Solicitor General Recommends the Supreme Court Deny Cert in Bowman v. Monsanto

By Kevin E. Noonan --

Earlier this year, the Supreme Court asked the Solicitor General for his views on whether the Court should grant certiorari in Bowman v. Monsanto.  The Solicitor has now given the Court his views, and they are that the Court should not grant cert.  Although the Court does not always follow the Solicitor's recommendations (and sometimes regrets not doing so; see Laboratory Corp. v. Metabolite Labs., Inc. ("LabCorp")), in this case the rationales in the Solicitor's brief make it unlikely that the Court will not agree.

To recap, the case arose as the result of a farmer replanting Monsanto's patented Roundup Ready® seed.  The patents-in-suit are (as they have been in other cases) U.S. Patent Nos. 5,352,605 and RE39,247 (a reissue of 5,633,435).  Claims 1 and 4 of the '605 patent are representative:

1.  A chimeric gene which is expressed in plant cells comprising a promoter from a cauliflower mosaic virus, said promoter selected from the group consisting of a CaMV (35S) promoter isolated from CaMV protein-encoding DNA sequences and a CaMV (19S) promoter isolated from CaMV protein-encoding DNA sequences, and a structural sequence which is heterologous with respect to the promoter.

4.  A plant cell which comprises a chimeric gene that contains a promoter from cauliflower mosaic virus . . . .

Claims 103, 116, 122, 128, 129, and 130 of the '247 patent are representative:

103.  A recombinant, double-stranded DNA molecule comprising in sequence:

    (a)  a promoter which functions in plant cells to cause the production of an RNA sequence;
    (b)  a structural DNA sequence that causes the production of an RNA sequence which encodes an EPSPS enzyme having the sequence of SEQ ID NO:70; and

    (c)  a 3' non-translated region that functions in plant cells to cause the addition of a stretch of polyadenyl nucleotides to the 3' end of the RNA sequence;
    where the promoter is heterologous with respect to the structural DNA sequence and adapted to cause sufficient expression of the encoded EPSPS enzyme to enhance the glyphosate tolerance of a plant cell transformed with the DNA molecule.

116.  A glyphosate-tolerant plant cell comprising a DNA sequence encoding and EPSPS enzyme having the sequence of SEQ ID NO: 70.

122.  A seed of the plant of claim 116, wherein the seed comprises the DNA sequence encoding an EPSPS enzyme having the sequence of SEQ ID NO: 70.

128.  A glyphosate[-]tolerant plant cell comprising the recombinant DNA molecule of claim 103.

129.  A plant comprising the glyphosate[-]tolerant plant cell of claim 128.

130.  A method for selectively controlling weeds in a field containing a crop having planted crop seeds or plants comprising the steps of:

    (a)  planting the crop seeds or plants which are glyphosate-tolerant as a result of a recombinant double-stranded DNA molecule being inserted into the crop seed or plant . . .

    (b)  applying to the crop and weeds in the field a sufficient amount of glyphosate herbicide to control the weeds without significantly affecting the crop.

Pioneer Hi-Bred (Pioneer), one of Monsanto's licensed seed producers, sold seed to Bowman; these sales were subject to a Technology Agreement similar to the Agreements Monsanto typically requires for farmers who purchase its seed.  Under the Technology Agreement, the licensed grower agreed: (1) "to use the seed containing Monsanto gene technologies for planting a commercial crop only in a single season"; (2) "to not supply any of this seed to any other person or entity for planting"; (3) "to not save any crop produced from this seed for replanting, or supply saved seed to anyone for replanting"; and (4) "to not use this seed or provide it to anyone for crop breeding, research, generation of herbicide registration data, or seed production."  It was undisputed that Bowman complied with these provisions as to its "first planting" each year.  Monsanto's complaint arose from farmer Bowman's "second planting," which was made using so-called "commodity seed" obtained from local grain elevators.  Farmers under the Technology Agreement could freely sell seed to grain elevators for commodity use (for example, as cattle feed), which did not include replanting.  However, since Farmer Bowman's "second planting" was riskier (in terms of potential yield) he decided to use commodity seed because it was significantly cheaper than Roundup Ready® seed.  After planting this seed, Farmer Bowman tested this second crop for Roundup® resistance, and finding that substantial amounts of the seed were resistant, used Roundup® on these plantings and replanted this seed.

