Patent Exhaustion Not Applicable in Second-Generation Seed Case

By Joseph Mandour on September 28, 2011

California Patent InfringementSan Diego – In a controversial decision, the Federal Circuit recently upheld a District Court ruling in favor of Monsanto in the patent infringement case Monsanto Company v. Bowman. Monsanto brought an action for patent infringement against Indiana farmer Vernon Bowman after learning that he had purchased second generation soybean seeds of Monsanto’s “Roundup Ready” line from a grain elevator and replanted them.

Monsanto holds a patent for soybean seeds resistant to the herbicide Roundup, which Monsanto also manufactures. Once purchased from Monsanto, these seeds may be planted by farmers. However the second generation seeds produced by the initial crop may not be replanted. Instead, a new set of seeds must be purchased from patent holder Monsanto.

The user-agreement does state that farmers are able to sell the second generation seeds to grain elevators for use as commodity seeds, which are often used as animal feed. However, the user agreement is silent as to whether commodity seeds purchased from a third party could be replanted.

In this case, Bowman purchased a large number of commodity seeds and was able to identify and replant the Roundup Ready second generation seeds from the others. Upon discovering this, Monsanto pursued an action in the Southern District of Indiana against Bowman for patent infringement. Monsanto argued that by using the second generation seeds of their patented seed line, Bowman had infringed on their patent.
Bowman, on the other hand, argued that the patent had been exhausted. Patent exhaustion occurs when a patent holder sells or licenses the patented component which is then subsequently sold, without restriction, to others. Since Bowman purchased the seeds legally from another legal purchaser, he argued that Monsanto’s patent rights had been exhausted. Bowman argued that the unrestricted sale by the grain elevator to him exhausted Monsanto’s rights in the second generation seeds, leaving him free to plant them.

The court rejected this argument holding that the patent rights had not been exhausted. As a patent holder, Monsanto has the ability to prevent others from using, making, or selling its patented material. By planting the second generation seeds, Bowman was committing patent infringement by using the offspring of Monsanto’s patent in an unauthorized manner.

Critics of the decision noted that neither Monsanto nor Bowman created the second generation seeds directly. Rather, Monsanto sold first generation seeds that grew into plants, creating the second generation seeds. One such critic stated that, “Monsanto needs to sue its own plants for violating Monsanto’s patents, not the farmer.”

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Posted in: Patent Infringement