What Does Monsanto’s Win Mean for Self-Replicating Technologies?

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Monsanto won its suit against Indiana farmer Vernon Bowman for reproducing the company’s patented genetically altered soybean seed without its authorization. But the decision upheld by the U.S. Supreme Court on May 13, 2013 raises further questions regarding patent protection as self-replicating technologies grow in different industries, says Professor Daryl Lim of The John Marshall Law School in Chicago.

On May 13, 2013, the U.S. Supreme Court unanimously held in the case of Monsanto v. Bowman (U.S., No. 11-796) that while patent owners cannot control certain uses of seeds that had been sold with their permission such as for resale, food or animal feed, they can prevent farmers from planting them because the new harvest reproduces their traits.

“Monday’s decision reassures biotech companies that their pipeline projects will be protected for the time being,” says Professor Daryl Lim of The John Marshall Law School in Chicago. At the same time, he observed that the Court left open important issues which it will demand resolution as self-replicating technologies continue to permeate more industries.

Monsanto produces and sells genetically altered soybean seed resistant to its “RoundUp” herbicide. Indiana farmer Vernon Bowman bought soybeans from a grain elevator, expecting most of them to be RoundUp resistant. When sued, he argued that Monsanto’s initial sale to an unknown farmer who subsequently sold his seed to the grain elevator extinguished Monsanto’s right to control subsequent generations of its soybeans, including those that Bowman had bought.

But both the District Court and the Federal Circuit rejected his argument, and the Supreme Court agreed with the lower courts.

It held that patent right limitations apply only to the particular article sold. If purchasers could make and sell endless copies, patents would protect only a single sale.

The soybean, corn and cotton production industry is worth more than $25 billion worldwide, mostly thanks to advancements in seed technology, according the Lim.

“These seeds are ‘self-replicating’ technologies because they lead to seed that can be replanted again and again.”

Lim notes that other commercially significant forms of self-replicating technologies already exist: “Medical treatments, such as recombinant DNA and various cell therapy techniques are derived from human genes engineered to support the body's natural immune system and target debilitating diseases across a variety of therapy areas.”

“The oral argument suggested that the case was part of the Court’s reassessment of the role of patents on living things. It sought to find the correct balance between innovation and reward. The Court recognized that siding with Bowman may result in more robust rights for farmers and users of patented technology in general. But interpreting this ‘first sale doctrine’ too broadly may destabilize innovation incentives in these industries.”

The Court stressed the limited nature of its holding, noting that in another case, reproduction might occur outside the purchaser’s control or might be a necessary but incidental step in using the item for another purpose.

“On one hand, wisdom counsels that the Court should restrain its opinion to avoid unforeseen consequences in this complex and rapidly evolving field,” Lim noted. “On the other hand, those who use or sell other self-replicating technologies are left with limited guidance on whether and to what extent they may be liable for patent infringement.”

One example of the uncertainty left by the case is whether the first sale doctrine can override single-use or sale restrictions commonly found in license agreements. Another is when a court will characterize a transaction as a license or sale. “It will be left to the lower courts to decide on a case by case basis whether the innovation deserves the reward when deciding the relevance of the first sale doctrine to the facts.”

Lim further explains that by recognizing exceptions to infringement when they relate to self-replicating technologies, the Court risks muddying the waters. “On the Court’s reading, there seems to be little need for express contractual restrictions since patent infringement ensnares all unauthorized reproductions. At the same time, it recognized unintentional or incidental infringement may warrant a different outcome.”

“The problem is that patent law does not excuse either unintentional or incidental infringement,” Lim said. “If exceptions are required to address the needs of one field of technology, it must be Congress rather than the Court that rewrites the law.”

Daryl Lim is an intellectual property law professor at The John Marshall Law School in Chicago.

About The John Marshall Law School

The John Marshall Law School, founded in 1899, is an independent law school located in the heart of Chicago’s legal, financial and commercial districts. Through classes, clinics and special programs, students develop the strategic, analytical and transactional lawyering skills that are so valuable to employers. Its excellent curriculum, coupled with outstanding skills and experiential learning, help make John Marshall graduates practice-ready from day one. For practicing attorneys, John Marshall offers nine LLM degrees, more than any other law school in the Midwest. John Marshall is also a leader in providing distance education options in intellectual property, estate planning and employee benefits at the advanced graduate degree level. John Marshall offers six clinical experiences, including the nationally recognized Veterans Legal Support Center & Clinic and the Fair Housing Legal Clinic. U.S. News & World Report’s America’s Best Graduate Schools 2014 edition ranks John Marshall’s Lawyering Skills Program second and its Intellectual Property Law program 12th in the nation.

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Marilyn Thomas
The John Marshall Law School
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