Bowman v. Monsanto and self-replicating seeds; David v. Goliath or Don Quixote v. Windmills?

• Author: Lesser, W.
• Position: IV. Discussion through VI. Conclusions and Issues for the Future, p. 554-573

3. Discussion

   A. Did the conditions for direct infringement exist?

   "If properly construed claims read on the infringing product, there is literal infringement." (329) Claim 28 of the '247E' patent cites, "a glyphosate-tolerant plant ...". (330) The plants grown by Mr. Bowman were indeed glyphosate-tolerant for he tested and found them so. (331) The patent in claim 15 also includes method claims: "[a] method of producing genetically transformed plants which are tolerant toward glyphosate herbicide." (332)

   Conclusion: The claims of a patent-in-suit indeed read to the allegedly infringing product, Bowman's late season soybean crop, so that literal infringement existed. (333)

   B. Was Bowman a contract or infringement issue?

   Monsanto chose to pursue Bowman under patent law, as it did Scruggs and McFarling, rather than as a contract violation. (334) The reasons for the choice are not public knowledge but perhaps relate to the potential for treble damages, or an immediate injunction, or the success with the earlier cases. But there was a choice made, as the Supreme Court made clear in Quanta. (335) Citing Keeler v. Standard Folding Bed Co, (336) "We note that the authorized nature of the sale to Quanta does not necessarily limit LGE's other contract rights. LGE's complaint does not include a breach-of-contract claim, and we express no opinion on whether contract damages might be available even though exhaustion operates to eliminate patent damages." (337) The petitioner, Bowman, agrees with this interpretation. (338) And in Jazz Photo the Federal District noted, "[a] license is governed by the laws of contract." (339)

   Conclusion: It is likely a contract case would have been more straightforward than patent infringement for self-replicating organisms, and the court may have been more sympathetic to the economic realities under contract agreements than patent infringement. For example, Mr. Bowman, in purchasing "commodity seed" from Huey Soil Services, would have been in violation of the contract agreement to "acquire Seed ... only from a seed company with technology license(s) from Monsanto." (340) However, while Bowman's actions were likely actionable under contract law, that does not prejudice their standing under patent infringement as Bowman's Petition for a Writ of Certiorari suggests. (341)

   C. Does an authorized unconditional sale actually forfeit all subsequent interest in the invention? Is Bowman guilty of experimental use and "reconstruction" infringement?

   The courts have made it clear in numerous cases that an authorized unconditional sale exhausts the patentee's monopoly. This from Mitchell: "consequently a patentee, when he has himself constructed a machine and sold it without any conditions, or authorized another to construct, sell, and deliver it, or to construct and use and operate it, without any conditions, and the consideration has been paid to him for the thing patented, the rule is well established that the patentee must be understood to have parted to that extent with all his exclusive right, and that he ceases to have any interest whatever in the patented machine so sold and delivered or authorized to be constructed and operated." (343)

   At the same time, the courts have identified a vanishingly limited experimental use exemption while characterizing a "reconstruction" of a patented object (however defined) as an infringement with no consideration of the form of the exchange. (344) Hence it is clear that the concept of complete exhaustion on first authorized unconditional sale is not intended literally, but rather applies only to certain rights-namely using and selling--but not necessarily making.

   Conclusion: It has been long established that "using, making and selling" are independent rights of the patentee. (345) Those rights may be surrendered on first unconditional sale, but not the rights of reconstruction or experimental use. (346) Clearly, some patent rights are inalienable, although they are not described that way.

   Since the right to bar experimental use and reconstruction are inalienable even under patent exhaustion, the issue arises if Mr. Bowman violated them and hence infringed the Monsanto patents. With regard to experimentation, the answer is provided by the case record. (347) "That same year [1999, the first year of the alleged infringement], Bowman applied glyphosate-based herbicide to the fields in which he had planted the commodity seeds to control weeds and to determine whether the plants would exhibit glyphosate resistance." (348) This may be de minimis experimentation but it is experimentation for commercial purposes nonetheless (Mr. Bowman continued to apply glyphosate to his spring soybean crop for the period of accused infringement) making him an infringer. (349)

   The issue of whether Mr. Bowman "reconstructed" the soy bean seeds is a more complex matter which is addressed below. (350)

