The Ends Don’t Justify The Beans: Patented Seeds’ Ability To Make New Seeds Belongs To The Patentee

On May 13, 2013. the Supreme Court issued a widely anticipated ruling in the case of Bowman v Monsanto, clarifying the limits of the “patent exhaustion” doctrine (similar to the “first-sale” doctrine of copyright law) when applied to objects that have the ability to self-replicate, such as seeds. The ruling was unanimous, exceptionally short by recent Supreme Court standards, and nearly brutal in its assessment of defendant Bowman’s arguments. It made clear that buyers of seeds do not always have the right to save some of their crop for future plantings.

A patent is a government-sanctioned monopoly. It gives the owner of the patent many exclusive rights including the right to make, distribute and sell objects embodying the patent. Those rights are not unlimited, however. Most importantly, they are limited by the doctrine of “patent exhaustion,” which cuts off most of the patent owner’s rights to control an individual patented object once it has been sold. So, for example, under this doctrine, you are free to use, resell or give away your car (which embodies numerous patents) even though that that would otherwise infringe the patent owner’s exclusive right to sell or distribute patented objects. The general statement of the doctrine is that “the initial authorized sale of a patented article terminates all patent rights to that item,” Quanta Computer, Inc. v. LG Electronics, Inc., 553 U. S. 617, 625 (2008). The purchaser, or any subsequent owner, has “the right to use sell” the thing as he sees fit.” United States v. Univis Lens Co., 316 U. S. 241, 249-250 (1942).

The purchaser does not, however, have the right to make new objects embodying the patent just because they have purchased one such object. That is so even if the purchaser uses the purchased object to produce the new one. So, for example, the Supreme Court has previously ruled that the purchaser of a patented cotton-bale tie could not use the buckle from one he purchased to make a new tie. Thus, while patent exhaustion limits the monopoly right to distribute and sell patented objects, it does not disturb the monopoly in making them.

This case addressed a potential conflict between the object buyer’s right to use and the patent owner’s monopoly on the right to make: what happens when using a patented object in an ordinary manner makes new patented objects as a result?

Monsanto, the plaintiff in this case, manufactures the herbicide/weed-killer known as “Roundup.” It also patented and sells a strain of soybeans that are resistant to the damage caused by Roundup. Of course, planting soybeans to grow and sell (the ordinary way in which farmers “use” them) also amounts to “making” new soybeans (which, having the same attributes, would be covered by the patent). When Monsanto sells soybeans to farmers it does so under an agreement limiting the farmers to using those beans for a single planting, the output of which must all be sold for use as food. Typically the farmers sell their crop to a grain elevator, a business that then resells the beans into the food processing industry.

Bowman bought beans from Monsanto for the first planting of each season and complied with the agreement for that planting. Eight or so years ago, however, he bought beans from a grain elevator (which were otherwise intended to be sold for food) for his second planting and planted those, reasoning that many of the beans he was buying would also be the Roundup-resistant strain. Each year he would save some of the beans that proved to be Roundup-resistant and use that for his second planting the following year. Monsanto discovered what he was doing and sued him for infringing its patents.

Bowman’s argument, which was rejected by the District Court (which awarded $84 thousand in damages), the Federal Circuit Court of Appeals, and, now, the Supreme Court, was that the farmers’ sale of their crops to the grain elevator (which was authorized by Monsanto) exhausted Monsanto’s patent rights in the individual beans. Bowman claimed that he was merely “using” the beans in the ordinary manner, and the fact that this involved “making” new beans was secondary.

The Supreme Court has now soundly rejected that argument, giving the patent holder’s monopoly on the right to make new patented objects primacy over the purchaser’s right to use, when the two are in conflict. As the Court explained, to do otherwise would almost completely vitiate patent rights in this sort of circumstance. Here, any competitor could purchase Monsanto’s beans from the grain elevator, and, after a few planting cycles to build supply, begin selling the beans on a mass scale in competition with Monsanto.

The Supreme Court’s ruling does not entirely resolve related questions, however. The Court made clear that its ruling applied only in this circumstance where there were substantial uses of the output product that did not implicate making new ones. (Here, almost all beans produced by farmers were sold use for food production, not for use as seed stock.) The Court did not say whether it would reach the same conclusion if making new patented objects was a “necessary step” in most uses of the patented object.