Supreme Court Nips Patent Exhaustion Doctrine in the Bud
In Bowman v. Monsanto Co., the Supreme Court ruled unanimously for Monsanto, holding that the patent exhaustion doctrine does not limit a patentee’s right to exclude others from reproducing their patented seeds after an authorized sale. The ruling preserves a critical patent right and limits the production of patented products through self-replication, and is limited to the specific facts of the case. It remains to be seen if this ruling itself will extend to other areas of self-replication–an important issue in biotechnology.
Respondent Monsanto’s patents cover a genetic modification to soybean plants that imbue the plants with a resistance to glyphosate herbicides. The glyphosate-resistant quality is passed down by the genetically-altered plants to the soybeans they produce, which are also covered by Monsanto’s patents and are marketed as Roundup Ready seeds. Only growers who assent to a special licensing agreement can purchase Roundup Ready seeds. Under the terms of the license, the grower can plant the seeds for only one season and must sell the crop for consumption or to a grain elevator. A licensed grower cannot replant the soybeans or transfer the soybeans to others for replanting. Instead, the grower must purchase new seeds to plant each additional crop.
Defendant Bowman is a farmer who regularly purchased Roundup Ready soybean seeds through authorized channels. Bowman then began planting soybeans he purchased from grain elevators because he understood that these soybeans came from farmers who mostly used Roundup Ready seeds and, therefore, most of the resulting crop would be glyphosate resistant. Bowman was correct and, after eliminating the non-resistant plants with glyphosate, he collected the seeds from the resistant plants for planting the next crop.
Monsanto learned of this practice and sued Bowman for infringing its Roundup Ready seed patents. Bowman raised patent exhaustion as a defense, arguing that Monsanto could not control his use of the seeds because they were purchased from a grain elevator that obtained them through authorized sale by other farmers. The district court rejected Bowman’s argument and the Federal Circuit affirmed. The Supreme Court granted certiorari and affirmed.
The Supreme Court explained that the doctrine of patent exhaustion imposes limits on a patentee’s right to exclude others from using and selling a patented item after the initial authorized sale of the item. The reason for the doctrine is that after the initial sale the patentee has realized all the rewards afforded to him by the Patent Act. The Patent Act does not reward any further use or enjoyment of the sold item and therefore does not restrict any such use or enjoyment.
The Court further explained that patentee’s right to exclude others from making the patented item, however, is untouched by the doctrine. The rationale here is that if the doctrine allows a purchaser of a patented article to freely make copies of the article and sell them, it would effectively reduce the patentee’s protection to a single sale. This, the Court concluded, is clearly at odds with the 20 years of protection promised by the Patent Act.
Bowman’s argument rested on his assertion that he was not making the patented seed, but instead using the patented seeds as they are normally used by farmers: by planting them. By allowing Monsanto to limit this common use post-sale, he argued, the Court would be creating an exception to the patent exhaustion doctrine for self-replicating technologies.
The Court was not swayed by Bowman’s argument. Bowman purchased his soybeans from a grain elevator that sold them for consumption, so his argument that he used the seeds as they were typically used was unfounded. Consistent with the patent exhaustion doctrine, Monsanto’s right to exclude would not extend to all uses of its patented seeds that it sells, only to those uses that impermissibly reproduce the seeds. Monsanto’s license to authorized purchasers of its seeds permits them to reproduce the seeds for consumption, so farmers can benefit from their use, while Monsanto is rewarded for its innovation.
The Court was also not convinced by Bowman’s argument that the plants themselves reproduced the patented seeds and he should therefore not be held liable. Bowman was not a passive actor here. He purchased the seeds with the intent of reproducing them and tended to them in a manner that he understood would produce the patented seeds. He then collected the seeds and replanted them to produce more patented seeds, and did so for eight crops. The Court thus rejected his “blame-the-bean” argument.
The Court made clear that their holding was narrowly applicable to the facts of the case and is not necessarily controlling for every self-replicating product. The Court indicated that there could be situations where self-replication is beyond the purchaser’s control or is incidental to necessary usage of a patented article, but declined to comment on whether the patent exhaustion doctrine would extend to these situations.
Take-Away Points
Generally, the patent exhaustion doctrine will allow for the free use and sale of a patented item after an authorized sale, but does not allow for uses that result in the reproduction of the patented item.
The Court’s explicit limitation on its holding and the comments that followed regarding certain self-replication may hint at the possibility that the patent exhaustion doctrine, or possibly another limitation on a patentee’s right to exclude, could allow for such “making” of some self-replicating products.
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