The Supreme Court this week unanimously ruled against an Indiana farmer who argued 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.
We agree with the court's decision.
Most soybean seeds are genetically engineered with Monsanto's patented "Roundup Ready" trait that makes plants resistant to glyphosate herbicides. Monsanto licenses the technology to seed companies, and places restrictions on the use of the trait. Specifically, farmers are prohibited from holding back a portion of their crop produced with Roundup Ready seeds to use to plant subsequent crops.
The seeds are more expensive than traditional hybrids. But the glyphosate resistance reduces other input expenses, making the seeds an overwhelmingly popular choice among commercial soybean growers.
Indiana farmer Vernon Bowman also liked soybean seeds that were glyphosate resistant, but he didn't care for the premium price.
Knowing that most if not all of the soybeans grown in his area contained the trait, he bought a load of soybeans from his local grain elevator. While farmers commonly buy soybeans as a livestock feed, Bowman used his to plant his crop.
It worked so well that he repeatedly planted soybeans he bought from a grain elevator between 1999 and 2007.
Monsanto found out and filed suit, arguing that Bowman had violated its patent.
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. Bowman countered that Monsanto's patent was exhausted when the farmers who grew the genetically modified soybeans sold them to the grain elevator.
The federal courts sided with Monsanto, and now the Supreme Court has ruled that the exhaustion doctrine applies only to the particular item sold, not to self-replicating copies.
The court said Monsanto's patent would not prevent Bowman from feeding the soybeans to livestock, eating them himself, or selling them to another party. "But the exhaustion doctrine does not enable Bowman to make additional patented seeds without Monsanto's permission (either express or implied)."
Critics of Monsanto say the company prevents farmers from holding back part of their crop to use as seed next year, something farmers have done for centuries. Those seeds, however, didn't contain patented gene traits that cost hundreds of millions of dollars to develop.
As the court observed, adopting Bowman's argument would result in less incentive for innovation -- innovation that has lowered overall soybean production costs and increased soybean producer profits.