Monsanto, Seeds, Software, Self-Replication, and the Supreme Court

As I read the Supreme Court’s unanimous opinion of Bowman v. Monsanto Co. from May 2013, I became interested in seeds and self-replication.  The case involved a farmer, Bowman purchased Monsanto’s Roundup Ready soybeans each year from an authorized dealer.  Bowman had a license with Monsanto to use the Roundup Ready seeds, but he could not use the seeds that were produced from the original plants that were produced from the Roundup Ready seeds. Every season, Bowman purchased soybeans from the grain elevator and planted them for his second crop. Additionally, he would save some seeds from this second crop and use them in the following season.    This where Bowman ran into trouble. Many of the soybeans at this grain elevator came from Roundup Ready seeds and thus, some of seeds from the second crop came from Roundup Ready seeds. Monsanto investigated and the infringement suit against Bowman ensued. Justice Kagan wrote for the court and said the decision only applied to this case and it was determined that Bowman did infringe on Monsanto’s Roundup Ready seed patent. The patent for the Roundup Ready seeds was not exhausted. Kagan concluded that, “Bowman planted Monsanto’s patented soybeans solely to make and market replicas of them, thus depriving the company of the reward patent law provides for the sale of each article. Patent exhaustion provides no haven for that conduct.”

After reading this case, I was interested finding out more about self-replicating technology and when patents of this self-replicating technology are exhausted.  For software and life sciences technology, the answer of when patent exhaustion occurs may be different than the genetically modified seeds. I read an article, from the Life Sciences and Law & Industry Report (TM) by John T. Aquino, entitled “Protecting Self-Replicating Tech Inventions Requires Attention to Claim Drafting, Licensing Contracts, Panelists Say.” Aquino’s article details a webinar held on August 20th that had panelist from Washington law firms discussing the Supreme Court’s decision in the Bowman case. Christopher E. Jeffers, from the firm Wombly Carlyle Sandridge & Rice, mentioned in the article that post-sale restriction enforcement have not been fully addressed by the Federal Circuit nor the Supreme Court.

It is difficult for a company to determine if its patents are exhausted after the first replication.  After Bowman, it looks like licenses may be the best option for companies trying to protect patented self-replicated technology from unauthorized use and infringement. This is how many software manufacturers limit use of their software. In these licenses, the patent holder may stipulate that the holder as licensor can audit the licensee to make sure the license agreement is not being violated.  This is also a good idea for all self-replicating technology in order for the licensor to have some way of possibly knowing if its patents are being infringed. The licensee may be less likely to engage in infringement if the licensee knows that the licensor can audit the use of the patented technology.

The issue of self-replication technology patent exhaustion and post-sale restrictions will remain murky until the Federal Circuit or the Supreme Court provide a definitive answer. With the increase of self-replicating technology, this case may come soon.

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