The man in the picture above is a self-proclaimed fan of Monsanto Company’s genetically engineered soybeans. In fact, every year until 2007 Vernon Hugh Bowman – a 75-year-old farmer from Indiana – purchased Monsanto’s Roundup-Ready soy seeds (RR) from a licensed retailer in order to plant his crop of soy. RR is a type of genetically modified seed that has in-plant resistance to glyphosate, the active ingredient in Monsanto’s Roundup herbicides. This means RR soy crops can be sprayed with Roundup weed-killers without any damage being done to the soy.
But despite his loyalty and admiration, in 2007 Bowman was sued by Monsanto for patent infringement, and the farmer has taken on a legal dispute that recently reached the U.S. Supreme Court. The case revolves around whether Monsanto’s patent over RR soybeans grants it control over the reproduction of second-generation seeds. But from a broader perspective it raises the question of what institutional framework is most desirable for regulating the scope of patent rights and points to the tension between protecting competitive markets and promoting innovation through patents. Moreover, it brings to the public sphere discussions concerning transformations of the farming sector resulting from the privatization of its basic input – seeds.
Every time he bought a batch of RR seeds from the licensed retailer, Bowman would agree to a contract – called a Technology Use Agreement – promising not to save or plant seeds from the resulting crop. But in 1997 the Indiana farmer decided he would start planting an additional second crop of soy later in the growing season, and reasoned that instead of paying for RR seeds it would be better to purchase cheaper commodity seeds from a local grain elevator. These elevators sell an undifferentiated, lower-quality variety of soy seeds normally used for animal feed or industrial purposes. Bowman’s choice for the commodity seeds was driven by the risks associated to second cropping, namely due to weather and soil conditions that would make it too risky to invest in RR technology. And since no Technology Use Agreement was signed concerning the commodity seeds, Bowman went on to use them as if no patent protection were applicable.
But this is where things got tricky. Considering that 94 percent of Indiana’s acres of soybeans are herbicide resistant, it was likely that many of the seeds purchased from the commodity elevator would be RR. So Bowman planted them and sprayed them with herbicide, and found out that most of the seeds indeed had in-plant resistance. He kept the seeds and started replanting them, until in 2007 Monsanto discovered these activities and filed suit for patent infringement. Their argument was that even though the company no longer had contractual control over what was sold by the commodity elevator, planting these seeds is equivalent to reproducing the patented product and therefore violates Monsanto’s rights. Bowman’s reply was that the patent had been “exhausted” after the authorized sale, since the patent exhaustion doctrine states that
“[t]he authorized sale of an article that substantially embodies a patent exhausts the patent holder’s rights and prevents the patent holder from invoking patent law to control post-sale use of the article.”
The case poses important problems. For generations, farmers have been going to elevators to purchase soybean and other grains as commodities. What they did with these seeds was their own business. And in a sector where a large fraction of the market is controlled by a small number of companies, these elevators have become one of the few ways farmers could purchase non-patented seed, be it for animal feed, second cropping or whatnot. Public soybean varieties are currently very hard to find, and even universities get patents on their technology. On the other hand, allowing farmers to freely replant patented seeds might seriously reduce the incentives to invest in research and development in the biotechnology industry.
The arguments presented in court have addressed mainly the economic impacts of the Bowman v. Monsanto decision. According to Monsanto, allowing farmers to plant second-generation GE seeds – no matter how they got them – would be catastrophic for investment and innovation in the agrochemical industry. The Supreme Court’s preliminary declarations on the case seem to be aligned with this point of view. During the first hearing, Chief Justice John G. Roberts Jr. asked
“Why in the world would anybody spend any money to try to improve the seed if as soon as they sold the first one anybody could grow more and have as many of those seeds as they want?”
The Federal Government has also sided with Monsanto in its Amicus Curiae, as did the Intellectual Property Law Association, software and hardware technology companies, and other sectors of industry.
On the other side of the dispute, organizations such as the Center for Food Safety, Save Our Seeds and the American Antitrust Institute argued that deciding in favor of Monsanto would lead to a further consolidation of what has become a largely concentrated market, leading to an actual reduction in investments and innovation as well as increased seed prices. According to the AAI,
“If allowed to stand, the Federal Circuit’s exception to the first sale doctrine likely will chill or altogether eliminate competition from commodity seed. Notwithstanding that a given bag of commodity seed actually may contain only a little RR seed or none at all, a purchaser intending to plant, save, and reuse commodity seed will no longer be able to do so unless the purchaser is willing to incur the risk of infringement liability or undertake costly mitigating measures. Whether a commodity seed purchaser’s added costs flow from infringement liability itself, the expense associated with seed sorting, or self-imposed seed-saving restrictions on commodity seed, the net effect is to increase the price of the product to the farmer or to devalue the product sold by the grain elevator.”
