By Kevin E. Noonan --
Farmer
Vernon Hugh Bowman, losing patent infringement defendant in Monsanto Co. v. Bowman, has filed a supplemental brief in
response to the brief submitted to the Supreme Court by the Solicitor General pursuant
to a request for the Government's views on whether the Court should grant certiorari. The brief raises arguments both cogent and
otherwise, and reflects the political realities of preparing a petition to the
Court having the greatest chance of being granted.
Bowman makes three arguments. First, he argues that the Solicitor General was wrong when he told the Court that the Federal Circuit's decision was not based on the "conditional sale" doctrine of Mallinckrodt, Inc. v. Medipart, Inc., as earlier applied in Monsanto Co. v. Scruggs and Monsanto Co. v. McFarling. This argument correctly notes that the District Court relied on this Federal Circuit precedent, including language reciting that Monsanto was entitled to damages for Bowman's use of patented soybeans in his second planting. The brief also cites the District Court for basing its decision on language in the licenses and other agreements between Monsanto and its distributors prohibiting saved seed or replanting of harvested seed. Indeed, the District Court specifically found that there had been no unconditioned sale of the seed "because the farmers could not convey to the grain dealers what they did not possess themselves."
The brief then extends this argument by asserting that the Federal Circuit necessarily agreed with the District Court's grounds for finding against Bowman based on the conditional sale doctrine. (This argument seems to put the jurisprudential horse before the cart: it is certainly the case that the District Court was following Federal Circuit precedent, but it does not follow that the appellate court affirmed this application of its precedent merely because it affirmed the District Court's judgment.) The basis for this argument does not come from language from the Federal Circuit opinion, but appears to arise merely from the fact that the Federal Circuit refused to find that Monsanto's patent rights were exhausted, i.e., failed to find in Bowman's favor based on Bowman's arguments. According to Bowman, a finding of patent exhaustion mandated a finding in his favor and (at least) a remand to reconsider the extent of the damage award. Bowman also argues that remand was necessary because damages were based on acres planted, and "[a]s any Indiana farmer can confirm . . . acres of commodity soybeans planted as a risky second crop late in the growing season may not produce any progeny" (emphasis in original). (There were no allegations in the brief that the damages calculation was otherwise defective, inter alia, because planted seed in fact produced no progeny soybeans.) According to Mr. Bowman, this potential (but not established) disparity between acres planted and progeny soybean plants produced (made) renders the conditional sale doctrine the only grounds under which the Federal Circuit could affirm the judgment.
Having made this logical leap, Bowman's argument easily follows: because (in his view) the Supreme Court abrogated (or at least seriously questioned) the conditional sale doctrine by virtue of its Quanta Computer, Inc. v. LG Electronics, Inc. decision, this case becomes "an appropriate vehicle through which the Court may resolve uncertainty created by the Federal Circuit's continued reliance on the Mallinckrodt line of cases." This uncertainty is created by the Federal Circuit not only by this case but, according to Bowman, by the appellate court's decisions in Princo Corp. v. International Trade Commission, characterizing that decision as being contrary to the Supreme Court's Quanta decision.
Regardless of whether the Federal Circuit retains any inclination to follow the conditional sale doctrine in the face of the Court's Quanta decision, where Bowman's argument fails to hold water is with regard to the grounds of the Federal Circuit's decision in this case. As set forth in the Solicitor General's brief, 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. Thus, Bowman's responsive brief mischaracterizes both the grounds for the Federal Circuit's decision and the Solicitor General's argument regarding that decision. Indeed, the Solicitor General's argument was that the Court was not presented with a case where the Federal Circuit had decided contrary to the Court's direction (in Quanta); the cases where the Federal Circuit had applied the conditional sales doctrine (Scruggs and McFarling) were decided prior to the Court's Quanta decision.
Bowman's second argument is that the Solicitor General's distinction between sold seed and progeny seed, wherein planting progeny seed is an infringement for "making" new seed regardless of whether the patent right had been exhausted for sold seed, is unsupported by the statute and inconsistent with" the distinctions created by Supreme Court law between "repair" and "reconstruction." The principal basis for this argument is that planting seed to produce progeny soybean plants is a "use," which Bowman argues is an exhausted patent right upon first sale. "[A]ny attempt by Monsanto to retain rights under the patent to exclude use is inconsistent with the doctrine of patent exhaustion as articulated by [the] Court for over 150 years," he argues, citing Adams v. Burke and U.S. v. Univis Lens for the proposition that "an authorized sale carries with it the right to use that machine to the full extent to which it can be used" (emphasis in the brief). The issue, of course, is that a genetically engineered soybean is different in kind from 19th and 20th Century machines, making the principles established in such cases less than illuminating and certainly not determinative.
