Survey of Disputes Involving GMO Patent Rights Carlyn Burton 1 August 18, th ACS National Meeting

Outline Discussion of six cases Looking at variety of issues presented –Patent eligible subject matter –Patent misuse –Damages –Implied license –Patent exhaustion –Declaratory judgments 2

J.E.M. AG Supply Inc. v. Pioneer Hi- Bred International Inc. US Supreme Court (2001) Held that utility patents may be issued for plants pursuant to 35 U.S.C. § 101. –Neither the Plant Patent Act or Plant Variety Protection Act forecloses utility patent coverage for plants Only patent holder (not PVPA certificate holder) can prohibit farmer from saving harvested seed for replanting own farm 3

Monsanto Canada Inc. v. Schmeiser Supreme Court of Canada (2004) Farmer Schmeiser argued original plant came onto farm without his intervention –95-98 percent of 1000 acres have Roundup Ready plants –Sprayed Roundup to isolate and harvest plant, segregate seeds, replant 4

Confirming Validity Prior Canadian case had ruled that higher life forms cannot be patented These patents were to gene and insertion process, not to the plant itself Whether or not patent extends to activities involving the plant is not relevant 5

Infringement? Did Schmeiser “use” the patented cell and gene? Infringement does not require use of the gene or cell in isolation in lab 6

Damages Damages to patent holder or accounting of profits of infringer –Monsanto elected accounting of profits Trial court awarded $19,832 (equivalent of profits on 1998 canola crop) as well as legal costs of $153,000 Supreme Court found Schmeiser’s profits were precisely what ordinary canola would have provided –No evidence of Roundup herbicide after initial gathering 7

Monsanto Co. v. McFarling Federal Circuit (2004) Farmer McFarling conceded that he saved 4575 bags of seeds for replanting in 1999 and 2000 Monsanto obtained sample of seeds during third party cleaning 8

McFarling’s Defenses Patent misuse –Unsuccessfully argued the germplasm was not within terms of patent because claims read on all generations of seed produced PVPA preempted prohibitions on seed saving –But see J.E.M. AG Supply Inc. v. Pioneer Hi- Bred International Inc 9

Damages District court found 120 multiplier on technology fee in Technology Agreement was valid liquidated damages clause Penalty clauses are not valid in Missouri –Anti-one-size rule Types of seed (cotton, soybean, etc) Types of activity (saving, replanting, sells) Bags purchased, not saved, sold, replanted 10

Monsanto Co. v. Scruggs Federal Circuit (2006) Farmer Scruggs purchased Roundup ready soybean and cotton seeds from seed companies but never signed a licensing agreement 11

Claim of Unrestricted Sale No unrestricted sale because use of seeds by growers was conditioned on obtaining license First sale doctrine not implicated –Second generation seeds were never sold –Applying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder. 12

Implied License Undisputed that Monsanto requires licensees to place notice on bags of seeds –Covered by US patents –Purchase conveys no license –License must be obtained before using the seeds Seed distributors have no authority to convey rights or license to use 13

Bowman v. Monsanto Co. U.S. Supreme Court (2013) Monsanto (patent holder) sued farmer Bowman for patent infringement –Purchased Roundup Ready soybean seeds for 1 st crop of season Used all seed purchased Sold entire crop to grain elevator 14

Bowman’s Second Crop For late season crop, purchased and planted “commodity soybeans” intended for human or animal consumption from grain elevator –Assumed (correctly) that most farmers also used Roundup Ready seeds Saved seed from 2 nd crop to use in late season 2 nd crop for subsequent year Harvested 8 crops 15

Bowman’s Defense Monsanto sued Bowman for infringing patents on Roundup Ready seed Bowman claimed patent exhaustion –Soybeans were subject of prior authorized sale from local farmers to grain elevator –Claimed Monsanto could not control use of these purchased soybeans 16

Patent Exhaustion Initial authorized sale of patented item terminates patent rights Doctrine limits the right of the patentee to control what can be done with article embodying patented invention after an authorized sale Sale gives purchaser right to use or sell article as he sees fit. 17

Bowman’s Problem Exhaustion doctrine limited to the particular article purchased –Does not confer right to copy or create new article Bowman could have consumed the soybeans or used for counting –Planting and harvesting new crop of seeds is what is problematic 18

But soybeans are self-replicating! Planted soybean, not Bowman, that made replica However, Bowman not a passive observer –Purchased assuming many were Roundup Ready –Applied herbicide to cull any plants without the patented trait –Harvested many more beans Selling some and saving some beans for next season 19

Organic Seed Growers & Trade Ass'n v. Monsanto Co Federal Circuit (2013) Coalition of farmers, seed sellers, and agricultural organizations sought declaratory judgments of non-infringement and invalidity of 23 Monsanto patents Question of whether there is a case or controversy that give rise to jurisdiction 20

Case or Controversy? Concern for contamination of transgenic seed into their field and subsequent patent infringement suit that could follow. Monsanto explicitly stated it will not take legal action against growers whose crops contain inadvertent or trace amounts of patented invention Even without covenant not to sue, no case or controversy 21

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