Agribusiness Alert: New Supreme Court Ruling on Replanting of Patented Seeds Leaves Producers with Limited Rights
On Monday, the Supreme Court held that farmers who purchase patented seeds may consume or sell the resulting crops, but they may not use any of the harvested crop for replanting. In Bowman v. Monsanto, Mr. Bowman signed a licensing agreement with Monsanto and purchased patented Roundup Ready soybean seeds for his first crop of the season. Roundup Ready soybeans are resilient to the glyphosate-based herbicide Roundup; allowing the producer to apply the herbicide to destroy unwanted weeds and other plant varieties while, at the same time, allowing the soybeans to survive. Significantly all commercially grown soybeans are sold with this seed characteristic. For his riskier late-season crop, however, Mr. Bowman purchased soybeans from his local grain elevator that were intended for human or animal consumption. Mr. Bowman planted the seeds, applied the glyphosate-based herbicide, and saved some of the harvested seed. Mr. Bowman continued this practice in the subsequent crop years. Monsanto sued Mr. Bowman for infringing its patent on the Roundup Ready beans. Monsanto won.
Mr. Bowman argued the legal doctrine of patent exhaustion allowed him to replant the saved seed. Typically a patent holder can only recover one royalty per patented item. This means if you purchase a patented product from an authorized source, you can resell that product and not be liable for patent infringement. The legal reasoning is that the patent holder received its economic reward when the product was originally sold and; therefore, the patent holder is not entitled to any additional economic benefit from any subsequent sale of the product. This happens all the time with equipment. Under normal circumstances, you can sell that patented equipment you bought. You cannot, however, make a copy of that equipment.
Mr. Bowman argued that the harvested beans were simply the same patented product that were bought under proper license at the start of the season. The Supreme Court disagreed. It found that the harvested beans were more like copies of a patented product and by Mr. Bowman planting the saved soybean seeds he was making additional patented soybeans without Monsanto’s permission.
The Federal Plant Variety Protection Act (the “PVPA”) also provides certain protections for seed companies. However, the PVPA (and subsequent cases that have applied the PVPA) carves out and allows for, in certain situations, the producer to save and replant seeds protected under the PVPA. The Monsanto case only dealt with the alleged patent infringement by Mr. Bowman. In the 2001 Supreme Court decision J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., the Supreme Court held that genetically modified seeds may be both patented and certified under the PVPA. The Supreme Court in the Monsanto case did not address whether the doctrine of exhaustion was still applicable under the more lenient Federal Plant Variety Protection Act.
The moral of the story: a producer who plants a patented seed (whether obtained through a licensed dealer or by other means), has limited rights to clean and replant the seeds in subsequent crop years.
Gray Plant Mooty is a full-service law firm with specialized practices in agribusiness, intellectual property and patent litigation. Contact Loren Hansen, Jeff Peterson or Phil Kunkel if you have any questions regarding this article.
This article is provided for general informational purposes only and should not be construed as legal advice or legal opinion on any specific facts or circumstances. You are urged to consult a lawyer concerning any specific legal questions you may have.