Justices Exhaust Seed Case

WASHINGTON (DTN) -- U.S. Supreme Court justices seemed skeptical Tuesday of a farmer's attorney who argued his client isn't violating a Monsanto patent by buying soybeans from a grain elevator to plant with the expectation that those soybeans would carry the Roundup Ready trait.

Vernon Bowman, a 75-year-old farmer from Indiana, bought soybeans from a local grain elevator as a cheaper way to get a double-crop planting following winter wheat. He did so counting on the prospect that a high percentage of the seeds would be Roundup Ready.

Monsanto Co. sued Bowman in 2007 for patent infringement. Monsanto won at both the district court level and on appeal. The initial ruling against Bowman was for $84,456.

The Supreme Court opted to hear the case because of its unique nature as the first patent case involving a self-replicating technology -- in this case, soybeans. Chief Justice John Roberts asked early in the proceedings if anyone could duplicate a seed then, "Why in the world would anybody spend money to improve a seed?"

Bowman's attorney argued that Monsanto's patent rights were "exhausted" after the first crop is grown from those patented seeds. Progeny, as with those beans purchased from an elevator, should not be covered under such a patent, he said. The exhaustion doctrine, a common principle under patent law, says a patent holder's exclusive rights to a product are exhausted after an authorized sale and use of the product. Bowman's attorney, Mark Walters, said Monsanto doesn't have the right to carry forward its patent in second- or third-generation seeds after the first licensed seeds have been sold and planted.

"Under Monsanto's theory, there really is no limit to the exhaustion doctrine," Walters said.

Justice Stephen Breyer told Walters a farmer or anyone can do a broad array of things with soybeans they have grown. They can make livestock feed or "make tofu turkey," Breyer said. But one law says a person can't throw soybeans at someone. That's assault.

"Another law says you cannot make copies of a patented invention and that's the law you violated" by reproducing the soybeans with the patented trait, Breyer said.

Justice Sonia Sotomayor noted the exhaustion doctrine "never permits you to make another item."

Justice Ruth Bader Ginsburg also reiterated that the court had never applied patent law to allow someone to create a copy of an original.

Walters acknowledged that Bowman sprayed the soybeans with glyphosate to effectively select for the Roundup Ready trait, but added, "We disagree that the activity of basic farming is replicating the invention."

Bowman began buying soybeans from a local elevator and planting them on at least part of his farm as far back as 1999. Bowman understood the likelihood that soybeans he was buying would be resistant to glyphosate. He then began saving some of his harvested seed and replanting it.

Bowman wasn't exclusively buying seeds from the grain elevator to plant. Typically, he was still buying licensed seed from Pioneer for his main soybean crop. He bought the soybeans from the elevator mainly for double cropping.

Outside the Supreme Court building, Bowman said for years he had been able to buy commodity grain to plant as a second crop. He often would buy commodity wheat from a local elevator to plant, usually as a cover crop.

"To me, the threat of using elevator grain isn't a threat because that's considered using junk seed," Bowman said. "No farmer -- if you go there next year and buy elevator grain and offer that to a farmer to plant, he'd say, I'm not planting that stuff. So there is no threat to Monsanto."

But Bowman acknowledged he was spraying those second-generation soybeans with glyphosate. Bowman said he didn't consider what he had done as finding a loophole in the Monsanto licensing agreement with farmers.

"I didn't look at it as a loophole because I had always been able to go to the elevator and buy the seed," he said.

Reporters were generally more interested in Bowman recounting how he is a small farmer who has taken a giant company to the Supreme Court.

Monsanto argued that if Bowman's arguments prevail, the company would have no way to limit reproduction of Roundup Ready soybeans. With more than 90% of soybeans containing the Roundup Ready trait, farmers could simply do as Bowman did and buy harvested soybeans from the local grain elevator and almost certainly grow their own herbicide-resistant varieties.

Melissa Sherry, an assistant U.S. solicitor general, argued for the Obama administration that under state and federal law, grain elevators aren't supposed to sell grain for seeds, largely because of labeling requirements. She also noted that second plantings are generally a high-risk practice.

Roberts chimed in, "That's why it's so cheap and that's why farmers want to use it."

Seth Waxman, a former U.S. solicitor general during the Clinton administration, represented Monsanto and spent a great deal of time with justices discussing the science behind soybeans and biotechnology. Waxman described Roundup's weed control as "the most popular agricultural technology in America."

Justice Elena Kagan questioned the impact of any farmer violating Monsanto's patent because of the broad use of the technology and possibility of volunteer crops. "You have the capacity to make infringers out of anybody."

Walters, on a rebuttal, noted the only way to use the invention of biotech crops is to plant them to grow more seeds. It is a case of patent rights vs. property rights.

Getting the last word, Justice Anton Scalia said, "He can use it for what it is used for, which is to grow a crop," he said. "He can use it, plant a crop and harvest a crop."

Noted in a case summary, if Monsanto loses, the company will likely be forced to create even stronger licensing contracts with farmers to protect its patents. It would become a greater struggle for Monsanto to control the distribution of seeds because of the problems trying to bind downstream users to patents.

It's the second time in three years the Supreme Court has heard a case involving Monsanto and biotech crops. In 2010, justices lifted an injunction on growing Roundup Ready alfalfa, allowing USDA to deregulate the crop.

Chris Clayton can be reached at chris.clayton@telventdtn.com

(GH/AG/CZ)

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