The District Court granted summary judgment of patent infringement and entered judgment against Farmer Bowman in the amount of $84,456.20.  The Federal Circuit rejected Bowman's arguments that were predicated directly on the Supreme Court's Quanta decision.  In Quanta, the Supreme Court reiterated its "substantial embodiment" test to apply the patent exhaustion principle, which applied to both composition and method claims (reversing the Federal Circuit as to method claim exhaustion), citing Ethyl Gasoline Corp. v. United States, 309 U.S. 436 (1940), and United States v. Univis Lens Co., 316 U. S. 241 (1942).  Specifically, the Court stated the standard that sales that "substantially embody" the patents in suit will be sales that exhaust the patent right to obtain royalties, citing Univis.  The immediately evident application of this decision to biotechnology patent claims include cases, as in Monsanto, where a patented article has the biological property of replication, where the license precludes use of replicates of the article after purchase.  Although critically important economically (since it is clear that Monsanto would not be in the seed business for very long in the absence of these restrictions), the rubrics for applying patent exhaustion set forth in the Court's Quanta decision could be applied to Monsanto's claim, and Bowman argued that they should be so applied.  It is without question that the seeds "embody" (figuratively and literally) the "essential features" of the patented invention, and thus the types of limitations Monsanto (and other seed producers) have placed on replanting of their patented seeds implicate the application of these standards to Monsanto's claims.

The Federal Circuit did not see it this way.  Farmer Bowman argued that exhaustion applied to all Roundup Ready® soybean seeds, including those present in grain elevators as undifferentiated commodity.  "Sales of second-generation seeds by growers to grain elevators, and then from grain elevators to purchasers (like Bowman) are authorized according to the terms of Monsanto's [T]echnology [A]greement[], and are thus exhausting sales . . . under the Supreme Court's analysis in Quanta [Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008)]," according to Bowman.

In response, Monsanto argued that sale of soybeans are not "authorized" when those soybeans are replanted (i.e., used as seed rather than as commodity grain).  Monsanto further argued that, even if sale to grain elevators resulted in exhaustion, infringement occurred when the seed was replanted because "patent protection 'is independently applicable to each generation of soybeans (or other crops) that contains the patented trait,'" arguments Monsanto had previously (successfully) made in other infringement actions.  Monsanto also urged that J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001), was controlling for patent exhaustion in seeds, specifically that exhaustion "must be limited to the seeds sold."  In this regard, Monsanto urged the portion of the J.E.M. opinion that stated that "there are no exemptions for research or saving seed under a utility patent."  Id. at 143 (emphases added).

The Federal Circuit agreed that patent exhaustion did not apply.  Citing the McFarling opinion, the panel stated that "[t]he 'first sale' doctrine of patent exhaustion . . . [wa]s not implicated, as the new seeds grown from the original batch had never been sold.  The price paid by the purchaser 'reflects only the value of the 'use' rights conferred by the patentee.'"  Id. at 1299 (citing B. Braun Med., Inc. v. Abbott Labs., 124 F.3d 1419, 1426 (Fed. Cir. 1997)).  Turning to the specific facts in this case, the Court stated that the important consideration is that "the grower has created a newly infringing article" when commodity seed was planted by Bowman and the "next generation" of seeds comprising Monsanto's Roundup Ready® technology were produced.  "The fact that a patented technology can replicate itself does not give a purchaser the right to use replicated copies of the technology," according to the opinion, and "[a]pplying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder," citing Monsanto Co. v. Scruggs, 459 F.3d 1328, 1336 (Fed. Cir. 2006), cert. denied, 549 U.S. 1342 (2007).  According to the opinion, the right to use patented technology upon purchase "do[es] not include the right to construct an essentially new article on the template of the original, for the right to make the article remains with the patentee," citing Jazz Photo Corp. v. Int'l Trade Comm'n, 264 F.3d 1094, 1102 (Fed. Cir. 2001), cert. denied, 536 U.S. 950 (2002).  The opinion applied the "substantial embodiment" test with regard to separate generations of seed, stating that present seed does not "substantially embody" "all later generation seeds," because with regard to the commodity seeds "nothing in the record indicates that the 'only reasonable and intended use' of commodity seeds is for replanting them to create new seeds, citing Quanta, 553 U.S. at 631 and noting that other uses for commodity seed existed (such as use as feed).  "While farmers, like Bowman, may have the right to use commodity seeds as feed, or for any other conceivable use, they cannot 'replicate' Monsanto's patented technology by planting it in the ground to create newly infringing genetic material, seeds, and plants.  Bowman's certiorari petition followed the adverse decision by the Federal Circuit.

