Today, the Supreme Court heard oral argument in Bowman v. Monsanto, No. 11-796 (2013). The transcript is here. I’ll briefly re-cap the facts: Monsanto’s makes genetically modified soybeans that are resistant to its pesticide, Roundup. It sold those soybean-seeds to Vernon Hugh Bowman, an Indiana farmer–but with a catch. Bowman could plant his crop, save the resulting seeds from the mature plants, and sell those to a grain elevator (a place where seeds are collected for animal feed), but he couldn’t replant them. To do that, he’d need to go back to Monsanto and buy another bag of seed. And Bowman signed a license with Monsanto to that effect. But Bowman had an idea. He, and other farmers, were selling their Monsanto seed to grain elevators. If he planted those seeds and sprayed them with Roundup, he’d have a Monsanto crop on the cheap. He did just that, and Monsanto, believe it or not, sued him. His principal argument in his case was that Monsanto was prevented from suing him under something known as the doctrine of patent exhaustion–the “once I sell it you, you can do whatever you want with it” rule. Neither the trial court nor the Federal Circuit bought it, and so, at 11:27 a.m. this morning, his lawyer found himself at One First St., N.E., staring down nine lawyers clad in black robes. The recap is below, followed by an analysis below the asterisks.
The (paraphrased) issues presented in the case were the following: (1) Whether the Federal Circuit erred by refusing to find this to be an example of patent exhaustion; and (2) notwithstanding that, whether there should be an exception for “self-replicating” technologies, like seeds.
Mr. Bowman was represented by Mark Walters, a partner at Frommer Lawrence & Haug in Seattle, and it seemed clear that Walters did not have a good day. He began the argument with a confusing discourse about the “title” to the seeds, eliding over the difficulties as to whether they were purchased or licensed and what that meant for further planting. Several Justices expressed confusion over why the act of growing new seeds wasn’t a new “making,” under § 271(a), and therefore outside the realm of patent exhaustion, which traditionally only applied to the specific article purchased. Walters tried to distinguish that it didn’t matter where the exhaustion began–once one purchase was exhausted, all future “makings” could not be infringing. Justice Breyer, however, wasn’t buying it. He noted that it didn’t matter where the exhaustion began, each new planting was a new, non-exhausted product, and joked that even if exhaustion applied to two generations of seeds, “maybe three generations of seeds is enough.” Justice Breyer also expressed surprisingly strident language on the role that copying plays in infringement regardless as to exhaustion, and Justice Ginsburg appeared to agree but took a more nuanced view. At this point, Walter picked up the argument by pointing out that the purpose of Monsanto’s patent was to grow plants and then began referencing the patent’s claims–typically, always a bad sign in patent cases before the Court–and at one point, accidently referred to Justice Breyer as “Mr. Breyer.” Justice Breyer became impatient and told Walters that he was “not getting [Walter’s] answer.” Walters then took a different tack and told the Court that it could not make an exception to the doctrine of patent exhaustion for self-replicating technologies–that was up to Congress. Walters then attempted to make a textual distinction between “copying” and “making,” arguing that copying wasn’t making and was therefore not infringement. Justice Sotomayor didn’t to seem to buy that argument. Clearly frustrated by Walters moving responses, Justice Breyer then laid out his concerns in full, what he thought Walters argument should have been, and simply asked Walters to respond. Justice Ginsburg, similarly, seemed frustrated at the argument about the issue of ownership because the patent statute did not immunize infringement claims from using the sold article to make a new one. The Chief Justice then interjected and displayed surprising facility with the concept of using Roundup Ready as a selecting agent. Walter ending his argument by claiming that because Monsanto sold seed to the grain elevator–an unclear point from the record–it couldn’t prevent Bowman from using those seeds as he saw fit.
