By Kevin E. Noonan —

The
tendency for members of the House of Representatives to exhibit ignorance of
the patent system, so amply demonstrated in the "debate" over H.R.
6621 at the end of the last Congress (see "Congressional Misunderstandings (Apparently) Motivate H.R. 6621"), persists in the 113th
Congress.  The most recent example is
H.R. 193, the ''Seed Availability and Competition Act of 2013''
introduced on January 4th by Representative Marcy Kaptur, D-OH
(9th District, which includes Toledo).  The seeming intent of the bill is to
substitute government bureaucrats from the Departments of Agriculture and the
Treasury for private patentees in enforcing patents on genetically engineered
seed.  In addition to amounting to a
compulsory license, Rep. Kaptur has evidently never considered that, sometimes,
the scariest sentence in the English language is "I'm from the Federal
government, and I'm here to help."  This is not surprising; Rep. Kaptur was recently elected to her 15th
term, and her background is not in patent law or agriculture:  her professional
training is in urban planning.

The bill requires "persons [farmers] 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, and for other purposes."  Specifically, any farmer who plants patented seed or
seed "derived from" patented seed to retain the seed for replanting
is subject to two requirements.  The farmer
must submit a notice to the Secretary of Agriculture of the intent to retain
patented seed for replanting, (§ 2(a)(1)) and to pay a fee
established by the Secretary and dependent on the "type and quantity"
of seed that can be retained and "any other information" the
Secretary determines to be "appropriate" (§ 2(a)(2)).  The fee is paid to the Federal government (§ 2(b)) and
deposited into a "Patented Seed Fund" established in the Treasury (§ 2(e)(1)(2)).  The fees will
be refunded to any farmer who can establish that, after paying the fees,
natural disaster or "related" circumstances prevented them from
replanting the seed (§ 2(c)).

The
monies collected from the farmers is then paid to the patent holders by the
goverment (§ 2(d)).  The motivation for all these
seeming legal and economic inefficiencies finally becomes evident in § 2(f), which provides that any farmer who complies with the
provisions of the bill (if enacted) "shall not be bound" by any
contractual, patent royalty, or licensing fees.

Not wishing to be considered
un-American, Rep. Kaptur (at left) included in the bill a provision (§ 3) whereby the Treasury Department will collect a tariff
amounting to the difference between the royalties or licensing fees imposed
upon purchasers of patented seed in the U.S. and any lower royalties or
licensing fees paid by purchasers of patented seeds in a foreign country and
then imported into the U.S.  Those
tariffs are paid into the Patented Seed Fund, presumably for payment to patent
holders who have negotiated the lesser fees in the foreign country in the first
place.

It is hard to know where to
begin.  Clearly the political controversy
engendered by the many patented seed cases brought by patentees against farmers
over the past decade, and the recent kerfuffle produced by the Public Patent
Foundation in its suit on behalf or "organic" farmers came to Rep.
Kaptur's attention.  And in some ways
this is a classic "split the baby" result, where the government (and
its sensitivity to political considerations) can determine the "appropriate"
royalty for replanted seed and distribute it to the patent holders.  The tariff provisions might also be seen as a
boon to those patentees who were unable to obtain royalties or patent licensing
fee abroad commensurate with the fees they collect from U.S. farmers.

But in reality, of course,
the bill imposes a compulsory license on holders of genetically engineered seed
patents, who have resisted the political pressure to permit farmers to replant
seed instead of purchasing seed for each planting.  Although this has imposed legal and public
relations costs on these patentees, the patent grant permits them to impose
these restrictions (unless and until the Supreme Court decides otherwise in Bowman v. Monsanto).  But regardless of which side has the better policy
argument in that debate, Rep. Kaptur's bill is not a remedy required by the
politics or economics of the situation.  Indeed, it would just impose another
government bureaucracy on U.S. agriculture that would not promote either
agriculture or technological progress.

The bill has been referred to
the House subcommittee on Rural Development, Research,
Biotechnology, and Foreign Agriculture for further consideration.

