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Rep. Marcia C. Kaptur (D-Ohio) reintroduced Jan. 4 the Seed Availability and Competition Act (H.R. 193) that would “require persons who seek to retain seed harvested from the planting of patented seeds to register with the Secretary of Agriculture and pay fees set by the Secretary for retaining such seed.”
The fees would be deposited in a “Patented Seed Fund” administered by the secretary for payment to patent holders. Farmers paying the fees would “not be bound by any contractual limitation on retaining such seed, or by any requirement to pay royalties or licensing or other fees, by reason of the patent, for retaining such seed.”
The effect of the bill would essentially be a compulsory licensing of patents owned by Monsanto Co., which has successfully litigated patent infringement cases against farmers who harvest the company's Roundup Ready seeds and replant them in second and subsequent years.
H.R. 193 was referred to both the Agriculture Committee and the Ways and Means Committee, but action on the bill would be a surprise. Kaptur has been fighting for such legislation since 2004, it has been referred to those two committees each time, and there is no record of any activity on the bill in either committee.
The U.S. Supreme Court, however, will be addressing the issue in its current session and could give farmers more relief than would H.R. 193. The case the high court will decide challenges whether the second-generation seed is subject to the patent exhaustion doctrine, such that farmers would be free to replant without infringing.
Monsanto licenses its technology to seed producers, who in turn sublicense it to farmers, under the terms of the Monsanto Technology Agreement. The agreement limits a farmer's planting of seeds to a single season, but the Roundup Ready trait carries forward to each successive seed generation. Monsanto's litigation has generally been to fight instances of seed planting in a second or subsequent season without license payments.
After initial success in a Canadian court, the company won multiple cases against farmers at the Federal Circuit:
• Farmer Homan McFarling was found likely to infringe two patents (U.S. Patent Nos. 5,352,605 and 5,633,435), and he was prohibited in a preliminary injunction from continuing to plant saved Roundup Ready seeds. Monsanto Co. v. McFarling, 302 F.3d 1291, 64 U.S.P.Q.2d 1161 (Fed. Cir. 2002). The farmer had challenged the forum selection clause in the Technology Agreement. Two years later, the court upheld the dismissal of McFarling's antitrust counterclaim and his patent misuse defenses. 363 F.3d 1336, 70 U.S.P.Q.2d 1481 (Fed. Cir. 2004).
• Two years after that, the court also held that the Technology Agreement does not constitute an illegal tying arrangement or patent misuse, in a case covering the '605 patent and three more (Nos. 5,322,938; 5,164,316; and 5,196,525). Monsanto Co. v. Scruggs, 459 F.3d 1328, 79 U.S.P.Q.2d 1813 (Fed. Cir. 2006).
• The '605 patent was again found infringed in 2008, as the appellate court rejected the farmer's argument that plant varieties are only patentable under the Plant Protection Act of 1930 or the Plant Variety Protection Act of 1970, in Monsanto Co. v. David, 516 F.3d 1009, 85 U.S.P.Q.2d 1963 (Fed. Cir. 2008).
• The court held in September 2011 that the result of self-replicating technology--the next generations of harvested seeds--is a “newly infringing article.” Thus, even if the original seed is subject to patent exhaustion after its first sale, replanting the second generation is not. Monsanto Co. v. Bowman, 657 F.3d 1341, 100 U.S.P.Q.2d 1224 (Fed. Cir. 2011).
The Federal Circuit is currently considering one more challenge, this time a declaratory judgment action brought by farmers and organic food organizations. The court heard oral argument on Jan. 10 of an appeal of the U.S. District Court for the Southern District of New York's decision that the plaintiffs lack standing to seek a declaration of patent ineligibility under 35 U.S.C. §101. Organic Seed Growers and Trade Association v. Monsanto Co., 851 F. Supp. 2d 544, 103 U.S.P.Q.2d 1623 (S.D.N.Y. 2012).
The Supreme Court granted the cert petition in Bowman on Oct. 5. Bowman v. Monsanto Co., No. 11-796, review granted Oct. 5, 2012. The grant was a mild surprise after a recommendation by the solicitor general to deny review.
Indiana soybean farmer Vernon Hugh Bowman is appealing the Federal Circuit's ruling described above.
According to the petition, Monsanto has exhausted its patent rights after an authorized sale “for their natural and foreseeable purpose--namely, for planting.” Should the Federal Circuit's ruling stand, the petition said, this would create an exception to the patent exhaustion doctrine for self-replicating technologies.
The high court will hear oral argument in the case on Feb. 19.
By Tony Dutra
Text of the bill can be found at: http://pub.bna.com/ptcj/HR19313Jan4.pdf.
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