Indiana Intellectual Property Law News
Washington D.C. — The U.S. Supreme Court has ruled that “patent exhaustion” does not bar an infringement claim against Indiana farmer Vernon Bowman for reproducing patented seeds by planting and harvesting second generation seeds without the patent holder’s permission. 
Bowman v. Monsanto Co., U.S., No 11-796, 5/13/2013. Monsanto produces and sells patented soybean seed that is genetically altered to resist its “RoundUp” herbicide. Bowman is a farmer who purchased soybean for planting from a grain elevator, expecting that most of the grain elevator soybean would be Monsanto’s herbicide-resistant soybean. In the subsequent patent infringement brought by Monsanto, Bowman argued that Monsanto’s sale of its seed that he ultimately purchased from the grain elevator exhausted any patent rights in the seed. The argument was rejected by both the District Court and the Federal Circuit, and the Supreme Court agreed to review the case.
Patent Exhaustion Only for Sold Article
Under the patent exhaustion doctrine, an authorized sale of a patented product cuts off the patent owner’s right to control of that product, because the sale of that product fulfills the patent law by providing a reward to the patentee. However, this limitation on patent rights applies only to the particular article sold. If the purchaser could make and sell endless copies, the patent would effectively protect just a single sale.
In this case, the patent exhaustion doctrine provides Bowman with the right to use the purchased product in several different ways without Monsanto’s permission, including resale, human consumption or animal consumption of the product. However, it does not permit Bowman to make additional patented soybeans without Monsanto’s permission.
Bowman contended that his use of the purchased seed was covered by the patent exhaustion doctrine because that is the normal way farmers use seed, and that Monsanto seeks an impermissible exception to the exhaustion doctrine for patented seeds and other self-replicating technologies.
The Court rejected the argument, pointing out that it is Bowman who seeks an unprecedented exception to the well-settled rule that the exhaustion doctrine does not extend to the right to make a new product.
“Reproducing a patented article no doubt “uses” it after a fashion. But as already explained, we have always drawn the boundaries of the exhaustion doctrine to exclude that activity, so that the patentee retains an undiminished right to prohibit others from making the thing his patent protects. * * * That is because, once again, if simple copying were a protected use, a patent would plummet in value after the first sale of the first item containing the invention. The undiluted patent monopoly, it might be said, would extend not for 20 years (as the Patent Act promises), but for only one transaction. * * *
Nor do we think that rule will prevent farmers from making appropriate use of the Roundup Ready seed they buy. * * * [I]n the more ordinary case, when a farmer purchases Roundup Ready seed qua seed–that is seed intended to grow a crop–he will be able to plant it. Monsanto, to be sure, conditions the farmer’s ability to reproduce Roundup Ready: but it does not–and could not realistically–preclude all planting. No sane farmer, after all, would buy the product without some ability to grow soybeans from it. And so Monsanto, predictably enough, sells roundup Ready seed to farmers with a license to use it to make a crop. * * * Applying our usual rule in this context therefore will allow farmers to benefit from Roundup Ready, even as it rewards Monsanto for its innovation.”
The Court also rejected Bowman’s argument that the reproduction occurred naturally, i.e., that it was the planted soybean, not Bowman himself, that made replicas of Monsanto’s planted invention. It found the “blame the bean” defense tough to credit, noting that Bowman was not a passive observer and that his seeds did not spontaneously create successive soybean crops. He purchased the beans, applied herbicide, saved beans for the following season, planted the beans, tended and treated them, and harvested many seeds for marketing or saving for the next cycle. It was Bowman, not the bean, who controlled the reproduction of Monsanto’s patented invention, according to the Court.
The Court stressed that this holding does not address every situation involving a self-replicating product. Some inventions are becoming more prevalent, complex, and diverse, and that the article’s self-replication in another case might occur outside the purchaser’s control or might be a necessary but incidental step in using the item for another purpose. For example, the Copyright Act states that it is not an infringement to make a copy or adaptation of a computer program that is “an essential step in the utilization of the computer program.” 17 U.S.C. 117(a)(1).
The Honorable Elena Kagan, Associate Justice, U.S. Supreme Court delivered the opinion for a unanimous Court and assigned Case No. 11-796.