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Organic Seed Growers and Trade Association Et al v Monsanto The Public Patent Foundation Takes on Agricultural Biotechnology

Organic Seed Growers and Trade Association Et al v Monsanto The Public Patent Foundation Takes on Agricultural Biotechnology

The Public Patent Foundation (PubPat), housed at the Cardozo School of Law in New York, is probably best known to readers of this blog for its role in the challenge to Myriad gene patents in AMP v. PTO (PubPat is co-counsel, along with the ACLU). PubPat has brought a number of other "public interest" actions against other patents, including reexamination of some of the key University of Wisconsin embryonic stem cell patents.

On March 29 PubPat took on agricultural biotechnology, filing a declaratory judgment action in the Southern District of New York against Monsanto, on behalf of a large contingent of plaintiffs, including agricultural member organizations, farms and farmers, and seed companies. The plaintiffs are primarily, but not entirely, organic, and all have purportedly have disavowed the use of genetically modified seed.

The primary contention of the plaintiffs is that they "are increasingly being threatened by transgenic seed contamination despite using their best efforts to avoid it." The allege that Monsanto "has aggressively asserted [its patents] against literally hundreds of farmers, including those farmers who became contaminated by Monsantos transgenic seed through no fault of their own." They have asked the court to declare a long list of Monsanto patents invalid, unenforceable, and not infringed, and that Monsanto would not be entitled to any remedies against the plaintiffs even if found to infringe a valid and enforceable patent.

Interestingly, I was talking with someone who works for Monsanto recently and he mentioned that to his knowledge the complaint had never been served upon Monsanto. I checked PACER on June 1, and the docket indicates that PubPat has yet to file notice that the complaint was served on Monsanto, even though the complaint was filed more than two months ago (March 29). For comparison, in the Myriad case notice of service on the plaintiffs was filed within one month after the complaint was filed.

Do the Plaintiffs Have Standing?

Perhaps the biggest stumbling block for PubPat will be establishing that any of the plaintiffs have standing to bring suit (a big issue in the Myriad lawsuit). The standing of the plaintiffs seems even more problematic in this case, since the plaintiffs all avow that they are doing everything they can to avoid infringing Monsantos patent, and there appears to be no evidence that Monsanto has ever filed suit against an involuntary/inadvertent infringer. The complaint filed by PubPat makes this allegation, but does not document a single example of a case where a party was sued for infringement that was involuntary. The closest it comes is a reference to a 2008 segment of the CBS Evening News, which the complaint alleges described an incident in which farmers (Mr. and Mrs. Runyon), "who never intended to use transgenic seeds," were threatened with a patent infringement suit (but apparently never sued).

The complaint also alleges that Monsanto has litigated patent infringement claims against other farmers who did not want to be contaminated by transgenic seeds, including notably Percy Schmeiser. Schmeiser has become something of a folk hero, a Canadian farmer who was sued by Monsanto for patent infringement in a case that was eventually decided by the Canadian Supreme Court. Critics of Monsanto in the popular media routinely point to Schmeiser as an example of a honest Canadian farmer sued by corporate villain Monsanto for patent infringement that was completely involuntary and inadvertent, while failing to note that the Canadian courts found unambiguously that Schmeiser’s infringement was in fact voluntary, and that he went out of his way to collect and plant transgenic seed incorporating the patented Monsanto trait. Here are some excerpts from the Canadian Supreme Court decision [Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34, [2004] 1 S.C.R. 902]:

The remaining question was how such a pure concentration of Roundup Ready Canola came to grow on the appellants’ land in 1998. The trial judge rejected the suggestion that it was the product of seed blown or inadvertently carried onto the appellants’ land . . .

Invoking the concepts of implied licence and waiver, the appellants argue that this Court should grant an exemption from infringement to “innocent bystanders”. The simple answer to this contention is that on the facts found by the trial judge, Mr. Schmeiser was not an innocent bystander; rather, he actively cultivated Roundup Ready Canola.

