Many farmers have ended up face-to-face with biotech giant Monsanto in court, but so far none of them have ever won. In fact, no farmer has challenged Monsanto in court without getting either 1) hammered financially like this farmer or 2) laughed out of court like these ones. But the company’s winning streak could soon come to an end.
Last week, the Supreme Court agreed to hear an appeal of a federal court ruling that Monsanto won against an Indiana soybean farmer. And while that’s no guarantee they’ll side with the farmer, I’ve often heard it said that the Supreme Court doesn’t take cases to pat the ruling judge on the back.
This particular case is a patent dispute. In fact, much of the blame (or credit) for Monsanto’s success in court lies with the U.S. Patent Office, which takes the view that things like individual product features, business techniques, website functions, and DNA are all patentable.
Of course, patent rights are just part of it. Every time Monsanto sells seeds to farmers, the company requires that they sign an incredibly strict terms-of-use agreement — in essence, a contract between Monsanto and the farmer that dictates exactly how the farmer may use the seeds. One of the agreement’s most notable clauses is the restriction against seed saving from one harvest to the next, even though Monsanto’s seeds grow “true-to-seed”; i.e., its herbicide-resistant “Roundup Ready” seeds will create corn plants whose seeds are also herbicide resistant.
Interestingly, this is not true for many conventional “hybrid” seeds, which are bred so that the next-generation seeds often result in less-desirable versions of the plant — thus causing the farmer to have to buy new seeds every year. So Monsanto has achieved through law what it could not through nature.
And while several farmers have been successfully sued for violations of this agreement, the company has also sued farmers who never signed its agreement but instead had Roundup Ready plants appear in their fields through windblown pollination (a.k.a. “contamination”). These farmers, knowingly or not, had violated Monsanto’s patent — and the courts have repeatedly upheld that conclusion.
But there is one tiny crack in Monsanto’s legal fortress. The company allows farmers to sell saved seeds from harvests of Roundup Ready crops to local grain elevators, which is where commodity crop farmers sell their harvests as well. The grain elevators mix the seeds up with other seeds from brand-name hybrids and resell them as generic seed packs, called “commodity seeds” in the trade, which are often used for late-season “second crop” planting.
Soybean farmer Vernan Bowman of Indiana saw the implications of this crack in the fortress and decided to try and drive his tractor through it.
For years, Bowman would grow a first crop of Monsanto seed, which he would purchase legally, and then would buy some commodity seed from his local grain elevator for his second crop. While aware he could not save seeds from the first crop he grew, Bowman would later plant the commodity seeds, spray the plants with Roundup, and was then able to identify which were resistant to the herbicide when they didn’t die. Bowman saved those seeds and saved money, since he had bought the commodity seeds for his second crop at a steep discount without paying Monsanto or signing its licensing agreement.
As the TechDirt blog reported at the time, Bowman was so convinced he hadn’t broken any law that he told Monsanto representatives what he’d done.
That didn’t stop Monsanto from suing him, which the company finally did in 2007. Monsanto could not claim he had violated the company’s terms of use, since he never signed an agreement regarding the commodity seeds. But what Bowman did, according to the company, was violate its patent rights — rights which the company claims go beyond the term of any particular agreement it may or may not have with any farmer. As Monsanto sees it, its patent rights apply to all uses of its products, in perpetuity. A federal court agreed and Monsanto won. Again. Bowman was ordered to pay Monsanto over $80,000. And then a federal appeals court upheld the ruling in 2011.
But there’s a small problem, as TechDirt pointed out after the appeal. This ruling appears to now contradict a limitation the Supreme Court put on patents back in 2008. It determined:
… that patent holders can’t shake down the entire supply chain, by forcing each level of the supply chain to also license the patent (even if they bought a product from someone who had licensed the patent).
And that’s exactly what Monsanto wants to do. Even if you legally buy seeds that were saved from a legally purchased Roundup Ready crop (in other words, through the commodity seed market), you still can’t actually plant them! (Yes, it really is as crazy as it sounds.)
Monsanto wants relief from what is technically called “patent exhaustion.” And if the company gets it, it will have total control over its seeds. Like the ultimate patent troll, Monsanto will be entitled to licensing fees from any appearance in nature of its patented genes, regardless of whether the company’s license terms were directly violated or not. That’s a lot of power for one company to have.
It’s hard to believe that Monsanto will get the right to claim that it can extract fees from anyone anywhere who grows a plant with the company’s genetic material in it — especially because those genes are so easily spread.
Of course, if the case gets upheld, and Monsanto’s DNA is this special, so is any product that includes patented genes. And that will extend an enormous amount of power to the whole biotech industry, including pharmaceutical companies. Imagine owing a drug company licensing fees because you passed genetic material from some advanced gene therapy drug onto your child, for instance.
So this case is actually a big deal in all sorts of ways. If Monsanto loses, it will finally have a limit on its power. Would it cause a wave of farmers to jump on Bowman’s bandwagon tractor? Who knows. Whatever happens, a limit is a limit — and it’s something Monsanto hasn’t had to deal with in the legal realm before (the natural realm is providing many limits to Monsanto’s power, however.)
Here’s hoping sanity prevails in the Supreme Court.
