Published on October 8th, 2012 | by Jeremy Bloom3
Game on! Supreme Court takes up Monsanto’s patented seeds
Now, the issue will finally be looked at by the Supreme Court.
The interesting question is, which way the court will go? On the one had, the conservatives who dominate the court have been very friendly to corporations (and Justice Clarence Thomas even worked at Monsanto early in his career).
On the other hand, those same conservatives also claim to practice “original intent” jurisprudence, seeking out the intentions of the founding fathers and ruling on the plain meaning of law as it was practiced at our country’s founding. And by that measure, there is simply no question that the founding fathers would have balked at the idea of patenting seeds and suing farmers for saving them.
One possible sign of how the Justices intend to rule: The Court didn’t have to take up this case. The lower courts had ruled FOR Monsanto, and the Obama administration had said the Supremes should just let the lower court ruling stand (the Obama Administration is also crawling with former Monsanto employees.)
The former chemical company has been incredibly aggressive in the seed business, becoming the #1 seed company in the world and suing anyone that gets in their way.
Monsanto utterly dominates the soybean market in the US, and it’s grossly profitable. According to Bloomberg,
Monsanto sold $1.77 billion of soybeans and genetic licenses during the fiscal year ended Sept. 30, about 13 percent of the company’s total. Gross profit in the soybean unit was $1.16 billion, more than 16 percent of Monsanto’s total.
Most companies would be happy with 10 percent profit, but why settle? With almost 95 percent market share Monsanto can set any price it likes, and go for 65% profit.
We never sue (except when we do)
Here’s my summary of the case from my initial article back in April:
Monsanto sued Bowman for patent infringement (something that the company also insisted it DOESN’T do, as recently as this past February, when farmers attempted to get a preemptive court injunction against just this kind of suit).
Here’s where the fun starts.
Patents for normal stuff come with what is called “exhaustion.” That is, if you buy a car or a refrigerator with patented components, the rights of the patent holder are exhausted in that first sale. You can safely resell your car without running afoul of patent law. You can resell your used books, video tapes, washing machines – anything up to nuclear reactors – and not run afoul of patent law.
But what about seeds? Not that the founding fathers would have considered seeds as patentable – the very idea would have been laughable. But stick with us.
Once you get to seeds, you have a problem. Seeds are self-replicating. If you buy one seed, you will soon have 10 or 100 or 10,000 seeds that you could sell. Just as you aren’t allowed to make photocopies of a book and go out and sell them, Monsanto argued that the “exhaustion doctrine” shouldn’t apply to seeds. And the courts agreed.
In a world where 94 percent of soybeans in circulation are descended from Monsanto’s genetically engineered seeds, it might be hard for farmers who didn’t want Monsanto’s seeds even to buy seeds that were not patent encumbered. Monsanto’s position would effectively place the burden on farmers to test seeds they hope to plant in order to ensure they are not covered by any patents.
It’s not like you’re buying an obviously-pirated copy of “Hunger Games” off a bootlegger on a streetcorner. Monsanto hasn’t bred their little frankenbeans to grow little “©”s on the pods: you can’t just look at a pair of soybeans and say “Okay, this one is clean, but that one is Monsanto.”
So here’s what Bowman (or at least his lawyer) asked the Court:
Patent exhaustion delimits rights of patent holders by eliminating the right to control or prohibit use of the invention after an authorized sale. In this case, the Federal Circuit refused to find exhaustion where a farmer used seeds purchased in an authorized sale for their natural and foreseeable purpose – namely, for planting. The question presented is:
Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?
Seeds of destruction
Yes, that’s what we’ve come to in 21st-Century America… a soybean is “A self-replicating technology”.
There’s a lot more analysis in my earlier piece – check out “Should Monsanto be able to patent genes? Supreme Court may take up the case, in part“.