October 6, 2012

Supreme Court to Decide Extent of Patent Exhaustion for Genetically Engineered Crops

In a case that presents a novel question regarding the scope of patent rights in a biotechnology invention, the Supreme Court has agreed to hear the appeal in Bowman v. Monsanto (Fed. Cir. 2011). Here, Monsanto sued an Indiana farmer, Vernon Hugh Bowman, for patent infringement for his use of patented seed for the growth of second-generation genetically engineered (GE) soybeans. The patented crop is the Monsanto Roundup Ready soybeans, which contain a gene that encodes EPSPS, a glyphosate-tolerant enzyme. The genetically modified plants express the enzyme and thus and exhibit resistance to the herbicide glyphosate– specifically, to the application of the Monsanto product, glyphosate, sold as Roundup. The purpose is to create a crop through genetic engineering that can withstand the application of the herbicide (weed-killer). Bowman was accused of patent infringement by buying GE commodity seed from a grain elevator which he then used for replanting (replication), which Monsanto characterized as an unauthorized use of a patented invention. The doctrine of patent exhaustion in patent law generally operates to limit the control that an inventor holds over the life of a lawfully sold patented article – the first sale of a patented invention is authorized, and then exhausts the control that the patent holder retains over subsequent uses (absent some valid conditional sale agreement that accompanies the sale). Would that doctrine extend to a claim that a later sale of originally-patented GE seed to Bowman and his use in planting became an act of patent infringement because the seed replicates and he “made” an infringing article? In 2011, the Federal Circuit ruled that Bowman’s planting of the GE seed he purchased created an act of patent infringement, rejecting an interpretation of the exhaustion doctrine that would recognize the special attributes of seeds, which embody the property of replication and “manufacture” of an originally-patented invention. Did the company’s patent rights extend to this later series of events, or did they exhaust upon the first sale of the patented seed? In his petition, Mr. Bowman presented the following question to the Supreme Court
Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?
The Supreme Court has provided some recent guidance on patent exhaustion in Quanta v. LG (2008), where they held that a sale that “substantially embodies” the patented invention exhausts the patent rights. Interestingly, the U.S., as amicus curiae, urged the Court not to take the case, warning that “if this Court granted certiorari, however, its decision could also affect the enforcement of patents for man-made cell lines, DNA molecules, nanotechnologies, organic computers, and other technologies that involve self-replicating features.” The Court did take the case, however, and it signals that it does wish to consider the prospect that the inherent property of self-replication in some biotech-related inventions does not demand unexhausted patent rights. 

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