The Solicitor's brief acknowledges that the Federal Circuit's treatment of so-called "conditional" sales has not been entirely consistent with the Supreme Court's views on patent exhaustion; this contrary jurisprudence was corrected by the Court in Quanta and thus does not warrant further correction.  More importantly, the Solicitor contends that conditional exhaustion was not the basis for the Federal Circuit's decision in this case.  Rather, the Solicitor's brief quotes the Federal Circuit as saying that "'[e]ven if [respondent's] patent rights in the commodity seeds are exhausted, such a conclusion would be of no consequence because once a grower, like [petitioner], plants the commodity seeds containing [respondent's] Roundup Ready technology and the next generation of seed develops, the grower has created a newly infringing article."  In addition, "[t]he right to use [] do[es] not include the right to construct an essentially new article on the template of the original, for the right to make the article remains with the patentee.'"  The Solicitor further notes that the Court rejected the argument that replanting was the only use for the "commodity seed," noting that the seed was useful, inter alia, as animal feed.

The Solicitor's brief notes that a majority (pp. 9-16) of petitioner's brief is focused on the Federal Circuit's "conditional sale" jurisprudence.  The brief sets forth these cases, beginning with Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 976 F.2d 700, 706-08 (1992), where the Federal Circuit held that a patent was not exhausted if the patentee conditioned the sale of a patented article to "unilateral or bilateral restrictions on the use or resale of the purchased article."  The Federal Circuit had justified these restraints under conditions where the restriction was "within the patent grant" (i.e., it did not exceed or be unrelated to subject matter within the scope of the claims) and did not have "anticompetitive effects extending beyond the patentee's statutory right to exclude" or was in violation of the antitrust laws.  These line of cases was relevant to the instant case, the Solicitor wrote, because other cases (significantly, ones for which the Court had denied certiorari) were based (at least in part) on the conditional sale doctrine, including Monsanto Co. v. McFarling, 302 F.3d 1291 (2002), cert, denied, 537 U.S. 1232 (2003), and Monsanto Co. v. Scruggs.  But these cases were all decided prior to the Supreme Court's Quanta decision; perhaps somewhat tongue in cheek, the brief states that "[i]t is not clear, however, whether the Federal Circuit will continue to adhere to the Mallinckrodt line of cases after Quanta.  What is clear is that the court did not do so here," thus avoiding this issue as a basis for a certiorari grant (which may arise by implication if the Federal Circuit does not follow the Court's lead from Quanta).

Here, the Solicitor affirms that the Federal Circuit rejected the patent exhaustion defense as point of "no consequence" because "'[e]ven if' exhaustion had occurred [] petitioner would still be liable because he had 'created a newly infringing article' when he 'plant[ed] the commodity seeds containing respondent's Roundup Ready technology and the next generation of seed develop[ed].'"  In other words, even if the petitioner had a "right to use" the seed for any "conceivable use," the one right that he did not have was the "'right to construct an essentially new article on the template of the original.'"  The brief casts the issue as one of the patent law giving a patentee "separate rights" to exclude others from "making, using, offering for sale, and selling [or importing] a patented invention," rights that can be separately alienated.  Separate from the rights to use and (re)-sell a patented article (which rights are exhausted upon first sale) is the right to make a new infringing article, something the Solicitor's brief contends was never the subject of the patent exhaustion doctrine.  Citing Quanta and other Supreme Court case law (including Mitchell v. Hawley, 83 U.S. (16 Wall.) 544, 547 (1872); United States v. Univis Lens Co., and Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336,346 (1961)), the Solicitor argues that exhaustion is particular to the article sold.  This issue has arisen in the past when courts have been asked to determine the distinction between repair of a purchased patented article (which is permitted) and reconstruction (which is not); this principle is a long-standing one according to the brief, hieing from cases like Wilson v. Simpson, 50 U.S. (9 How.) 109, 123-125 (1850), and American Cotton-Tie Co. v. Simmons, 106 U.S. 89, 93-94 (1882).  Quoting the Federal Circuit, "the rights of ownership do not include the right to construct an essentially new article on the template of the original, for the right to make the article remains with the patentee" says the Solicitor, citing Jazz Photo Corp. v. Int'l Trade Comm'n.

