By MATEUSZ PERKOWSKI
The U.S. Supreme Court is preparing to decide what a farmer can legally do with genetically engineered soybeans purchased from a grain elevator.
The court's answer could potentially affect the limits that biotech companies place on patented seeds that are pervasive in some crop sectors.
Several justices during this week's hearing appeared critical of the argument that seeds sold into the commodity market could be replanted to grow new genetically engineered crops.
"Why in the world would anybody spend money to try to improve the seed if as soon as they sold the first one, anybody could grow more and have as many of those seeds as they want?" Chief Justice John Roberts asked.
The controversy stems from a lawsuit brought by biotech developer Monsanto against Indiana farmer Vernon Bowman, who repeatedly planted soybean seeds that he bought from a grain elevator between 1999 and 2007.
Most soybeans grown in the area are genetically engineered to withstand glyphosate, a herbicide Monsanto sells under the trade name Roundup. Bowman sprayed his crop with the herbicide and found that it exhibited the Roundup Ready biotech trait patented by Monsanto.
A federal appeals court found in 2011 that Bowman had violated the company's patent and ordered him to pay more than $84,000 in damages. However, the Supreme Court's decision to review the case has thrown the ruling into question.
The debate focuses on how to apply the "exhaustion doctrine" to "self-replicating technologies," like biotech seeds.
With most goods, the patent holder's rights are "exhausted" once the invention is sold without restriction. The product can then be freely used, modified or resold to others.
In this case, Bowman argues that Monsanto's patent rights were exhausted once the soybeans were sold to the grain elevator, allowing him to plant them unencumbered.
Associate Justice Sonia Sotomayor seemed dubious of that interpretation, which was previously rejected by a federal appeals court that found Bowman was creating "newly infringing articles."
"I'm sorry. The exhaustion doctrine permits you to use the good that you buy. It never permits you to make another item from the item that you bought," she said. "You can use the seed, you can plant it, but you can't use its progeny unless you are licensed to, because its progeny is a new item."
Bowman's attorney, Mark Walters, said that this understanding creates an exception to the exhaustion doctrine that was never established by Supreme Court precedent.
Patent law is intended to protect the purchaser as well as the patent holder, but in this case, Monsanto is able to act as the seed's owner even after it has been sold, he said.
"So what they're essentially asking for is for the farmers to bear all the risk of farming, yet they can sit back and control how that property is used," Walters said.
An attorney for the federal government supported Monsanto's position during the arguments. Under Bowman's interpretation of the law, agriculture companies and potentially other technology developers wouldn't have an incentive to invent "self-replicating" products, Melissa Arbus Sherry, assistant to the solicitor general, said.
"It would be near impossible to recoup your investments with that first sale and so the more likely consequence is that research dollars would be put elsewhere," she said.
Associate Justice Antonin Scalia called that a "horrible result" but said that preventing farmers from planting seeds from a grain elevator would also be a "horrible result."
"Now they can't do that because there's practically no grain elevator that doesn't have at least one patented seed in it," he said.
Attorneys for the government and Monsanto countered that farmers don't commonly plant seed purchased from grain elevators.
It's more practical to buy a non-patented variety and have a perpetual source of new seeds for replanting -- but that seed wouldn't have the herbicide-tolerant trait Bowman was seeking, said Seth Waxman, Monsanto's attorney.
It's also unlikely Monsanto would sue a farmer who accidentally planted a patented seed, since nobody would be aware of it unless he tried to take advantage of the glyphosate-resistant technology, Waxman said.
"The farmer wouldn't know, Monsanto wouldn't know, and in any event, the damages would be zero," Waxman said.