the owners of the grain elevator "had no right to plant the soybeans and could not confer such a right on Bowman. Consequently, Bowman has infringed on Monsanto's patent rights by planting the commodity soybeans, which contained the patented trait, and then applying a glyphosate-based herbicide to that planted crop." The court ordered Bowman to pay Monsanto $84,000 in unrecovered royalties.
In 2011, Bowman appealed his case to the U.S. Court of Appeals for the Federal Circuit in Washington, DC. In its decision, the three-judge panel reviewed two earlier cases, McFarling and Scruggs, in which farmers asserted patent exhaustion claims. In the McFarling case, a farmer simply violated the technology agreement he signed by saving and subsequently planting Roundup Ready seeds. He claimed that once he purchased seeds from Monsanto he could do whatever he wanted with them.
In the Scruggs case, a farmer claimed that he had bought Roundup Ready seeds but never signed the technology agreement and so was not infringing Monsanto's patent by replanting saved seeds. In Scruggs, the Appeals Court rejected this claim, noting that "there was no unrestricted sale because the use of the seeds by seed growers was conditioned on obtaining a license from Monsanto." The fact that Scruggs had not obtained a license meant that he had no right to use the seeds. The Court further found that the "fact that a patented technology can replicate itself does not give a purchaser the right to use replicated copies of the technology. Applying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder." Just because a technology is self-replicating does not change the fact that making copies of a patented item is an infringement.
In both cases, the Court of Appeals ruled in favor of Monsanto. Given these earlier rulings, it is not at all surprising that the Appeals Court found for the company again: "While farmers, like Bowman, may have the right to use commodity seeds as feed, or for any other conceivable use, they cannot 'replicate' Monsanto's patented technology by planting it in the ground to create newly infringing genetic material, seeds, and plants." In other words, Bowman infringed.
When the Supreme Court heard oral arguments in Bowman v. Monsanto last month, the justices' questions to the attorneys do not appear to bode well for Bowman's case. Bowman's lawyer had barely cleared his throat before Chief Justice John Roberts got right to the heart of the matter by asking: "Why in the world would anybody spend any money to try to improve the seed if as soon as they sold the first one anybody could grow more and have as many of those seeds as they want?"
Bowman's attorney tried to deflect the Chief Justice's query by suggesting that Monsanto and other seed companies could protect their inventions through contracts. Later Justice Elena Kagan opined that relying contracts would be "peculiarly insufficient." Why? Because if one self replicating seed escapes "the web of these contracts [that]…essentially makes all the contracts worthless." Of course, that is exactly the argument the farmer in Scruggs was making: He hadn't signed a contract so he could grow and sell as many patented seeds as he wanted.
The Justices were also skeptical of Bowman's patent exhaustion argument. Justice Sonia Sotomayor, for example, declared that the "Exhaustion Doctrine permits you to use the good that you buy. It never permits you to make another item from that item you bought." Similarly, Justice Stephen Breyer noted, "When you create a new generation [of seeds], you have made a patented item, which you cannot do without the approval of the patent owner."
As a friend of the court, Assistant U.S. Solicitor General Melissa Arbus Sherry piled on against applying the patent exhaustion argument to self-replicating technologies like seeds. "In order to encourage investment, the Patent Act provides 20 years of exclusivity," said Sherry. "This would be reducing the 20-year term to essentially one and only sale." If that were to be the case, Sherry added, there would be "no incentive to invest, not just in Roundup Ready soybeans or not even agricultural technology" but any future self-replicating technologies.
As it happens, Bowman had the option of planting conventional soybeans whose seeds he could legally save for replanting each year. It's clear that he chose not to do this because he specifically wanted the weed-control convenience Roundup Ready seeds afforded him; he just didn't want to pay for them.
If the Supreme Court does "eviscerate" seed patent protections, agricultural biotech companies could turn to genetic engineering solutions similar to the Technology Protection System (TPS), an approach developed in 1999 by the U.S. Department of Agriculture and the seed company Delta & Pine Land Company (now owned by Monsanto). TPS consists of an array of three genes that causes a second generation of seeds to be sterile so that farmers would gain nothing by saving them. Bowman himself suggested in 2009 to the Federal District Court that Monsanto could protect itself against people like him by deploying TPS.
Back in 1999, anti-biotech activists were quick to denounce the TPS, dubbing it Terminator technology. The activists were against TPS precisely because it would prevent farmers from saving seeds. In addition, prominent anti-biotech activist Vandana Shiva worried in 2000 that one dire outcome of TPS would be "the gradual spread of sterility in seeding plants [that] would result in a global catastrophe that could eventually wipe out higher life forms, including humans, from the planet." This is, of course, biologically impossible: A gene technology that causes sterility is, by definition, one that can't spread.
If the Supreme Court were to rule in favor of Bowman, future advances in agricultural biotechnology would be significantly and needlessly slowed as agricultural biotech innovators seek regulatory approval to develop and incorporate TPS or other genetic use restriction technologies. Advances like increased drought tolerance, crops that use 50 percent less nitrogen fertilizer, disease resistant varieties, and nutritionally enhanced grains. Looking further afield, a decision for Bowman would also slow the development of all sorts of future self-replicating technologies ranging from stem cell therapies and vaccines grown on cell lines to self-assembling nanotechnology machines.
The patent system is certainly not perfect, but as Abraham Lincoln explained in 1858, its aim is to "add the fuel of interest to the fire of genius." So to paraphrase the Chief Justice: Why in the world would anybody spend money on developing an invention if as soon as they sold the first one anybody could make more and have as many of them as they want? That's the right question; let's hope the court comes up with the right answer.
Disclosure: As far as I know I own no stocks in any agricultural biotechnology company. Given the scientific consensus on the safety of biotech crops, I happily eat foods daily made from ingredients derived from them.
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