Monsanto has a history of aggressively defending its patents in Court. According to a report from the Center for Food Safety, as of November 2012 Monsanto had filed 142 lawsuits involving 410 farmers and 56 small farm businesses alleging seed patent infringement. The Bowman case therefore seemed to present “a microcosm of the problem of farmer prosecution that the current system created and fosters.”
But despite all the talk about “David vs. Goliath”, last week the Supreme Court unanimously ruled that the patent exhaustion doctrine does “not permit a farmer to reproduce patented seeds through planting and harvesting without the patent holder’s permission.” The Supreme Court thus confirmed the Federal Circuit’s decision arguing that there would be a “mismatch between invention and reward” should the replication of seeds be allowed. Concerning the repercussions of this ruling for other self-replicating technologies, like software or viruses, the court stated that the exhaustion doctrine might have to be interpreted differently depending on the circumstances at hand.
All in all, the Bowman case failed to initiate controversies about the broader economic and environmental consequences of seed patents. Especially Monsanto’s patenting practices, like the replacement of Roundup Ready 1 after patent expiration in 2016 through Roundup Ready 2, were not considered. These are questions that simply fall out of the scope of the Supreme Court and would have to be raised before the Patent Office that examines the novelty and non-obviousness of inventions .
The only larger policy issue that was raised seems to be the level of protection patents have to afford in order to incentivize investments in genetically modified seeds; an assessment that is far more difficult to make than is often assumed. Looking beyond the Bowman case, large agrochemical companies are usually not only active in the U.S. or Europe, but also in South America and other regions of the world. In light of their activities, U.S. soybean farmers used to complain that they paid for research and development whose results would be enjoyed for free by their South American competitors. As this is no longer the case and the licensing streams coming from different parts of the world have presumably increased, it might be time to ask how much income is generated due to the transnational expansion of patent protection. Given that cross-border licensing revenues could be measured, it might be possible to determine how many replicated generations of seeds really have to be protected to make further research for Monsanto, Syngenta or Pioneer worthwhile.
These issues were of course not at stake in this case, as Bowman did not even purchase the seeds in question from Monsanto thus making the issue to be decided pretty basic. On the other hand, there are few opportunities to discuss the fact that the opportunity contexts for agrochemical companies have changed since the 1990s, while the assessments of judges and policymakers have not. It might very well be that they are lacking the insights that could be provided by organizations like the Office of Technology Assessment (OTA). This organization has not been extended in light of more transnational challenges, but was abolished in 1995.
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governancexborders.com 
7 comments
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May 22, 2013 at 10:38
philmader
Ana, Markus, Thanks for this excellently clear analysis of an issue whose complexity always confounds me. But I’m still left wondering: why sue this guy? Bowman bought seeds from the local elevator, which was distributing them. Wasn’t it the responsibility of the grain elevator operators to make sure they weren’t selling patented material? The logic of suing the farmer (who may be more victim than perpetrator in this case) seems the same as, for instance, suing the buyer of a bootlegged book who bought it in good faith, rather than the bootlegger him/herself.
In the context of this case were any means by which farmers could retain the means for freely replanting un-patented seed varieties actually suggested or discussed? Or is that now more or less an impossibility in the USA?
May 22, 2013 at 11:34
jiskagojowczyk
Hello,
I add a question: I know there have been several of those cases during the last years, prominently e.g. Monsanto vs. Schmeiser in Canada (http://en.wikipedia.org/wiki/Monsanto_Canada_Inc._v._Schmeiser). However, it can be argued that farmers somehow really ‘profited’ using the modified seeds. However, they may be cases in which farmers’ seeds loose qualities because of unintended dissemination, e.g. in organic farming. I do not know about cases in which local sellers or farmers sue Monsanto for ‘contamination’ of seeds with RR in Northern American courts. Do those cases exist, how has been decided? In case farmers had chances to succeed, the David may have another, more promising path.
Thanks for this insightful post!
May 22, 2013 at 14:25
anaalfinito
Thanks phil and jiska for the interesting points. @phil, this is another point where things get complicated. You see, the grain elevators did have the right to sell second-generation patented seeds….and those seeds can be bought and used by farmers, as long as they are not planted (they an be used for feed, for oil, etc). So the elevator legally sold patented seeds to bowman (with no contract restricting use) and he went on to do what he thought he had the right to do. Now, one important question to be settled was: in this case, would a contract between the elevator and the farmer be necessary to protect the rights of the patent holder (this contractual model of patent protection was what the American Antitrust Institute was defending)? Or do those rights derive directly from law? The supreme court decided that it was the latter case, that second-generation seeds are protected by law and that no contract was necessary to restrict their use. The court basically extended the scope of patent rights, just like that. And in the end, no assessment of good faith was even made! It didnt even matter if Bowman legitimately thought he had the right to do what he was doing!
