By MATEUSZ PERKOWSKI
The U.S. Supreme Court has unanimously rejected a farmer's claim that patents on biotech seed are "exhausted" once the crop is sold to a grain elevator.
The ruling means that biotech developers like Monsanto can enforce patent protections to bar the planting of genetically engineered seed, even if it has been sold without restriction into the commodity market.
Indiana farmer Vernon Bowman claimed that he was allowed to replant soybeans from a grain elevator under the doctrine of patent exhaustion, which permits buyers to use a patented product as they wish once it has been sold.
Most soybeans in his region contain a genetically engineered "Roundup Ready" trait developed by Monsanto that allows the plant withstand glyphosate herbicides. Bowman acknowledged spraying soybeans grown from grain elevator seed with the chemical.
The nation's highest court has ruled that the exhaustion doctrine "leaves untouched the patentee's ability to prevent a buyer from making new copies of the patented item."
The doctrine would allow Bowman to feed the soybeans to animals, consume them himself or resell them, Associate Justice Elena Kagan wrote in the decision.
"Monsanto, although the patent holder, would have no business interfering in those uses of Roundup Ready beans," the ruling said. "But the exhaustion doctrine does not enable Bowman to make additional patented seeds without Monsanto's permission (either express or implied)."
When a patent holder sells an item, he receives a reward and the purpose of patent law is fulfilled -- however, that reward doesn't cover copies of the product, the court held.
Under Bowman's theory, the patent would only be effective for a single transaction, Kagan wrote. "And that would result in less incentive for innovation than Congress wanted. Hence our repeated insistence that exhaustion applies only to the particular item sold, and not to reproductions."
Bowman claimed that seeds were unique in that they replicated themselves naturally, but the Supreme Court found the "blame-the-bean defense tough to credit" because he cultivated the seeds and wasn't a "passive observer of his soybeans' multiplication."
The ruling affirms a $84,456 judgment that Monsanto won against Bowman, which was previously upheld by a federal appeals court in 2011.
When Supreme Court decided to review that opinion, legal scholars were surprised -- particularly since the federal government had urged the court not to take the case.
Experts thought it was possible that at least some of the Supreme Court justices disagreed with the appellate decision and wanted to overturn it, which could have disrupted the business model of biotech developers.
It now seems likely the Supreme Court took the case to send a definitive message about further litigation over patent rights for genetically engineered seed, said Drew Kershen, a law professor specializing in agricultural biotechnology at the University of Oklahoma.
"It would be an implied statement of, 'It's time to bring these cases to an end,'" he said.
The Supreme Court wasn't likely to agree with Bowman's argument because it would reduce the motivation for biotech developers to create new traits, Kershen said. "You would greatly reduce the strength for a patent."
It's possible the justices granted "certiorari" -- agreed to review the case -- because they saw an opportunity to clarify a previous patent ruling, said Mark Janis, director of the Center for Intellectual Property Research at Indiana University's Maurer School of Law.
Upon closer inspection, the justices could have realized that the facts of this case weren't sufficiently similar to build upon or change that precedent, he said.
The ruling is nonetheless useful because it clarifies the court's position on how the exhaustion doctrine applies to seeds, Janis said. "That's a pretty important pronouncement. That could have been accomplished by denying certiorari, but it doesn't hurt for the court to say so explicitly."