MONSANTO v. SCHMEISER
The U.S. Perspective
78TH IPIC ANNUAL MEETING
October 14 – 16, 2004
Bruce C. Haas
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35 U.S.C. § 101
•Whoever invents or discovers any new and useful
process, machine, manufacture, or composition of
matter, or any new and useful improvement thereof, may
obtain a patent therefor, subject to the conditions and
requirements of this title.
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The U.S. Supreme Court has concluded that
living things are patentable under 35 U.S.C. §
101
•In J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l Inc., 534
U.S. 124, 145 (2001), the Supreme Court held that a
newly disclosed plant breed falls within the subject
matter of 35 U.S.C. § 101.
– Over 2000 U.S. utility patents directed to plants had
issued between Diamond v. Chakrabarty, 447 U.S. 303
(1980) and J.E.M. Ag Supply.
– The Court in J.E.M. Ag Supply affirmed the broad
applicability of Chakrabarty.
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– The Court found no irreconcilable differences
between the different forms of protection for plants
available in the U.S.
– The Court addressed post-sale restrictions.
Specifically, what can farmers do with seeds of the
patented plant after purchase.
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•The Plant Variety Protection Act (PVPA) and Plant
Patent Act (35 U.S.C. §§ 161-164) also can provide
protection in the U.S., but these protections do not
override § 101.
•Due to the more stringent requirements to obtain a
utility patent (applicant must present a new, useful, nonobvious invention and meet the requirements of 35
U.S.C. § 112), utility patent holders receive greater
benefits than provided by either the Plant Patent Act or
the PVPA.
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PLANT PATENT ACT
•In U.S., patent protection is available under the Plant
Patent Act for asexually reproduced plants (those
produced from cuttings or grafts (not grown from seeds)
(35 U.S.C. §§ 161-164).
– Limited to distinct and new plant varieties.
– Single claim to the plant as shown and described.
– Limited applicability – grants rights to exclude
others from asexually reproducing the plant, and
from using, offering for sale, or selling the plant so
reproduced (35 U.S.C. § 163).
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PLANT VARIETY PROTECTION ACT
•In 1970, U.S. Congress enacted the Plant Variety Protection
Act.
•The PVPA confers protection to sexually reproduced plants
that are new, distinct, uniform and stable (7 U.S.C. §
2402(a)).
•The PVPA permits a plant breeder to protect seed crops with
a certificate of plant variety protection from the Secretary of
Agriculture. This certificate grants the breeder the right to
exclude others from selling the variety, or offering it for sale,
or reproducing it for 20 years (7 U.S.C. § 2483).
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PLANT VARIETY PROTECTION ACT
(Cont.)
•The PVPA contains a “crop exemption” allowing
– A farmer to save seed for replanting.
“[I]t shall not infringe any right hereunder for a
person to save seed produced by a person from
seed obtained, or descended from seed obtained,
by authority of the owner of the variety for
seeding purposes and use such saved seed in the
production of a crop for use on the farm of the
person . . .” (7 U.S.C. § 2543).
•The PVPA also contains a “research exemption” (7
U.S.C. § 2544).
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•In the U.S., the holder of a certificate of plant variety
protection cannot use that certificate to prevent a farmer
from saving seed.
•However, in the U.S., one can also obtain a Utility
Patent claiming a plant or living thing under 35 U.S.C. §
101. See Diamond v. Chakrabarty, 447 U.S. 303 (1980);
J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l Inc., 534 U.S.
124 (2001).
•Patentability depends on not whether the thing is living
– but whether it is a human-made invention, whether
living or not. J.E.M. Ag Supply, 534 U.S. at 130.
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•By enacting the PVPA, Congress never intended to
exclude the possibility of plants being claimed in utility
patents.
•A U.S. utility patent affords the possibility of a claim
directed to a plant, unlike in Canada.
•In the U.S., the holder of a utility patent claiming a
plant and a PVPA certificate may sue for infringement
for post sale products without being restricted by the
PVPA exemptions. See Monsanto Co. v. McFarling, 302
F.3d 1291, 1299 (Fed. Cir. 2002); 363 F.3d 1336, 1344
(Fed. Cir. 2004).
