Monsanto Prevails Again against Infringing Farmer
By Kevin E. Noonan --
In recent weeks, Monsanto has prevailed in patent infringement lawsuits involving its patented seeds from various crop species genetically engineered to be resistant to glyphosate herbicides such as Roundup® (also a Monsanto product). The U.S. Supreme Court recently refused to grant certiorari to the defendant in Monsanto Co. v. McFarling (despite representation by noted academic Mark Lemley of Stanford; see "Supreme Court Fails to Grant Certiorari in Monsanto Co. v. McFarling") and the defendant, Mr. McFarling, an individual farmer is thus liable for a judgment of $375,000.
The latest Monsanto victory against another individual farmer, Loren David (although both Mr. McFarling and Mr. David own farms far larger than the typical “family farm” that the appellation “individual farmer” might bring to mind) was affirmed yesterday in a unanimous decision by the Court of Appeals for the Federal Circuit. In this case, the damages award was even larger -- $786,989.43 -- comprising both compensatory damages of $226,214 and prejudgment interest, attorneys fees, and costs. And while based on the same general activity held to infringe the same patent (U.S. Patent No. 5,352,605) in McFarling (replanting genetically-engineered seed contrary to both the patent license and a contractual agreement not to do so), Mr. David’s behavior and inconsistent testimony, as well as the interesting legal arguments raised by his counsel, warrant further consideration.
Monsanto first became suspicious that Mr. David was replanting its genetically-engineered Roundup Ready® soybean seed when the amount of seed Mr. David purchased in 2003 was not sufficient for the acreage planted nor consistent with the amount of Roundup® herbicide he applied to his fields. Monsanto thus suspected, as in McFarling, that Mr. David was replanting Roundup Ready® seed obtained from a prior year’s planting. As in McFarling, the company sold Mr. David its patented soybean seeds subject to the conditions of an agreement, termed the “Technology Agreement” (which Mr. David signed) that requires him to pay a one-time license fee of $6.50 per 50 lb. bag, and to agree not to plant himself, or supply to others, "saved" seeds, i.e., seeds produced from the originally purchased seeds. The Technology Agreement also required Mr. David to pay $7.75 per unit (50 lb. bag of seed) sold. Mr. David had participated in this arrangement with Monsanto between 1999 and 2003, when the infringing activity occurred.
Monsanto’s evidence at trial was based on residual soybean plant material obtained from Mr. David’s farm in 2004 (after the 2003 soybean crop had been harvested), which showed that the soybeans were recombinant; records showing that Mr. David had purchased an insufficient amount of Monsanto Roundup Ready® soybean seed for the 2003 growing season for the acreage planted; and records showing that Mr. David purchased more than 1,000 gallons of Roundup® herbicide, which would have killed any native soybeans not protected by expression of the recombinant protein in Monsanto’s Roundup Ready® seeds. This evidence was supported by expert testimony as to the amount of seed needed to plant Mr. David’s acreage.
The District Court after a bench trial found Mr. David’s testimony (and his daughter’s testimony on his behalf) to be unconvincing, particularly since the District Court found that Mr. David changed his testimony (three times by Mr. David, according to the Federal Circuit’s opinion) in an effort to provide a non-infringing explanation for the evidence of the infringement. Moreover, affirmative evidence produced by Mr. David in his defense was unavailing; for example, he had records for the purchase of additional Roundup Ready® seed in 2003, but these records were for purchases made after the entirety of his fields had been planted that year. The District Court found this to be an effort to mislead Monsanto into believing he had not saved seed from the 2002 crop, in violation of the Technology Agreement and infringement of Monsanto’s ‘605 patent.
On appeal, Mr. David argued that his activities were not infringing because the ‘605 patent is not directed towards a plant or seed but rather to a gene. Representative claims of the ‘605 patent include the following:
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, said promoter selected from the group consisting of a CaMV (35S) promoter and a CaMV (19S) promoter, wherein said promoter is isolated from CaMV protein-encoding DNA sequences, and a structural sequence which is heterologous with respect to the promoter.
8. A plant transformation vector which comprises a disarmed plant tumor inducing plasmid of Agrobacterium tumefaciens and a chimeric gene, wherein the chimeric gene contains a promoter from cauliflower mosaic virus, said promoter selected from the group consisting of a CaMV(35S) promoter and a CaMV(19S) promoter, and a structural sequence which is heterologous with respect to the promoter.
Mr. David argued that the patent specification did not satisfy the written description requirement of 35 U.S.C. § 112, first paragraph, and specifically that the specification lacked the “specificity that would be required of a patented plant variety.” Cited in support of this argument was the Supreme Court’s J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc. case, which Mr. David argued “stands for the proposition that plants can only receive patent protection under the Plant Patent Act of 1930, 35 U.S.C. §§ 161-164 (the 'P.P.A.'), the Plant Variety Protection Act of 1970, 7 U.S.C. § 2321 (the 'P.V.P.A.'), or under a utility patent on a plant variety.” However, the Federal Circuit disagreed, in an opinion written by Judge Lourie joined by Judges Bryson and Moore. Indeed, the Federal Circuit held that the plain meaning of the Supreme Court’s decision was precisely the opposite: that there was no basis to "narrow the reach of §101 where Congress has given [the Court] no indication that it intends this result." The CAFC analyzed the infringing act as "planting a seed containing the [claimed] gene sequence . . . [t]he gene itself is being used in the planting, and infringing act."
The Federal Circuit recognized Mr. David’s complaint to be the same as Mr. McFarling's: a belief that he had the right to replant the patented seed despite the exclusive right of the patentee and his own participation in the Technology Agreement. Having decided that such replanting was an infringing act in McFarling, this panel had no reason to come to any other conclusion.