Given the issues of standing, one has to wonder why PubPat has chosen the declaratory judgment route to challenge Monsantos patents. After all, PubPat asserts that Monsanto has aggressively asserted its patents against "literally hundreds of farmers," including farmers whose only offense was to have their crops contaminated by Monsantos seed. In the Myriad case, the ACLU and PubPat were forced to assemble a group of plaintiffs and file a declaratory judgment action, because for years Myriad has disappointed its critics by never suing anyone for infringing its gene patents. But that is not the case with Monsanto, which I believe has filed patent infringement suits against farms numbering in the hundreds.

Why isnt PubPat defending one of these farmers that has already been sued? This would give PubPat the opportunity to challenge the Monsantos patents, without any issue of standing. Perhaps they find it is preferable to conduct "public interest litigation" on behalf of recruited plaintiffs rather than actual defendants potentially liable for damages.

In fact, at least one farmer is currently before the Federal Circuit arguing one of the legal theories raised in the PubPat complaint, i.e., that "Monsantos patent rights in transgenic seed exhaust upon the authorized distribution by Monsanto to its customers." In 2009, a district court in the Southern District of Indiana rejected this very argument in Monsanto v. Bowman, citing earlier Federal Circuit decisions in Monsanto v. Scruggs and Monsanto v. McFarling. Mr. Bowman argued unsuccessfully that he should not be held liable for infringement based on the use of "commodity" soybean seed he had purchased and that inadvertently included seed containing the patented Roundup Ready trait. The district court decision indicates that Mr. Bowman argued the case as a pro se defendant, but the appeal briefs being filed with the Federal Circuit this year indicate that he is currently being represented by Frommer Lawrence & Haug LLP.

Below, I briefly address some of the arguments raised in the PubPat complaint, including moral utility, exhaustion and inadvertent infringement.

Moral Utility

Historically, US law had a doctrine of moral utility, under which a patent could be found invalid if the claimed invention lacks sufficient social or moral use. The doctrine traces its origin to a statement by Justice Story in the 1817 Lowell v. Lewis decision to the effect that inventions that are "injurious to the well-being, good policy, or sound morals of society" are unpatentable. Examples provided by Justice Story included "a new invention to poison people, or to promote debauchery, or to facilitate private assassination."

Although technically still on the books, the doctrine of moral utility has generally been considered moribund in the US since the 1999 Federal Circuit decision in Juicy Whip v. Orange Bang, which essentially held that patent law is not the appropriate legal vehicle for addressing questions of morality. I think this is the proper approach. For example, I would rather not have the patent office deciding whether or not a gambling invention is patentable based on the morality or social utility of gambling. A patent does not confer any positive right to practice in invention, only the right to exclude others from practicing it, so the patent would in no way shields the patent owner from anti-gambling laws, which is the more appropriate way to address morality or social concerns associated with gambling.

European patent law, on the other hand, explicitly provides that inventions that are "immoral and against the public order" are patent ineligible. The European High Court is currently considering a case challenging the patent eligibility of embryonic stem cells based on allegations that the use of viable human embryos in the industrial process of producing cultured embryonic stem cells is immoral. The Courts advocate general has in fact put forth such a position, as discussed recently on the Patent Docs blog.

I cannot imagine PubPat prevailing on this theory. The doctrine of moral utility has generally been considered pretty much irrelevant after Juicy Whip, but even if the doctrine still has some teeth, there is a wealth of data supporting the benefits of transgenic crops, which explains why they have been so widely adopted in the US, and increasingly throughout the world. The PubPat complaint goes to great lengths reciting a host of alleged evils of agricultural biotechnology, and asserts that transgenic crops have failed to provide any benefits, citing authorities such as Englands Prince Charles, but I think this flies in the face of a wealth of evidence going the other direction.