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•Monsanto Co. v. McFarling, 302 F.3d 1291, 1299 (Fed. Cir.
2002)
– “It is thus established that the right to save seed of
plants registered under the PVPA does not impart
the right to save seed of plants patented under the
Patent Act.”
•Monsanto Co. v. McFarling, 363 F.3d 1336, 1344 (Fed.
Cir. 2004)
– “In light of the Supreme Court’s interpretation of
Congress’s intent, we conclude that Congress did
not intend to prohibit owners of utility patents from
enforcing seed-saving prohibitions in their licenses.”
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•Monsanto Co. v. Scruggs, 249 F. Supp.2d 746, 756-757
(N.D. Miss. 2001)
– “[T]he PVPA is no impediment to the enforceability
of … patents.” Id. at 756.
– “[E]ven if it were shown that Monsanto obtained
PVPA certificates for its [patented] seeds and plants,
the Federal Circuit’s decision in the Pioneer Hi-Bred
case all but dictates the conclusion that the
additional protections afforded Monsanto by virtue
of the United States patent laws permit it to
determine, within the confines of reason, how best
to offer its patented discoveries for sale or use by
others.” Id. at 757.
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The Common U.S. and Canadian Question
When can a patentee (of a plant, seed or gene) place
post-sale restrictions on the sale of the patented
product?
• Monsanto was able to succeed against Schmeiser
based on its Canadian patent directed to a
gene/cell.
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• In Canada, despite the lack of utility patents for
plants, the Schmeiser case holds that a patentee can
protect plants regenerated from patented cells.
“Whether or not patent protection for the gene and
the cell extends to activities involving the plant is
not relevant to the patent’s validity.” Monsanto v.
Schmeiser, 2004 SCC 34 at ¶24.
– Saving and planting seed, then harvesting and
selling plants that contained the patented cells and
genes, constitute “utilization” of the patented
material within the meaning of s. 42 of the Patent
Act. Id. at ¶69.
– The same result would likely occur in the U.S. if
Monsanto had a patent to the plant, gene or cell.
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• In the U.S., utility patent claims can also restrict
post-sale activity. See J.E.M. Ag Supply, Inc. v. Pioneer
Hi-Bred Int’l Inc., 534 U.S. 124 (2001).
• In the U.S., courts have found that “bag tags” (like
shrink wrappers) can effectively license “one time
use” of plants or seeds. See Pioneer Hi-Bred Int’l, Inc.
v. Ottawa Plant Food, Inc., 283 F. Supp.2d 1018,
1035-1049 (N.D. Iowa 2003).
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•Pioneer Hi-Bred Int’l, Inc. v. Ottawa Plant Food, Inc., 283 F.
Supp.2d 1018, 1035-1049 (N.D. Iowa 2003)
– “The court [found] that the meaning of the clear,
unambiguous language of the bag labels at issue in
this case is that the only right granted to a buyer was
the right to use the seed to produce forage or grain,
thereby reserving all other rights to the patentee,
including the right to sell or resell.” Id. at 1039.
– “The bag label and bag tag unambiguously grant only
a right to use the seed … to produce grain or forage;
the label and tag unambiguously do not grant a buyer
the right to resell [patented] seed.” Id.
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•In the U.S. it has been found that “mistaken planting” of
patented seeds is not a defense to patent infringement (Monsanto
v. Dawson, 2000 WL 33953542, *2 (E.D. Mo., Nov. 24, 2000)).
•“Lack of knowledge” of post sale restrictions or patent coverage is
not a defense to patent infringement in the U.S. (Monsanto v.
Hartkamp, 2001 WL 34079482, *2 (E.D. Okla., April 19, 2001)).
•“Lack of any formal execution” of a one-time limited license is
not a defense to patent infringement in the U.S. (Monsanto v.
Scruggs, 249 F.Supp 2d 746, 754 (N.D. Miss. 2001)).