   D. Did Bowman illegally "reconstruct" the RR soybean seeds? Were the progeny seeds sold?

   Would the saving and replanting of RR soybean seeds in and of itself constitute "repair" or "reconstruction?" The extensive case history defines "repair" as allowable while "reconstruction" is infringement; with the distinction based more or less on durable parts replacement, including a "proportionality" test. (351)

   Bowman argues forcefully that the use of progeny seed is not reconstruction, and hence not infringement. (352) One line of argument refers to the production of second generation seed as "begotten" and the process a natural one. (353) "[E]ven if left untended on a field, [seed] will replicate and produce new generations." (354) "Progeny seeds that result from planting are 'begotten', not 'made.'" (355) And, "[i]n the case of seeds, they will self-replicate or 'sprout' unless stored in a controlled manner preventing this natural activity." (356) But Bowman continues and undercuts this interpretation by noting that, "[h]umans can (and most often do) intervene in the process." (357) Bowman himself intervened, having tended his second crop by treating it with glyphosate. (358) Even if one accepts this metaphysical explanation, there remains the distinction between progeny (the crop) and progeny seed, the crop which has been conditioned for use as seed. (359) Bowman did not repair the RR seeds--they served admirably their purpose of producing a crop--but did reconstruct the crop as seed, an infringing activity.

   This is essentially the position taken by the Federal District when declaring that the progeny seed "created a newly infringing article." (360) That is, the progeny seed is not the result of practicing the invention under an implied license but rather a new, recreated, and infringing, product. (361) The Federal District in Scruggs took a different slant with the same outcome. (362) In Scruggs, the court also ruled that the "new seeds grown from the original batch had never been sold." (363) No sale, no patent exhaustion.

   Conclusion: Bowman, in his Petition for Writ of Certiorari, argues that the "applicability of patent exhaustion in the context of self-replicating technologies raises a novel question that this Court has not yet addressed." (364) That position may be valid, but the Federal District in Bowman and the Supreme Court in its prior allowable repair decisions recognized that progeny seed is a new, reconstructed product, so there is no patent exhaustion but there is infringement. (365)

   E. Was Bowman's sale "authorized?"

   For patent exhaustion to apply, the first requirement is the initial sale be "authorized." (366) The definition of "authorized" is suggested early on in Adams: "the sale by a person who has the full right to make, sell and use [the article]." (367) But, "[b]y knowingly making the sales to [another] outside the scope of its license, [a seller] in fringes the patents embodied in the product." (368)

   In the case of Mr. Bowman and other soybean farmers around the country, access to RR soybeans was allowed only on condition of signing the Monsanto Technology Agreement. (369) And under Scruggs, if the Agreement was somehow bypassed then the unauthorized sale to Scruggs could not confer a use license, so that any subsequent sale of the crop for any purpose could not be authorized either. (370) One of the terms of the Technology Agreement signed by Bowman for purchasing RR seed for the spring crop was "not to supply Seed produced from Seed to anyone for planting...." This crop was in due course sold, presumably to a local wholesaler (also known as a grain elevator). (372)

   For the second crop Bowman purchased "commodity seed" from a local elevator, Huey Soil Services, which again presumably purchased from other local farmers. (373) Soybeans, needless to say, are bulky and hence are typically sold nearby to reduce the initial transport cost. (374) We are not told if Mr. Bowman sold to Huey, but that is not critical for he would have known that, (1) the soybeans sold to Huey were largely RR (a point he later confirmed by testing his second crop with glyphosate), (2) other farmers growing RR soybeans had signed the same Monsanto Technology Agreement, and (3) the Technology Agreement permitted the sale of the crop, the commodity beans, by allowing "[a] limited use license to purchase and plant Seed" for which sale of the resultant crop is the primary purpose. (375)

   However, the Technology Agreement as noted above specifically prohibits sale of the crop for "planting" meaning a sale of the crop for subsequent use as a seed source was not authorized by the Technology Agreement. (376) That is, seed purchased as "commodity beans" were not provided through authorized sales. (377) If the contract terms are insufficiently clear to reach this conclusion on allowed use then one, quoting Justice Bradley, can ask, "it is difficult to know what meaning to attach to language however plain." (378) And, "[i]f it be contended that the right of vending the lids to others enables them...