As for the possibility of freely replanting unpatented seeds, of course this is a possibility…but more and more only a theoretical one. because the stakes are going up and farmers will definitely be more afraid of running into legal problems. Bowman himself showed that in order to get a batch of “pure” non-patented seeds he would have to travel half way across the country (I think it was to the University of Washington, that distributes such seeds). Not much of an option, now is it…?
@Jiska, also a really good point, which I honestly dont know much about. I know there have been initiatives in Australia to sue Monsanto for crop contamination, but I dont really know what happened in those cases. Moreover, I ask myself if this is really a promising path…I mean, these legal suits are expensive, the courts (from what I saw in this case and in others) seem to have a bias towards the protection of patent-holder’s economic interests…I dont know if seed emancipation will get much action from the judiciary. But thats just my skepticism. you are right that exploring different legal strategies – and arguing about the economic interest of the organic farmer – is important and could have interesting outcomes.
May 22, 2013 at 14:46
philmader
Ana, your reply clarifies how much of a landmark this ruling is, and what is potentially at stake. Extremely put, farmers now must fear there being a few Monsanto seeds in the 10 tonnes of generic seeds they buy for planting – even if they are sold as non-GM seeds. They may be better off paying the license costs for Monsanto’s seeds than risking that.
You could also call this a kind of contamination, given that one seed in a huge batch can make you liable for lawsuit. This ruling could give the GM seed rights owners an effective monopoly.
May 22, 2013 at 20:09
Markus Lang
@ Jiska
@ Phil
You are both asking very good and complicated questions. I try to answer them by going further into the details of patent related practices.
There is indeed the case “Organic Seed Growers and Trade Association (OGSATA) vs. Monsanto” (http://www.osgata.org/wp-content/uploads/2011/03/OSGATA-Amended-Complaint.pdf) in which the plaintiffs preemptively sued Monsanto arguing that genetically modified seeds would spread through wind to their land and make it exceedingly difficult to avoid infringing Monsanto’s patents. The District Court which had to decide this case sided with Monsanto as it considered the scenario presented by OGSATA as hypothetical. Monsanto had not sued any organic farmers based on such grounds before.
Now, Jiska, the point you are making is somewhat different as you argue that organic farmers could sue Monsanto for unintendedly diminishing the quality of their seeds. This is a relevant concern, but my guess would be that courts are unlikely to see such cases. It would require a scenario in which the land of organic farmers who clean and handle seeds is located in close proximity to fields with open pollineating crops like corn. They would then have to show that significant amounts of the seeds of harvested crops ended up in the trades they are selling to other organic farmers. And even if there would be a situation like this, they would still have a hard time to demand anything else than damages.
(@ Phil: I am taking here exclusively the perspective of Western farmers who usually buy their seeds from traders who have cleaned and pickled (“beizen” in German) their seeds. I don’t know much about current practises in India, Bangladesh or China. It might be interesting to look into some FAO reports if you are interested in this)
Generally, I think there are two reason why it is very difficult to address these issues through the court system:
1) As shown in the documentary “Food, Inc.” (http://www.imdb.com/title/tt1286537/), Monsanto and other agro-chemical companies hire outside companies to investigate which patents might be infringed upon. They are allowed to do that as farmers, by signing contracts for seed trades, give Monsanto rights to inspect the land. The respective farmers also have to go through certification processes before they can plant genetically modified crops. Monsanto or Syngenta can thus simply look into their databases to see how many acres have been certified and how many bags of seed been purchased in a given year by a particular farmer.
What usually happens is that corn seeds spread naturally through wind around 1 – 1 1/2 miles or more. This is problematic from an environmental point of view as corn is an open pollinating crop making its spreading hard to control. It is somewhat less problematic for soybeans being annual plants that die soon or later in the year. So the odds of unintended dissemination in the case of soybeans should be quite low even though we can discuss the details of the scare and questionable evidence available.
2) Many conventional farmers prefer the status quo to a situation in which agro-chemical companies would seek to enforce their rights through technical instead of legal means. In analogy to the use of DRM in the music industry, Monsanto could for instance rely on the infamous “terminator gene” (http://en.wikipedia.org/wiki/Genetic_use_restriction_technology) to limit the use of seeds by farmers to one generation. It is easy to see the dangers of such practices when draughts or floods reduce the common seed supply.
So no matter what you think about the patenting of genetically modified crops, I don’t think there is much legal ground on which to challenge agro-chemcial companies within the parameters of current U.S. patent (and tort liability) law. This is precisely why the decisions of the United States Patent Office and the bases for these decisions matter so much, as I tried to argue in the last paragraphs of the post.
May 23, 2013 at 13:13
jiskagojowczyk
Thank you so much for those insights!
May 27, 2013 at 16:17
olgamaletz
Thanks a lot! I really enjoyed your analysis. The comments are so insightful, too.