Text
of the bill:

A BILL

To 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, and for
other purposes.

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.


This Act may be cited as the ''Seed Availability
and 5 Competition Act of 2013''.

SEC.
2. RETAINING PATENTED SEED.

    (a) REGISTRATION.—Any person who plants patented
seed or seed derived from patented seed may retain seed from the harvest of the
planted seed for replanting by that person if that person—
        (1) submits to the Secretary of Agriculture notice,
in such form as the Secretary may require, of the type and quantity of seed to
be retained and any other information the Secretary determines to be appropriate;
and
        (2) pays the fee established by the Secretary pursuant
to subsection (b) for the type and quantity of seed retained.
    (b) FEES.—The Secretary of Agriculture shall establish
a fee to be paid by a person pursuant to subsection (a)(2) based on the type
and quantity of seed retained.  The Secretary shall deposit amounts
collected pursuant to subsection (a)(2) in the Patented Seed Fund established
under subsection (e)(1).
    (c) REFUNDS.—The Secretary of Agriculture may refund
or make an adjustment of the fee paid pursuant to subsection (a)(2) when the
person is unable to plant or harvest the retained seed as a result of a natural
disaster or related condition and under such other circumstances as the
Secretary considers such refund or adjustment appropriate.
    (d) DISTRIBUTIONS.—The Secretary of
Agriculture shall pay the collected fees to the appropriate patent holders, at
a frequency that the Secretary determines is appropriate, from the Patented
Seed Fund established under subsection (e)(1), taking into consideration the
possibility of refunds pursuant to subsection (c).
    (e) PATENTED SEED FUND.—
        (1) ESTABLISHMENT.—There is established in the
Treasury of the United States a fund to be known as the ''Patented Seed Fund'',
consisting of such amounts as may be received by the Secretary and deposited
into such Fund as provided in this section.
        (2) ADMINISTRATION.—The Fund shall be administered
by the Secretary of Agriculture and all moneys in the Fund shall be distributed
solely by the Secretary in accordance with this section and shall not be
distributed or appropriated for any other purpose. Amounts in the Fund are
available without further appropriation and until expended to make payments to
patent holders.
    (f) INAPPLICABILITY OF CONTRACTS AND PATENT FEES.—A person who retains seed under
subsection (a) from the harvest of patented seed or seed derived from patented
seed shall 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.
    (g) DEFINITION.—In this section, the term ''patented
seed'' means seed for which a person holds a valid patent.

SEC. 3. TARIFF ON CERTAIN IMPORTED PRODUCTS.

    (a) TARIFF.—In any case in which—
        (1) genetically modified seed on which royalties or
licensing or other fees are charged by the owner of a patent on such seed to
persons purchasing the seed in the United States is exported, and
        (2) no such fees, or a lesser amount of such fees,
are charged to purchasers of the exported seed in a foreign country, then there
shall be imposed on any product of the exported seed from that foreign country
that enters the customs territory of the United States a duty determined by the
Secretary of the Treasury, in addition to any duty that otherwise applies, in
an amount that recovers the difference between the fees paid by purchasers of
the seed in the United States and purchasers of the exported seed in that
country.
    (b) DEPOSIT OF DUTIES.—There shall be deposited in
the Patented Seed Fund established under section 2(e)(1) the amount of all
duties collected under subsection (a) for distribution to the appropriate
patent holders in accordance with section 2(d).
    (c) DEFINITIONS.—In
this section—

        (1) the term ''genetically modified seed'' means any seed that
contains a genetically modified material, was produced with a genetically
modified material, or is descended from a seed that contained a genetically
modified material or was produced with a genetically modified material; and
        (2) the term ''genetically modified material''
means material that has been altered at the molecular or cellular level by
means that are not possible under natural conditions or processes (including
recombinant DNA and RNA techniques, cell fusion, microencapsulation,
macroencapsulation, gene deletion and doubling, introducing a foreign gene,
and changing the positions of genes), other than a means consisting exclusively
of breeding, conjugation, fermentation, hybridization, in vitro fertilization,
tissue culture, or mutagenesis.