Bowman's brief acknowledges that the Solicitor General agreed that Monsanto's patent rights were exhausted as for use of the commodity seed he planted. However, for Bowman patent exhaustion permits any use (akin to "the full extent to which [a machine] could be used") including replanting, whereas the Solicitor General recognizes that there are exhausted uses (e.g., as animal feed) and non-exhausted uses (replanting, which constitutes a "making" of new seed). According to Bowman, the Solicitor General's position "eliminates the doctrine of patent exhaustion for self-replicating technologies" because certain uses, limited for now to "making" additional soybeans and seed, do not fall within the scope of the exhaustion. In the type of rhetoric that arises in briefs in support of certiorari petitions, such an outcome would "exact[] an abhorrent servitude on these items of personal property as they meander through streams of commerce."
The brief further disputes the Solicitor General's application of the "repair" vs. "reconstruction" dichotomy to the situation before the Court. According to Bowman, "[t]hese cases are not germane to the use of patented seeds." The reason: the "use" of the sold seeds "may simply result in the creation of a new item" (emphasis in the brief). The distinction between seeds and the repair reconstruction cases is that in the latter the "use" that attached to the sold seeds was "no longer possible" because the article had "become worn or destroyed." Repair was permitted in this earlier Supreme Court precedent precisely because the sold article had not yet come to the end of its useful life (which, presumably, would trigger a further sale of a new embodiment of the patent product), whereas reconstruction occurs after that "point of no return" had been reached (presumably denying the patentee of a sale of a new embodiment of the patented product).
Bowman's brief makes a valid point that seed is not "beyond repair" when it is replanted; the brief fails to acknowledge that, like reconstruction, replanting seed is essentially making ("reconstructing") a patented article, and not one where the patent right has been exhausted by a sale (unless that first "sale" is capable of echoing down the generation after generation of seed that can be made from that first planting of the sold seed). Bowman concedes that private contractual arrangements may preclude replanting but would have the Court decide that protection against unlawful "reconstruction" by replanting patented seed is outside the protections of the Patent Act.
Bowman's brief also argues that the Solicitor General's use of the term "make" in 35 U.S.C. § 271(a) to create the non-exhausted patent right is wrong; conceding that the statute does not define "make," he argues that adopting the Solicitor General's view would encompass both inducement to infringe (prohibited by 35 U.S.C. § 271(b)) and contributory infringement (35 U.S.C. § 271(c)). The basis for this argument is that indirect infringers can be involved in "caus[ing] to exist" the patented article, and thus all indirect infringement would be direct infringement. However, this argument is diminished if not vitiated by the Solicitor General's argument that replanting seeds and making new soybeans is an act of direct infringement that is supported by the literal language of 35 U.S.C. § 271(a). And the brief's citation of Deepsouth Packing Co. v. Laitram Corp. is unavailing because while true that "making" under the statute requires "an operable assembly of the whole and not the manufacture of its parts," replanting a seed is a making of "an operable assembly" of the whole soybean plant, an act performed in toto by Bowman (even though the brief argues that it is the seed that "'physically connected' all the elements of the claimed invention into an 'operable whole.'").
In the final portion of this part of his argument, Bowman resurrects an argument that has been made before in cases involving genetically engineered cells (such as Amgen v. Elanex, 1996 U.S. Dist. LEXIS 22015 (W.D. Wash, Feb. 6, 1996): that the recombinant seed is "made" only upon introduction of the recombinant construct into the germline, and that because "Bowman did not form the plant cell with the claimed DNA sequence" he should be absolved of patent infringement liability.