Patent Exhaustion

As mentioned above, PubPat alleges that Monsantos patent rights in transgenic seeds are exhausted by their first authorized sale, presumably relying on the Supreme Courts 2009 Quanta decision. This was one of the main concerns that I raised regarding Quanta, i.e., the potential for the decision to preclude the ability of biotechnology companies to adequately enforce patents covering products capable of self-replication.

Prior to the Supreme Court deciding Quanta, the Federal Circuit held in Monsanto v. Scruggs (2006) that patent exhaustion did not shield from infringement liability a farmer who saved and replanted patented seeds without Monsantos authorization because (1) the initial sale from Monsanto was not an “unrestricted sale” and (2) the second generation of seeds were never “sold.” Scruggs filed a petition for certiorari with the Supreme Court, which was denied. The case was remanded to the district court, where Scruggs moved for reconsideration in light of the Supreme Courts decision in Quanta. The district court denied the motion, but certified the issue for interlocutory appeal to the Federal Circuit, to resolve the question of whether the Federal Circuits decision regarding patent exhaustion in Monsanto v. Scruggs was still good law in view of Quanta. But in 2009 the Federal Circuit exercised its discretion and declined to decide the interlocutory appeal, advising Scruggs to appeal the issue after the district court issues a final decision or injunction.

Thus, the question of whether the Federal Circuit decision in Monsanto v. Scruggs regarding patent exhaustion of transgenic seeds survives Quanta has yet to be resolved. The Federal Circuit could address the issue in Monsanto v. Bowman, or perhaps in the PubPat lawsuit if it goes forward.

Inadvertent Infringement

At a doctrinal level, for me perhaps the most interesting argument raised by PubPat is that the plaintiffs are not liable for infringement because any infringement would be involuntary and inadvertent, the result of contamination by transgenic seed used by other farmers. To my knowledge, this issue has never been directly addressed by the courts, and as a practical matter I doubt that Monsanto has sued farmers for legitimate good-faith but inadvertent infringement. As noted above, the PubPat complaint does not appear to identify any specific occurrence of this, and the widely propagated story that Schmeiser was a good-faith inadvertent infringer is contrary to the findings of the Canadian courts.

But how would a court deal with involuntary and inadvertent infringement if the issue ever did arise? It is well-established that, as a general matter, patent infringement is a matter of strict liability, i.e., intent is not an element of patent infringement. However, I am convinced that a court faced with a true case of inadvertent infringement would find some doctrinal loophole to shield the alleged infringer from liability. However, there is to my knowledge no specific doctrinal defense addressing the issue.

For example, in Monsanto v. Schmeiser, the Canadian Supreme Court indicated that if Schmeiser’s infringement had been inadvertent he would not have been liable for infringement, because under such circumstances his mere possession of patented seeds would not lead to a presumption that he had "used" the seeds in an infringing manner.

In the US, the issue of inadvertent infringement was addressed in the fascinating case of SmithKline Beecham v. Apotex, 403 F.3d 1331 (2005), which involved allegations that a generic drug manufacturer would not be able to produce a non-infringing generic drug without inadvertently producing an infringing polymorph of the drug, thus involuntarily infringing the patent. At the district court level, the decision was written by Judge Posner, a famous judge on the Seventh Circuit Court of Appeals, sitting by designation for this case as a district court judge. Judge Posner noted the policy concern attendant to holding an inadvertent infringer liable for patent infringement, and spent a great deal of time grappling with the question of how existing patent doctrine could be interpreted in a manner to arrive at the outcome, i.e. no liability for inadvertent infringement.

Here is an excerpt from Judge Posners opinion in SmithKline Beecham v. Apotex, 247 F.Supp.2d 1011 (2003):

The reason for excusing the alleged infringement in this case is not that Apotex stole only a little hemihydrate from SmithKline. It stole nothing from SmithKline. It doesnt want hemihydrate, and it derives no value from the hemihydrate that it unavoidably creates and “sells.” If it made hemihydrate deliberately, or if it took advantage of 100 percent conversion to obtain a product that had hemihydrates superior handling characteristics, that would be theft and it would be nonsense to point out that paroxetine is only 10 percent of the pill by weight. But if the person sitting next to me at dinner spills his soup on my sleeve, I am not a thief even though I cannot remove the stain.