•“Lack of intent” is not a defense to patent infringement in the
U.S. (Monsanto v. Roman, 2004 WL 1107671, *9 (N.D. Tex., May
17, 2004); See also, Monsanto v. Hartkamp).
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In the U.S., there is tension between the
doctrine of patent exhaustion and one-time
use restrictions
•The premise of the doctrine of patent exhaustion is that
the first sale by a patentee of an article embodying his
invention exhausts his patent rights in the article. See
Bangad, Inc. v. Al Bolser's Tire Stores, Inc., 750 F.2d 903,
924 (Fed.Cir.1984), citing United States v. Univis Lens Co.,
316 U.S. 241, 250-52 (1942).
•While the doctrine might appear to benefit an accused
infringer, the Federal Circuit and the district courts have
held that the restrictions in licensing agreements against
using patented seeds or plants to produce additional
seeds for planting do not violate the patent exhaustion
and first sale doctrines.
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•Monsanto Co. v. McFarling, 302 F.3d 1291 (Fed. Cir.
2002).
– The Federal Circuit Court held that Monsanto’s
licensing agreements prohibiting saving seeds did
not violate the doctrines of patent exhaustion and
first sale because the restrictions in the agreements
were within the scope of Monsanto’s patent rights.
Id. at 1298.
– The Court reasoned that “[t]he ‘first sale’ doctrine
of exhaustion of the patent right is not implicated,
as the new seeds grown from the original batch had
never been sold” and that “[t]he original sale of the
seeds did not confer a license to construct new
seeds.” Id. at 1299.
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•Monsanto Co. v. Scruggs, 249 F. Supp.2d 746, 756-757
(N.D. Miss. 2001); 2004 WL 1535690, *11 (N.D. Miss.,
July 6, 2004).
– The Court held that Monsanto’s single use
restriction was valid because it falls within the patent
grant (relates to subject matter within the scope of
the patent claims).
– The Court found that Monsanto never made an
unrestricted sale of its seed technology. Since
Monsanto never made an unrestricted sale of its
technology, the Court ruled that “the doctrine of
first sale/patent exhaustion afford [sic] no protection
to the [defendants].” 2004 WL 1535690, *11.
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•Monsanto Co. v. Trantham, 156 F. Supp.2d 855, 869-870
(W.D. Tenn. 2001)
– The Court ruled that the doctrine of exhaustion did
not bar Monsanto’s claims for patent infringement
because the sale of Monsanto’s patented gene
technology was “expressly conditioned on the
signing of the restrictive licensing agreement that
prohibits the saving of seed and restricts the use of
the seed to a single growing season.”
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•Pioneer Hi-Bred Int’l, Inc. v. Ottawa Plant Food, Inc., 283 F.
Supp.2d 1018, 1031-1035 (N.D. Iowa 2003)
– The Court granted summary judgment for the
patentee because “there was no ‘first’ unconditional
sale.” Id. at 1034.
– The Court reasoned that “in the face of undisputed
evidence that the sales were conditional, the ‘patent
exhaustion’ defense is simply inapplicable as a
matter of law.” Id. at 1033.
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A U.S. court faced with the Schmeiser facts
would likely find the same way
•U.S. courts would have no problem with the scope of
Monsanto’s utility patent.
•Likely that a U.S. court would find that collecting, saving
and planting seeds containing Monsanto’s patented gene
and cell would constitute a “use” under 35 U.S.C. §
271(a). See Monsanto v. Swann, 308 F. Supp.2d 937, 941
(E.D. Mo. 2003).
•Lack of knowledge or intent is not a defense to patent
infringement. Intent only goes to willful infringement
and damages.
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•Damages issues could differ.
– U.S. courts may be more inclined to award actual
damages based on number of bags of seeds saved
and replanted (Monsanto v. McFarling, 363 F.3d
1336, 1352 (Fed. Cir. 2004)).
– Since the Canadian Supreme Court does not focus
on Schmeiser’s intent or knowledge in determining
the appropriate remedy, it is unclear whether a U.S.
court would have awarded damages differently.
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