Next up was Melissa Arbus Sherry, an assistant Solicitor General. She first laid out the distinction between the Plant Patent and Variety Act and the “garden-variety” patent statute. She mentioned that the court already rejected the argument that the utility statute had a seed saving exception in J.E.M. Ag Supply, and it shouldn’t abrogate that decision here. She further argued that exhaustion has never been extended to making a new article. The Chief Justice asked whether it was different because the two essentially are the same product. Sherry responded by pointing out that if exhaustion applied in that circumstance, Monsanto couldn’t protect any of its seeds because they all derived from a common ancestor. Sherry then mentioned that grain elevators are not typically in the business of selling seed for planting and that an authorized sale ends at the “second” generation of seed. (The generation Bowman sold to the grain elevator.) Justice Kagan, in the final minutes, asked Sherry for a good reason, any reason, to overrule the Federal Circuit on the “conditional sale” doctrine (a limit to patent exhaustion), and Sherry responded that the Court did not need to because Quanta should have resolved those issues.
Next up, the estimable Seth P. Waxman, former Solicitor General and now partner at WilmerHale in Washington. Waxman spent most of his time laying out the science for the Court, displaying an ease with the Justices that seemed almost unnatural. Then he began to read from Bowman’s brief–another bad sign for Bowman–and then joked with Justice Scalia about whether the technology Monsanto used to genetically engineer seeds–a “gene gun”–could be used to rob a bank. Justice Kagan then got a few lines in about whether everyone in the world was an infringer because the technology was widely adopted, and Waxman appeared to step out of his advocacy role for a moment and mentioned a startling fact: Monsanto’s technology is arguably the largest, fastest technological adoption in human history. The first seed was sold in 1996; it’s now something on the order 90% of the soybean farmland in the entire world. Waxman ended by asking the Court not do address the conditional sale doctrine because, the Justices pointed out during Walters’ argument, the putatively infringing crop was never sold to Bowman; it was new. But, if the Court chose to do so, Waxman humbly suggested that conditional sales should not be found to be ipso facto unenforceable, especially where the innovator has no other choice but to recoup its entire investment on the first sale. Justice Kennedy brought up a fascinating point about whether Bowman could have resold the grain elevator seed (knowing of course that it contained patented products). Waxman did not have a good response there.
Walters finished with some rebuttal, simply arguing that the Federal Circuit should reversed on idea that the conditional sale was unenforceable because the product couldn’t be used for its intended purpose–growing more seed. Neither the Chief Justice nor Justice Scalia seemed that enthralled with that argument because the seed resold to the grain elevator had an intended purpose beyond mere replanting, e.g., being processed into animal feed.
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So, what to make of all of this? Well, first, as I mentioned, it seems that Walters had a bad day. The obvious arguments–that the license was unenforceable, that it didn’t control future purchases from any source, that the conditional sale doctrine applied for prudential reasons–weren’t made clearly to the Court. Pointing out patent claims to a Court that’s famous for hating patent law is not a good sign–nor is having Seth Waxman read your brief to make his point. And calling Justice Breyer, “Mr. Breyer” is as bad of a SCOTUS faux pas as you can get. (Yes: worse than calling former Chief Justice Rehnquist simply Justice Rehnquist.) And when the Court ventured down the road of “every planting is a new making not a sale, and therefore the exhaustion doctrine doesn’t apply,” Walters just didn’t really have any good answers. It’s a shame because those, I think, were the most interesting issues to the case, and it would have been great to hear the Court engage with them more fully. It was also somewhat shocking to hear Justice Breyer give what sounded to me like a full-throated defense of intellectual property in parts, and to hear the Chief Justice essentially explain artificial selection in his own words.
But I don’t think Walters’ poor argument killed his case. The Justices seemed to look for a way to dispose of this case in the most elegant way possible, precisely, I think, because anything broad would do incredible economic violence not just to Monsanto but to many other industries as well. And that’s to engage in the idea that every time I grow a plant, I’m making a new article–license or no license. It doesn’t matter that I made it with a patented thing that I purchased, and it doesn’t matter even if that’s the patented object’s primary purpose or the logical consequence of using it in the first instance. That’s a straightforward, albeit a little quirky reading of the infringement statute, and doesn’t get tangled up in issues of exhaustion or conditional sales or “self-replicating technologies.” I predict that’s going to be the winning response, in some form of a split decision. (In the interest of full disclosure, I previously predicted a 5-4 split on this one, figuring that it would revolve around the issue of the propriety of the licenses and how far they applied downstream. That simply doesn’t seem to be the way the wind is blowing on this one .)
Jake Sherkow, CLB fellow