As the Solicitor General noted, the Federal Circuit recognized that "[t]he fact that a patented technology can replicate itself does not give a purchaser the right to use replicated copies of the technology," and "[a]pplying the first sale [patent exhaustion] doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder." According to the Federal Circuit, 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). "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." These differing views on the scope of the patent right provide the best argument for Supreme Court review (but certainly does not mandate it). And while the Government acknowledges that the case presents something of a novelty, the dual nature of replanting as being both an (arguably) exhausted use and a non-exhausted making would appear to mitigate in favor of finding infringement for replanting ("the planting and harvesting of soybeans also constitutes the 'making' of newly infringing seed" (emphasis in original)). Regarding the "making only occurs upon creation of the genetically engineered seed" argument, the Solicitor General cogently counterargued that "[p]etitioner 'cause[d] [the progeny seed] to exist,'" and it was immaterial that how that was accomplished differed from how the patentee had created the recombinant seed in the first place. The Solicitor General's assessment of Bowman's culpability is also compelling:
[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.
In his final argument, Mr. Bowman contends, contrary to the Solicitor General's brief, that deciding in his favor would be consistent with the Plant Variety Protection Act and the Court's J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc. decision. Mr. Bowman correctly notes that the Court's J.E.M. case does not speak to the scope and meaning of the word "make" in the statute. But he argues (correctly) that the Court's J.E.M. decision does not indicate or mandate that principles of patent exhaustion. This is a strawman, however; the Solicitor General's actual argument was that the Court refused to find that the presence of an affirmative exemption for farmers to save seed that can be used for replanting in the PVPA provided a contrast to the absence of any such exemption in for utility patents. The Solicitor General argued 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." And this outcome would create a statutory inconsistency:
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. Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1995), another case involving the seed-saving exemption of the PVPA.
Not mentioned in Mr. Bowman's brief are the policy considerations involved (besides how the outcome of this case affects Mr. Bowman), something directly (and appropriately) addressed by the Solicitor General. If, as Mr. Bowman contends, "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. In addition, the Solicitor General's brief reminds the Court that a Supreme Court decision 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).
Whether the Court heeds this warning will be seen when the Court has its petition conference on September 24th.
Dear Kevin:
Thanks for your interest in this case. Allow me to respond to some of the points you raise.
After accepting the premise that the district court expressly relied on the conditional sale doctrine to dispose of Bowman’s exhaustion defense, you attempt to refute Bowman’s argument that the CAFC necessarily agreed with that reasoning when it affirmed the judgment, saying that Bowman’s argument “put[s] the jurisprudential horse before the cart …,” and that “The basis for [Bowman’s] argument … appears to arise merely from the fact that the Federal Circuit refused to find that Monsanto's patent rights were exhausted, i.e., failed to find in Bowman's favor based on Bowman's arguments.” This is not Bowman’s argument at all. Please see page 2 of Bowman’s Supplemental Brief where he states “[h]ad the Federal Circuit concluded (as it should have) that Monsanto’s patent rights to seeds sold by the grain elevator were exhausted, it would have been required to vacate the judgment and remand for review of the damages award based on the number of infringing units Bowman allegedly ‘made’ by planting. Instead, the Federal Circuit affirmed the judgment, which was based on acres planted.” An order from the CAFC vacating the judgment and remanding for review of the damages award based on the number of infringing units allegedly “made” by Bowman certainly does not require the district court to find in Bowman’s favor. All Bowman is saying here is that the CAFC did not find exhaustion in the seeds he bought on the open market in an authorized sale, and that the only rationale articulated by the CAFC that could possibly affirm a judgment based on acres planted is the conditional sales rationale. The alternative rationale used by the panel, i.e., that use by planting is also “making” the invention, cannot support the judgment on its own because the judgment is based only on evidence showing the number of units planted; there is no evidence in the record telling us the number of units Bowman allegedly “made.” That is why remand would have been required had the CAFC actually relied on the “making” argument. The facts are contrary despite the wording of the panel opinion, which was likely written to shield the Mallinckrodt line of authority from Supreme Court review.
You also say “[r]egardless of whether the Federal Circuit retains any inclination to follow the conditional sale doctrine … As set forth in the Solicitor General's brief, conditional exhaustion was not the basis for the Federal Circuit's decision in this case,” which is to simply say that Bowman is wrong because the SG says he’s wrong. I think the SG’s brief must be taken with a grain of salt given that Monsanto in this case is represented by a former SG. Notice, too, that the Patent Office is not on the brief; which begs the question, why? The patent office has been on just about every brief from the OSG on a patent issue since I can remember.
