The U.S. Solicitor General has recommended that the U.S. Supreme Court not hear a case over whether the doctrine of patent exhaustion applies to Monsanto Co.’s herbicide-resistant Roundup Ready soybean seeds. A lower court held that farmer Vernon Bowman infringed the patents on the seeds through a “second planting” using so-called “commodity seed” obtained from local grain elevators. Bowman contends that his purchase of Monsanto seeds was an authorized sale and that Monsanto’s claims are thus precluded under the doctrine of patent exhaustion which provides that a patent holder cannot control a patented product after the first authorized sale.
Significantly, the seeds Bowman purchased were subject to a Technology Agreement in which licensed growers agreed: (1) “to use the seed containing Monsanto gene technologies for planting a commercial crop only in a single season”; (2) “to not supply any of this seed to any other person or entity for planting”; (3) “to not save any crop produced from this seed for replanting, or supply saved seed to anyone for replanting”; and (4) “to not use this seed or provide it to anyone for crop breeding, research, generation of herbicide registration data, or seed production.” Although licensees could sell seed to grain elevators for commodity use such as cattle feed, it excluded replanting.
But in light of recent Supreme Court law on this subject — most notably Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008) — Bowman argued that “[s]ales of second-generation seeds by growers to grain elevators, and then from grain elevators to purchasers (like Bowman) are authorized … and are thus exhausting sales….”
In a brief filed Aug. 24, U.S. Solicitor General Donald Verrilli argues that the Federal Circuit correctly held that the exhaustion doctrine is of no consequence because, even if Bowman’s purchase was an “authorized first sale,” Bowman created new seeds when he planted them: “[O]nce a grower … plants the commodity seeds containing [Monsanto’s] Roundup Ready technology and the next generation of seed develops, the grower has created a newly infringing article.” The Solicitor further notes that the lower court properly rejected the argument that replanting was the only use for the “commodity seed,” noting that the seed was useful for, among other things, animal feed. Finally, the brief notes that the patent-exhaustion doctrine still applies to self-replicating technology like seeds and that, after an authorized sale, Monsanto lost the right to control the use of the seed. Nevertheless, it still holds the exclusive right to make the seeds.