On appeal, the Federal Circuit rendered the question of inadvertent infringement moot by invalidating the SmithKline patent for inherent anticipation. However, in a concurring opinion Judge Gajarsa addressed the issue of inadvertent infringement, in a manner that would probably resonate with PubPat and other opponents of patents on transgenic seeds. Judge Gajarsa essentially advocated a position that the issue of inadvertent infringement could be dealt with in situations such as this by recognizing that any product capable of being "spread and reproduced by natural processes" is patent ineligible under 35 USC 101. I think this assertion is incorrect, and would be inconsistent with the Supreme Courts decision in Diamond v. Chakrabarty, which explicitly found genetically modified living organisms to be patent eligible.

Nevertheless, here are some excerpts from Judge Gajarsa’s concurrence:

The asserted breadth of Claim 1 makes sense only under the erroneous belief that patents may protect products spread and reproduced by natural processes, directly contradicting our well established understanding of the limits imposed by section 101. Given current scientific trends, such a belief could easily lead to misdirected research investments, to inappropriately issued patents, and to a widespread in terrorem effect crippling entire industries whose artisans learn that even their best efforts to respect patent rights may not save them from liability as inadvertent, inevitable infringers. As the district court recognized, the notice function of patents is meaningless in such an environment, SK II, 247 F.Supp.2d at 1028. The lack of suitable notice could easily chill innovation, inquiry, experimentation, and commercial development. The patent law does not sanction the concept of inevitable infringement.
. . .

Consider, for example, what might happen if the wind blew fertile, genetically modified blue corn protected by a patent, from the field of a single farmer into neighboring cornfields. The harvest from those fields would soon contain at least some patented blue corn mixed in with the traditional public domain yellow corn-thereby infringing the patent. The wind would continue to blow, and the patented crops would spread throughout the continent, thereby turning most (if not all) North American corn farmers into unintentional, yet inevitable, infringers.FN7 The implication-that the patent owner would be entitled to collect royalties from every farmer whose cornfields contained even a few patented blue stalks-cannot possibly be correct. The underlying question that engaged the district court, and that led it to develop numerous alternative holdings, is why this implication is incorrect.

FN7. Although intent is not a factor in determining infringement, public notice is required as a predicate to the validity of a patent. Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 n. 2 (Fed.Cir.1996). The hypothetical causes unavoidable infringement even in situations where the public would, in good faith, want to avoid infringing.

At oral argument, when faced with this hypothetical, SKB expressed its belief that such a blue-corn patent would be “very strong.” Such a belief is misplaced. The implicit concept of “inevitable infringement” stems from the inevitable failure of the patent to provide public notice-which, in turn, stems from the inherently unpatentable nature of the claimed subject matter.

This section 101 problem therefore brings us full circle, back to the impossibility of public notice. Under normal circumstances, inventors other than the patentee will understand how to avoid infringing a patent by avoiding the claimed product. Because products, such as our hypothetical blue corn or SKBs paroxetine hemihydrate, that can be “made” through a natural process of spontaneous conversion imply inevitable infringement, no combination of claim language and written description could possibly teach even one skilled in the art how to avoid infringement. It is unsurprising that a requirement considered so trivial for most patentable products that we are content to let it remain implicit, namely a lesson in infringement avoidance, is effectively impossible for subject matter unpatentable under section 101. In short, patent claims drawn broadly enough to encompass products that spread, appear, and “reproduce” through natural processes cover subject matter unpatentable under section 101-and are therefore invalid.

It will be interesting to see how the PubPat challenge to Monsanto, and the patenting of Arab cultural biotechnology in general, plays out.

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