Background Facts:
Monsanto owns patents covering soybean seeds containing a
genetic alteration that makes the seeds immune to glycophosate-based
herbicides, such as Monsanto’s Roundup® herbicide. As a result, farmers can apply glycophosate
herbicides directly on fields before or after planting, killing weeds but not
harming the soybean plants. Monsanto sells Roundup Ready seeds under a license
agreement that prohibits farmers from retaining soybeans harvested from Roundup
Ready seeds for planting. Thus, although farmers may sell the harvested seeds
for consumption or processing, they cannot be used as seed.
Bowman, an Indiana soybean farmer, purchased Roundup Ready seeds
for his spring crop. However, unwilling to pay the premium price of the seeds
for his second, more speculative planting, he purchased seed from the local
grain elevator, knowing that they were largely made up of soybeans harvested from
Roundup Ready seeds, and planted them. He then saved and replanted the seeds
for eight successive seasons. Monsanto discovered his practice, and sued for
patent infringement. Bowman defended on the ground that since he purchased his
seed from the grain exchange, which had purchased it from Monsanto’s licensees,
he was a downstream purchaser protected by the doctrine of patent exhaustion.
Supreme Court Decision:
The district court rejected Bowman’s defense, as did the
Federal Circuit. In an opinion by Associate Justice Kagan, the Supreme Court
agreed.
Although patent exhaustion allows downstream purchaser to “use”
and “sell” a patented product, it does not confer the right to “make” copies of
the invention. If it did, any patent would only protect against the first sale,
and the invention could thereafter downstream purchasers could widely copy and distribute it. The effect would be to cause the value of the affected patent to “plummet[.]”
Slip op. at 8.
The Court concluded that by replanting the Roundup Ready seeds
that he purchased, Bowman was unlawfully “making” new copies of the invention:
Under the patent exhaustion doctrine, Bowman could resell the patented soybeans he purchased from the grain elevator; so too he could consume the beans himself or feed them to his animals. Monsanto, although the patent holder, would have no business interfering in those uses of Roundup Ready beans. But the exhaustion doctrine does not enable Bowman to make additional patented soybeans without Monsanto’s permission (either express or implied). And that is precisely what Bowman did. He took the soybeans he purchased home; planted them in his fields at the time he thought best; applied glyphosate to kill weeds (as well as any soy plants lacking the Roundup Ready trait); and finally harvested more (many more) beans than he started with. That is how “to ‘make’ a new product,” to use Bowman’s words, when the original product is a seed.
Slip op. at 5-6.
The Court rejected Bowman’s main two arguments. First,
Bowman argued that since seeds are all meant to be used by planting, the doctrine
of patent exhaustion covered his cultivation. The Court noted, however, that
the harvested seeds could be used for consumption or processing. In fact, the
seeds Bowman purchased could not legally be used for replanting under a state
statute. Bowman admitted that he was not aware of any other farmer who used
grain purchased from a grain elevator for replanting. Thus, the patent
exhaustion did not protect the use. Second, Bowman argued that the seeds he purchased, if
left alone, would spontaneously germinate and reproduce. Thus, Bowman argued that the seeds themselves were responsible for any infringement. The Court
rejected this “blame-the-bean” defense, noting that Bowman repeatedly orchestrated
and controlled the replanting.
The Court noted that patent exhaustion could well apply in a
situation where "self-replication might occur outside the purchaser’s control"
or might be an essential step in "using the item for another
purpose." Id. at 10. But neither scenario was before the Court. So, in the
end, Bowman’s arguments against liability failed to bear fruit.
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