The Solicitor's brief recognizes that the case presents something of a novelty, because this invention is capable of making replicas of itself (although later in the brief the Solicitor rejects petitioner's contention that this self-replicating property absolves him of infringement liability).  The brief rejects petitioner's contention that planting new seed is a "use" of the seed and does not constitute "making" new seed, because while planting see is certainly a use, "the planting and harvesting of soybeans also constitutes the 'making' of newly infringing seed" (emphasis in original).  The brief also rejects petitioner's argument that new Roundup Ready seeds are "made" only "'when they artificially insert patented germplasm into naturally occurring soybean seeds.'"  This is also a making, according to the brief, but is does not negate that planting and harvesting seed is also a "making" of seed.  (Here, the brief relies on a dictionary definition of the word "make," in the absence of any special definition of the word in the Patent Act, unlike, for example, the definition of the word "process" at 35 U.S.C. § 100(b).)  "Petitioner 'cause[d] [the progeny seed] to exist,'" according to the Solicitor, and it was immaterial that how that was accomplished differed from how the patentee had created the recombinant seed in the first place.

Turning to the argument that seeds "self-replicate without farmer assistance" (and thus, presumably, somehow absolve the farmer from responsibility for infringement), the Solicitor states that:

[P]etitioner did not simply leave the seed "untended on a field."  . . .  Rather, he intentionally planted the commodity seed in order to create a new crop of soybeans; he saved some of that new crop to replant the next growing season; he continued to plant, harvest, and save seed for eight successive years; and he exploited the known glyphosate-resistant properties of the progeny seed by treating his crops with a glyphosate-based herbicide.

All these are acts presumably raising infringement liability.

The brief also relied upon the Court's decision in J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc. in support of its argument that planting seeds constituted "making" under the patent statute.  There, the Supreme Court held that the Patent Act provided utility patent protection (that endowed patent holders with "greater rights of exclusion" than patents under the Plant Variety Protection Act).  The PVPA provides an affirmative exemption for farmers to save seed that can be used for replanting, and the J.E.M. Court noted that there was no such exemption for utility patents.  The Solicitor's brief argues that there would be "no practical significance" for this distinction (between plant and utility patents) "if the unauthorized creation of new seed was treated as non-infringing under 35 U.S.C. 154 and 271 [] based on the patent-exhaustion doctrine.  Petitioner would effectively read a seed-saving exemption into the Patent Act."  This aspect of the difference between the extent of the exclusionary right conferred by utility versus plant patents also distinguished Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1995), another case involving the seed-saving exemption of the PVPA:

If, as petitioner contends, the authorized sale of patented seed exhausts a patentee's rights in that seed, as well as in its progeny, then a grower could save second-generation seed and sell that seed commercially without infringing the patent.  That would, in turn, afford greater rights of exclusion to holders of a PVPA certificate than to utility patent holders, contrary to this Court's understanding in J.E.M.

The Solicitor also notes that recombinant seed are not exempt from the patent exhaustion doctrine.  The question is for which seed does patent exhaustion apply, and the Solicitor answers that it is the seed that is sold, and not progeny seed, that is subject to exhaustion.  "But the sale of patented seed never authorizes a purchaser to create a new generation; the right to make is a distinct, exclusive right that remains with the patentee," says the brief.

The Solicitor ends his brief by addressing the policy issues raised by petitioner:  "that the court of appeals' decision will eliminate commodity soybeans as a low-cost alternative for second-crop plantings, and will otherwise alter traditional farming practices."  These are decisions best left for Congress, according to the Solicitor.  In addition, a decision by the Court on recombinant seeds "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."  Instead of deciding this issue in this case, "[t]he Court should allow the case law to develop further before considering whether to adopt a more restrictive definition of 'making' that could have unforeseen consequences for other present and future self-replicating technologies, citing the Court's own cautionary statements in this regard in Bilski v. Kappos, 130 S. Ct. 3218, 3227 (2010).

The Court will schedule a conference to discuss whether to grant certiorari in due course after the summer recess.

Comments

[Dan Feigelson]

Thanks Kevin. Can you provide a link to the SG's opinion? Interesting that the SG makes the effort to says that he thinks Quanta overrules Mallinckrodt: if as he says, the conditional sale doctrine wasn't the basis for the CAFC's decision, then he needn't have said anything about whether or not Quanta overruled Mallinckrodt (he was surely aware that Quanta can be read narrowly in a manner that preserves the conditional sale doctrine).