You do not adequately address Bowman’s argument that the SG’s proffered definition of “makes” is vastly overbroad, such that it would eliminate the concepts of indirect infringement. The word “makes” as used in 35 U.S.C. § 271(a) cannot possibly mean what the SG says it does because under the SG’s definition, anyone who has a causal connection to infringement could be liable as a direct infringer. The SG’s argument is also in conflict with Supreme Court law which states that “[a] word in a statute may or may not extend to the outer limits of its definitional possibilities. Interpretation of a word or phrase depends upon reading the whole statutory text, considering the purpose and context of the statute.” Dolan v. United States Postal Serv., 546 U.S. 481, 486 (2006) (applying a more narrow reading of the phrase “negligent transmission” based on use of the phrase in the context of the statute).
Finally, as to the policy arguments, the petition already deals with several of the arguments made by the SG. Suffice it to say that Monsanto has adequate contractual remedies. All Monsanto needs to do to preserve those against farmers like Bowman is to segregate GM seed from conventional seed and require purchasers to agree by contract not to plant. Of course, Monsanto is loathe to do this because it would give purchasers something Monsanto is against, i.e., the choice to buy foods made with conventional grain.
As for the SG’s argument that a ruling for Bowman would permit farmers and others to compete directly with Monsanto in the market for GM seed, that argument is meritless. Commodity grain is unlike seed saved from a first-crop planting. Seed saved from a first-crop planting is of a single variety, maturity, disease resistance, etc. Monsanto is rightly concerned that first-generation seed savers might compete directly with Monsanto in the market for first-generation seeds. But commodity grain is an entirely different animal. It is all mixed together. There is no single variety, disease resistance, maturity rate, etc. Farmers refer to it as “junk seed,” and it is only used for risky plantings, such as when a farmer is washed out from a flood or in Bowman’s case, as a second-crop planting. There is little or no chance that a farmer (or someone else for that matter) would be able to sell commodity seed in competition with Monsanto in the market for first generation seed. But do not take my word for it, the National Farmer’s Union made this same point in a letter to the SG in support of Bowman’s petition.
Finally, you note that the SG argues that “[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).” But please consider whether we would have a better patent law had the Supreme Court taken certiorari in State Street Bank. Arguably, if the Court had taken certiorari more than a decade ago in State Street Bank, we would not be in the current mess we are in, where there is great uncertainty concerning the validity of the thousands of issued patents on business methods.
Thanks again for your interest in this case and for your consideration of these comments.
Best Regards,
Mark Walters
Posted by: Mark Walters | September 19, 2012 at 12:27 AM
Dear Mark:
Thank you for your comments. They provide some information I didn't have and raise a few interesting points.
Before we get to those point, I think the semantical arguments about the scope of "making" versus "using" are not persuasive. I don't think proscribing making a patented article - whether by manufacturing it in a factory, growing a cell in a laboratory or planting a seed that makes more seed - will impinge on indirect infringement or make indirect infringement into direct infringement. But I understand that you might object to having the same act be an exhausted "use" and a non-exhausted "making" - that argument is a little slippery.
And I don't think the presence or absence of the PTO on the brief is meaningful - it is clear that the SG isn't paying attention to the Office (evidence for that includes, for example the "magic microscope"-enunciating Myriad brief). The wisdom of this lack of coordination or lack of it is evident, I think, but it doesn't mean that the Office would necessarily have a different view.
I am very interested in the "sheep versus goats" aspect of comodity seed versus first-crop grain. That is a distinction that was not evident and does raise issues of whether such grain falls within the scope of the claims, particularly with regard to utility and operativeness.
I also think there may be traction in the planting versus production argument, but I saw no indication that there was evidence in support of the question. I have no basis to dispute that there is a difference, but was there evidence that second plantings in this case yielded substantially fewer acres of soybeans that first crop plantings?
Finally, hindsight is 20-20: I agree that the failure of the Supreme Court to affirm the Federal Circuit's State Street decision has created something of a mess, but that doesn't mean Supreme Court proscription in the biotech area is something to be desired. It would bring certainty but perhaps not the certainty that promotes progress and innovation. The biotech era began with an expansive view of patent eligibility under Chakrabarty. It would be tragic if this court ended that era by an uninformed restriction demanded (as it has been in the IT space) by the short-sighted interests of people who want the fruits of innovation without recompensing the innovators.
Thank you again for your comments and for reading.
Posted by: Kevin E. Noonan | September 21, 2012 at 01:42 PM