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September 12, 2012

Comments

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

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.

The comments to this entry are closed.

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