On Monday, 13 May 2013, the Supreme Court of the United States unanimously held that patent exhaustion does not apply to second, third or nth generations of seeds. In an opinion authored by Justice Kagan, the court found that patent exhaustion does not apply to seeds because later generations constitute new copies of the invention. Despite the fact that farmers were simply using the product for its intended purpose — that is, planting of the seed — the Court found that a newly infringing article was formed and therefore not subject to exhaustion principles.
However, the Court was limited in its decision and concluded that in rendering its decision in Bowman v. Monsanto, it was deciding only the case before it and not extending its holding to all self-replicating technology. Furthermore, the Court showed restraint in noting that it was limited to the facts of the case, perhaps leaving the door open for cases where Monsanto sues innocent infringers or organic farmers whose farming lands are contaminated with the patented seeds. The decision is unsurprising given the tenor of oral arguments in February, but the fact that the Court limited its decision to the specific facts of the Bowman case leaves the door open for further litigation regarding both other forms of self-replicating technology as well as cases involving contamination.
The basic facts are these: Bowman purchased seeds from a grain elevator and planted these seeds. Some of these seeds were the patented “roundup ready” soybeans produced by Monsanto. Because Bowman purchased these riskier seeds from a grain elevator, there were no contractual obligations between Monsanto and Bowman (generally, Monsanto placed contractual limitations on the seeds when selling them to farmers). Bowman harvested the seeds and saved some for future planting. Monsanto alleges that Bowman infringed on its patents in the seeds because Bowman created “newly infringing” articles and that its rights to the future generations seeds were not exhausted and that patent exhaustion does not apply to self-replicating technology. Additional background to the case is available here.
Justice Kagan, writing for the Court, essentially found that the very planting of seeds purchased from the grain elevator that created new seeds was an infringement of the patent. She noted that the seeds purchased directly from Monsanto and planted that also created newly infringing products would have infringed the patent, but that Bowman had a license to create those second generation seeds. The seeds purchased from the grain elevator did not have such a license attached, and therefore the very use of the seeds for its natural purpose — planting — infringed:
Under the patent exhaustion doctrine, Bowman could resell the patented soybeans he purchased from the grain elevator; so too he could consume the beans himself or feed them to his animals. Monsanto, although the patent holder, would have no business interfering in those uses of Roundup Ready beans. But the exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto’s permission (either express or implied). And that is precisely what Bowman did. He took the soybeans he purchased home; planted them in his fields at the time he thought best; applied glyphosate to kill weeds (as well as any soy plants lacking the Roundup Ready trait); and finally harvested more (many more) beans than he started with. That is how “to ‘make’ a new product,” to use Bowman’s words, when the original product is a seed. Brief for Petitioner 37; see Webster’s Third New International Dictionary 1363 (1961) (“make” means “cause to exist, occur, or appear,” or more specifically, “plant and raise (a crop)”). Because Bowman thus reproduced Monsanto’s patented invention, the exhaustion doctrine does not protect him.
The Court stated that if it found against Monsanto, then Monsanto would not receive sufficient reward for its invention because purchasers would only purchase the seeds once, save the seed and replant it, thus saving them from purchasing directly from Monsanto for future plantings.
However, as noted above, the Court did not make sweeping generalizations in its holding. Rather than applying its holding to all self-replicating technology, it limited its decision to the facts of the case before the Court, that is the decision is limited to cases regarding seeds and the fact that Bowman purchased the seeds from a grain elevator. The Court concludes:
Our holding today is limited—addressing the situation before us, rather than every one involving a selfreplicating product. We recognize that such inventions are becoming ever more prevalent, complex, and diverse. In another case, the article’s self-replication might occur outside the purchaser’s control. Or it might be a necessary but incidental step in using the item for another purpose. Cf. 17 U. S. C. §117(a)(1) (“[I]t is not [a copyright] infringement for the owner of a copy of a computer program to make . . . another copy or adaptation of that computer program provide[d] that such a new copy or adaptation is created as an essential step in the utilization of the computer program”). We need not address here whether or how the doctrine of patent exhaustion would apply in such circumstances. In the case at hand, Bowman planted Monsanto’s patented soybeans solely to make and market replicas of them, thus depriving the company of the reward patent law provides for the sale of each article. Patent exhaustion provides no haven for that conduct.