Business

05.15.13

Supreme Court Supports Monsanto in Patent Dispute

The Supreme Court’s ruling in favor of Monsanto’s soybean patent is a victory for the protection of intellectual property, writes Paul Campos.

A strange aspect of human psychology, at least in this culture, is that many people who would never dream of shoplifting a CD or stealing a car feel no compunction at all about stealing intellectual property.

An example of this moral incongruity is provided by a new Supreme Court decision dealing with patent law. On Monday, the court ruled that a farmer in Indiana was breaking the law by replanting seeds harvested from a crop of genetically modified soybean plants, which were originally the invention of Monsanto.

The Monsanto corporation produces a popular pesticide called Roundup. Monsanto’s scientists have also invented a genetically modified form of soybean, called Roundup Ready, which is immune to Roundup’s effects. Monsanto’s Roundup Ready patent guarantees that, for 20 years, it has the exclusive right to produce Roundup Ready.

Without such enforceable licensing agreements, Monsanto’s patent would soon be worthless: once the initial sale of Roundup Ready seed had been made, the purchaser would be able to plant or sell an exponentially growing number of Roundup Ready seeds derived from the plants produced by the first sale. But thanks to its patent, Monsanto controls an estimated 90 percent of the soybean market.

The company sells Roundup Ready soybean seeds to farmers under a licensing agreement, which gives the purchasers the right to grow one season of crops from the seeds, but forbids them from using seeds harvested from those crops to grow more Roundup Ready soybeans, or to sell such seeds to third parties.

Vernon Bowman, an Indiana farmer, thought he had come up with a clever way of avoiding the cost of paying Monsanto’s licensing fee. Bowman bought soybeans that were sold to be consumed, not planted, from a grain elevator, planted them, sprayed them with Roundup Ready, and then planted the seeds from the surviving plants. (Such seeds were of course from Roundup Ready plants, since they had survived the spraying of Roundup).

Bowman knew that it would have been illegal for the grain elevator owners to sell him Roundup Ready seeds, since they weren’t licensed by Monsanto to do so, but he argued that the seeds produced by the beans he planted weren’t subject to Monsanto’s patent. The seeds, he argued, were the product of nature.

Bowman’s argument was based on a legal rule called the exhaustion doctrine, which says that someone who sells a patented article cannot enforce the patent against subsequent purchasers of the article. So, for example, if Xerox sells a patented copy machine, the buyer of the machine is free to sell it to someone else without infringing Xerox’s patent in the copier.

But as the Supreme Court unanimously agreed, the exhaustion doctrine applies only to individual, patented articles—not to copies of the product. For instance, if Xerox sold a copier that could make copies of itself, then for a purchaser of the copier to sell the new machines produced by the copier would be an infringement of Xerox’s patent. Any patent, whether it applies to a self-replicating machine or a biological entity, that can’t prevent buyers from selling duplicates would be of little value, no matter how the copies were made.

All this seems fairly obvious, but it wasn’t to Bowman. His attitude toward the matter reminds me of that held by people who download copyrighted music from the Internet without a license to do so, while at the same time convincing themselves they aren’t stealing someone else’s property.

But that sort of rationalization may be better tackled by psychologists than the justices of the Supreme Court.