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Monsanto Wins Seed Case as High Court Backs Patent Rights

May 13, 2013
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The U.S. Supreme Court bolstered Monsanto Co.’s ability to control the use of its genetically modified seeds, ruling that companies can block efforts to circumvent patents on self-replicating technologies.

The justices unanimously upheld an $84,456 award Monsanto won in a lawsuit against Vernon Hugh Bowman, an Indiana farmer. Rather than buying herbicide-resistant soybean seeds from a Monsanto-authorized dealer, Bowman used harvested soybeans containing the technology to plant his crops.

(See related: Monsanto Court Case: Can Gene Guns Rob Banks?)

"Bowman planted Monsanto’s patented soybeans solely to make and market replicas of them, thus depriving the company of the reward patent law provides for the sale of each article," Justice Elena Kagan wrote for the court.

The case may affect makers of live vaccines, genetically modified salmon, and bacteria strains used in medical research, potentially helping makers of those products restrict use beyond the first generation. Even so, the court said its ruling was a narrow one that didn’t resolve all issues concerning patents on self-replicating technologies.

"We recognize that such inventions are becoming ever more prevalent, complex and diverse," Kagan wrote. "In another case, the article’s self-replication might occur outside the purchaser’s control. Or it might be a necessary but incidental step in using the item for another purpose."

Genetic Modifications

The case centered on a technology that has helped make Monsanto the world’s largest seed company, with $14.7 billion in annual revenue, as well as a prime target for opponents of genetically modified food.

St. Louis-based Monsanto inserts genes into crops, letting them withstand application of the herbicide Roundup. Farmers who buy so-called Roundup Ready seeds must accept restrictions on their use, agreeing not to save the harvest for planting in a later season.

Monsanto has sued 146 U.S. farmers for saving Roundup Ready soybeans since 1997, winning all 11 cases that went to trial, the company says.

Biotechnology companies, software makers and research universities backed Monsanto in the case. Makers of replacement auto parts and the American Antitrust Institute supported Bowman. 

Second Generation

Bowman sought to get around Monsanto’s rules from 1999 to 2007 by buying less expensive soybeans from a grain elevator. Because the elevator accepted harvests from farmers using Monsanto seeds, the second-generation beans proved to be herbicide-resistant. The farmer says he saved $30,000 for his farm.

When Monsanto found out about the practice, the company sued Bowman. The U.S. Court of Appeals for the Federal Circuit upheld the award against Bowman in 2011. The appeals court said Bowman "created a newly infringing article" by growing a new generation of soybeans with the seed.

The Supreme Court today rejected Bowman’s contention that Monsanto had "exhausted" its patent rights by the time he bought the seed.

The Obama administration largely backed Monsanto in the case.

Monsanto said before the ruling that a loss would force the seed industry to shift research away from soybeans, canola and wheat -- crops that produce exact replicas of themselves because they are self-pollinating. Grain from hybrid crops such as corn isn’t typically replanted because the offspring are less productive.

Genetic traits require an average of $136 million to develop and commercialize, a process that takes 13 years, according to CropLife International, an industry group. Monsanto in 2012 reported $1.51 billion in research and development spending.

The case is Bowman v. Monsanto, 11-796.


To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net. To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net.

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RELATED TOPICS: Corn, Soybeans, Genetics, Seed

 
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