Patent Controls on GM Crop Farming Janice M. Mueller Professor of Law University of Pittsburgh School of Law April 15, 2005

2 Monsanto Co. v. McFarling, 363 F.3d 1336 (Fed. Cir. Apr. 9, 2004) Rejecting farmer’s challenge under the antitrust and patent laws to Monsanto’s patent licensing practices Monsanto’s Technology Agreement prohibits farmers from saving and replanting second- generation GM seed Supreme Court on Oct. 12, 2004 requested SG brief on views of United States

3 Monsanto’s Patents on Roundup Ready® Soybeans USP 5,633,435 (‘435 patent): –Isolated DNA molecule encoding modified EPSPS enzyme (not affected by glyphosate) –Glyphosate-tolerant plant cell –Glyphosate-tolerant plant –Seed of glyphosate-tolerant plant USP 5,352,605 (‘605 patent): –Promoter sequence

4 Monsanto’s Licensing Practices Monsanto licenses the patents to manufacturing seed “partners” Sales of GM seed by seed company to farmer contingent on farmer signing Monsanto’s Technology Agreement In exchange for the “opportunity to purchase and plant seed containing” the patented technology, farmer must agree “to not save any crop produced from this seed for replanting.” Result: farmer must purchase new “first-generation” GM seed for planting each season.

5 McFarling Argues Illegal tying occurs when Monsanto forces farmers to buy unwanted new seed (the “tied” product) in order to obtain license to “use” the patented GM technology ( the “tying” product) in growing their soybean crop –Sherman Act § 1 violation (unreasonable restraint of trade) –Patent misuse

6 Federal Circuit’s Rationale Monsanto’s licensing prohibitions on saving/replanting seed do not exceed the exclusionary scope of Monsanto’s patents Thus, no antitrust tying violation or other illegal restraint of trade by Monsanto No patent misuse by Monsanto

7 McFarling’s Petition for Certiorari Questions Presented: 1. May a patent holder lawfully prohibit farmers from saving and replanting seed as a condition to the purchase of patented technology? 2. Does obtaining patents on products which are the subject of licensing agreements afford an absolute defense to any claim that the licensing agreements violate the Sherman Act?

8 McFarling’s Petition for Certiorari “The heart of McFarling's argument is that agreements to prohibit seed-saving are an unreasonable restraint of trade, since the farmer is not allowed to purchase the Monsanto technology without also agreeing to buy overpriced new seed. Monsanto ties unwanted new seed to the right to purchase the patented technology. This tying is not for the benefit only of Monsanto. Instead, its seed company licensees derive a financial windfall since farmers have to buy overpriced new seed from the seed companies each year. A farmer cannot purchase the technology unless he also agrees to purchase new seed each year.”

9 Questions for Discussion If goal is to limit farming of GM crops, should we favor restrictive patent licensing practices?

10 Questions for Discussion Do Monsanto’s licensing practices survive rule of reason scrutiny? Are there less restrictive alternatives to seed saving/replanting prohibitions?

11 Questions for Discussion What is the permissible scope of field of use restrictions in patent licenses? Restriction on licensee’s use of product claimed in licensed patent, vs. Restriction on licensee’s use of product produced by the product claimed in licensed patent

12 Questions for Discussion Should patents on GM technology be interpreted as encompassing “second- generation” seed products, or are such products unpatentable under 35 U.S.C. 101 as “products of nature”?