Despite losing his appeal on the underlying infringement decision, the Federal Circuit vacated and remanded the damages award as being excessive. Specifically, the CAFC found that the District Court was correct in deciding that this was an “exceptional” case under 35 U.S.C. § 285, in view of evidence that Mr. David “knew that saving seed was a violation of the Technology Agreement, yet . . . did so anyway” and “[h]e attempted to cover up his infringement and deceive Monsanto.” The Federal Circuit characterized his actions as “a case of a farmer with apparent disregard for patent rights, license agreements, and the judicial process,” not a case of a farmer “unknowingly infringing a patent.” The CAFC did find, however, that the award contained both the damages dictated by the terms of the Technology Agreement ($164,608.03) as well as costs Monsanto requested under 28 U.S.C. § 1920 ($30,542.99). These awards together seemed duplicative, and the Federal Circuit remanded the case to the District Court for reconsideration of the damages award. The Federal Circuit also included in the remand a recalculation of the amount of the reasonable royalty Monsanto was entitled to, based on the estimates the District Court used to calculate the amount of patented soybean seed Mr. David substituted with his saved seed. The CAFC did not, however, overturn the royalty rate, which was identical to that imposed in McFarling ($55.04 per unit), and much higher than the contractual rate under the Technology Agreement ($7.75 per unit). Significantly, the opinion notes that it would be within the District Court’s sound discretion to accept Monsanto’s expert’s estimate for the number of units to use in calculating a reasonable royalty, but left it to the District Court to make that determination in the first instance.
Maybe farmers will get the message after this run of victories by Monsanto. However, it is not at all clear to what extent the Supreme Court’s impending decision in Quanta v. LG will influence Monsanto’s ability to put these types of limitations on its patented products. Should the Supreme Court expand the scope of the patent exhaustion principle, or restrict a patentee’s right to limit the uses to which a patented product is put, Monsanto may have to revisit these issues with the next crop of recalcitrant farmers with a more uncertain outcome.
Monsanto Co. v. David (Fed. Cir. 2008)
Panel: Circuit Judges Lourie, Bryson, and Moore
Opinion by Circuit Judge LourieFor additional information regarding other related topics, please see:
- "Court Report," February 3, 2008
- "Court Report," January 28, 2008
- "Court Report," January 13, 2008
- "Court Report," January 7, 2008
- "Supreme Court Fails to Grant Certiorari in Monsanto Co. v. McFarling," January 7, 2008
- "Court Report," December 16, 2007
- "Court Report," November 18, 2007
- "Court Report," October 21, 2007
- "Court Report," July 1, 2007
- "Monsanto Co. v. McFarling (Fed. Cir. 2007)," June 4, 2007
- "Court Report," May 20, 2007
- "Court Report," May 7, 2007
- "Court Report," April 15, 2007
- "Court Report," March 11, 2007
- "Court Report," March 4, 2007
- "Court Report," February 28, 2007
Additional information regarding this case can also be found at Patently-O.
Stem Cell Sciences plc
under the agreement, the parties are hoping that the neuroscience community at large will benefit from the source of brain cells and methods discovered during the collaboration.
Earlier this month, the Wisconsin Alumni Research Foundation (WARF) 
In a January 7, 2008 
SGN-40 is a humanized monoclonal antibody that is currently in phase I and phase II clinical trials for non-Hodgkin lymphoma and multiple myeloma under a worldwide collaboration agreement with Genentech. SGN-40 targets the CD40 antigen, which is expressed on most B lineage hematologic malignancies, as well as solid tumors such as bladder, renal, and ovarian cancer. Seattle Genetics and Genentech have several other ongoing phase I and II trials relating to SGN-40 alone and in combination with other therapeutics.
biopharmaceutical company that provides development and manufacturing services relative to biologics, such as recombinant proteins and antibodies.
In a December 17, 2007 
oncology drugs in the United States, including drugs for treatment of severe pain related to cancer (phase II), oral mucositis, and leukemia (each in phase I). This transaction is expected to close in the first quarter of 2008.
products and technology acquired by Affymetrix will enable it to accelerate development of new genetic analysis products, and add value to its available product portfolio.
Dacogen
Exiqon A/S
develop molecular diagnostic tests based on microRNA biomarkers. The companies expect at least one such test to be available within the coming year.
In a November 26, 2007 
The buyout and purchase does not affect rights to pirfenidone (at left) in Japan, Korea, and Taiwan, which rights remain licensed by Marnac to Shionogi & Co. Ltd. The terms of the purchase include upfront payments from InterMune totaling $13.5 million, and could include an additional $53.5 million in payments if pirfenidone achieves positive Phase 3 data and is registered in the U.S. and Europe. All of InterMune's milestone and royalty payments under the prior license agreement are extinguished by this purchase.
Agensys' portfolio includes 30 proprietary cancer targets to 14 different tumor types, and an antibody targeting prostate, pancreatic, and bladder cancers in Phase Ib clinical trials, and several candidate antibodies in the late preclinical stage. Agensys develops human monoclonal antibodies through the use XenoMouse
GlaxoSmithKline
Reliant's therapeutic portfolio has been developed through in-licensing and development of cardiovascular medicines. Included in its portfolio is Lovaza (formerly Omacor
In a November 16, 2007 
The terms of the agreement include an $8 per share cash offer from Pfizer for all of Coley's outstanding common stock, which is estimated to total about $164 million. The acquisition is subject to a number of closing conditions.
