On Monday, December 10, 2012, Knowledge Ecology International (KEI) filed an amicus brief in a case before the Supreme Court of the United States involving application of the patent exhaustion doctrine to self-replicating technology. KEI filed in support of the petitioner, urging the Supreme Court to find that the patent exhaustion doctrine does in fact apply to self-replicating technology and that the patent holder’s rights in the present case were exhausted with the sale of the first-generation of the technology, in this case a seed. KEI’s amicus brief is available for download here.
Background
In case no. 11-796, Bowman v. Monsanto Co. et. al., the petitioner, Vernon Hugh Bowman, was sued by respondents, Monsanto, for infringing patent rights over genetically modified soybeans. More specifically, Bowman purchased “Roundup Ready” seeds, that is, seeds that are resistant to the herbicide known as “Roundup” from a grain elevator, planted those seeds, then saved the second-generation seeds for future plantings.
Monsanto often protects its interests over second-generation (and all future-generation) seeds by enforcing contracts against purchasers which prohibits the very actions of Bowman (that is, the planting and saving of future generations of the seeds). However, because Bowman purchased the seeds from a grain elevator, no privity of contract existed over these particular seeds between Bowman and Monsanto. As a result, Monsanto sought to prohibit the use of future generations of the seeds by asserting that patent exhaustion does not apply to second-generation seeds or to self-replicating technology. The Court of Appeals for the Federal Circuit agreed with Monsanto, essentially finding an exception to the patent exhaustion doctrine for self-replicating technologies, such as seeds.
On Writ of Certiorari
The case is now before the Supreme Court of the United States, which will look at the following issue:
Question Presented
Patent exhaustion delimits rights of patent holders by eliminating the right to control or prohibit use of the invention after an authorized sale. In this case, the Federal Circuit refused to find exhaustion where a farmer used seeds purchased in an authorized sale for their natural and foreseeable purpose—namely, for planting. The question presented is:Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?
KEI’s amicus brief provides a brief overview of the history of the Supreme Court’s history of applying a robust patent exhaustion doctrine to ensure that a patent holder can receive a single reward for his efforts, but cannot control downstream sales. It also notes that a judicially created exception from patent exhaustion for self-replicating technology is an inappropriate solution. The second section notes that contract law provides a more appropriate mechanism to protect investments in self-replication technology. Notably, contract law, unlike patent law, may be scrutinized for anticompetitive or unconscionable behavior and can be voided for these reasons, thus providing protections both for the patent holder as well as the user. In its long line of patent exhaustion cases, the Supreme Court has repeatedly noted that the application of patent exhaustion does not negate a patent holder’s ability to attempt to enforce post-sale limitations through contracts. Finally, KEi’s amicus details the non-patent mechanisms that exist that can and should encourage progress wehre patents are an inappropriate or burdensome reward.
The implications for the Supreme Court’s decision may have unintended and currently unknown consequences. The outcome of the case will almost certainly impact all forms of self-replicating technologies which may include cell lines, DNA molecules, and other nanotechnologies. As the Solicitor General noted in its brief at the petition stage, the decision could have “unforeseen consequences for tother present and future self-replicating technology.” Given that self-replicating technologies are a rapidly evolving and maturing field, the Supreme Court should take care to avoid sweeping or categorical exclusions from the application of the patent exhaustion doctrine.
It appears that the Supreme Court will have an active term on intellectual property. The Supreme Court has already heard a case on the application of the first sale doctrine to copyrighted goods made abroad (Kirtsaeng v. John Wiley & Sons), will hear the present case on application of patent exhaustion to self-replicating technology, and recently granted cert. in the BRCA gene patent case to hear the question of whether human genes are patent eligible (Association for Molecular Pathology, et. al. v. Myriad Genetics, et. al.). Additionally, the Court will also hear an important case related to access to medicines to determine whether reverse payments (also known as “pay-for-delay“) are presumptively anticompetitive. The Supreme Court could also decide to take another patent exhaustion case analogous to the Kirtsaeng case to decide whether international exhaustion of rights or national exhaustion of rights applies to patented goods.