By Kevin E. Noonan —

The
Supreme Court heard oral argument today in Bowman v. Monsanto Co., with Mark P.
Walters representing Farmer Bowman, Seth Waxman representing Monsanto, and
Melissa Arbus Sherry representing the Department of Justice.  While Supreme Court tea-leaf reading is a
fool's game, consideration of the questions from the Justices can at least
provide a diverting pastime while we await the Court's decision.

The
Chief Justice asked the first question from the bench and got right to the
point:  "Why in the world would
anybody spend any money to try to improve the seed if as soon as they sold the
first one anybody could grow more and have as many of those seeds as they want?"  Mr. Walters answered that while he agreed no
one would do that, he didn't think that was the situation before the Court
because Monsanto could protect its investment through contract.  The Chief Justice persisted, asking how that
was different from any patented article, and when Mr. Walters agreed, the Chief
concluded by stating:  "So the patent system is based, I think, on the
recognition that contractual protection is inadequate to encourage invention."  Mr. Walters countered that patent policy also
exists to "protect the purchaser," and "any" farmer who
grows soybeans infringes Monsanto's patents.  Justice Scalia took issue with this characterization, saying "I
thought that their claim is he only violates the patent if he tries to grow additional
seeds from his first crop.  Right?  Isn't that the only claim here?"  But Mr. Walters (mis)characterized Monsanto's
position to be that Monsanto can control how the seed was used even after it is
sold.

This argument did not hold
water for Justice Scalia:

No, not that seed.  It's different seed.  That
seed is done.  It's been planted in the ground and has grown other seed.  It's
the other seed we are talking about.  It's not the very seed that was sold.  Right?

Mr.
Walters was not deterred; he responded that "if exhaustion is eliminated, rather,
for the progeny seed, then you are taking away the ability of people to
exchange these goods freely in commerce.  You have essentially a servitude on these things that are exchanged, and every
grain elevator who makes a sale is infringing."  Justice Kennedy then agreed that this may be
Monsanto's argument, and says that he had "great difficulties
characterizing it that way."  "But
Monsanto can still prevail if you say that there's a patent infringement if he
plants it for seed and uses the seed to replant.  That's not as far as Monsanto
goes, but it seems to me it's one way to characterize their argument and to
make it sensible," according to Justice Kennedy.

Justice
Breyer distinguished Petitioner's argument regarding restrictions on sale of commodity
seed by stating:  "No, but you are allowing him to use those seeds for
anything else he wants to do.  It has nothing to do with those seeds.  There are
three generations of seeds.  Maybe three generations of seeds is enough" (echoing Justice Oliver Wendel Holmes' infamous statement from Buck v. Bell).  Returning to this generational analogy,
Justice Breyer characterized the situation as:

[H]e [Farmer
Bowman] can do what he wants with the first generation.  Anything he wants.  And moreover, when he buys
them from Monsanto, he can make new seeds.  He can make generation two, because
they've licensed him to do it.  Here, he
buys generation two.  Now, he can do what he wants with those seeds.  But I'll
tell you, there is a problem, because the coming about of the third generation
is itself the infringement.  So the second generation seeds have nothing to do
with it.  If he went into a room and had a box that he bought from a lab and he
put rocks in it and he said, hocus-pocus and lo and behold out came the third generation
of seeds, he would have infringed Monsanto's patent with that third generation,
would he not?

Mr. Walters responded with a
succinct "No."  After attempting to clarify his hypothetical, Justice
Breyer said that "You know, there are certain things that the law prohibits.  What it
prohibits here is making a copy of the patented invention.  And that is what he
did.  So it's generation 3 that concerns us.  And that's the end of it."  When Mr. Walters attempted to make his
argument on the lack of distinction between "making" and "using,"
Justice Ginsberg noted that "you said making or use and it isn't an
either-or thing then.  . . .  You can use the seed to make new seeds.  So use and make
aren't — it's not either you use it or you make it.  You can use it to make a
new item."  Mr. Walters stated in
response that making new seed was the "point" of the invention and
thus constituted an exhausted use.  Justice
Breyer returned to the colloquy with the following:

I'm still not getting the answer.  I'm going
to try once more.  Now, when you buy generation 2, well, there are a lot of
things you can do with it.  You can feed it to animals, you can feed it to your
family, make tofu turkeys.  I mean, you know, there are a lot of things you can
do with it, all right.  But I'll give you two that you can't do.

One, you can't pick up those
seeds that you've just bought and throw them in a child's face.  You can't do that
because there's a law that says you can't do it.

Now, there's another law
that says you cannot make copies of a patented invention.  And that law you have
violated when you use it to make generation 3, just as you have violated the
law against assault were you to use it to commit an assault.

Now, I think that's what the
Federal Circuit is trying to get at.  And so it really has nothing to do with
the Exhaustion Doctrine.  It has to do with some other doctrine perhaps that —
that somehow you think should give you the right to use something that has as a
basic purpose making a copy of itself.  Maybe you should, but I don't see that.  Where is that in the law?

Mr. Walters valiantly
responded that this would be an exception to the patent Exhaustion Doctrine for
self-replicating technologies.

Justice Sotomayor then said:

I'm sorry.  The Exhaustion
Doctrine permits you to use the good that you buy.  It never permits you to make
another item from that item you bought.  So that's what I think Justice Breyer
is saying, which is you can use the seed, you can plant it, but what you can't
do is use its progeny unless you are licensed to, because its progeny is a new
item.

Mr. Walters responded that
this is a "brand-new case" before the Court, and to adopt the Federal
Circuit's view would "modify[] this Court's case law substantially, and
that's something that ought to be done in Congress."  He then expanded on Petitioner's theme
regarding the balancing of rights between the patentee and the public, saying:

The Exhaustion
Doctrine, the policy that underlies this Court's cases is fundamentally a
choice about the purchaser's rights in that personal property over the patentee's
rights in the monopoly to use that monopoly and increase its sales.  This Court
has always chosen the purchaser's rights over the patentee's rights to increase
sales.  And we're just asking you to make the same choice here.

Justice
Kagan turned Petitioner's argument on exceptions back on Mr. Walters,
contending that the law was clear that a purchaser does not have the right to
make a new copy of the exact same kinds as the purchased article, and that
Farmer Bowman was asking the Court to make an exception for "self-replicating
technologies."  After some further
discussion of whether the farmer was in control of his crop ("They plant,
they spray and they pray."), Justice Breyer returned to the argument regarding
the purported "self-replicating technology" exception:

You don't need any exception.  There's no exception from anything.  When you
create a new generation, you have made a patented item, which you cannot do
without the approval of the patent owner.  Therefore, Monsanto gives that approval
when you buy generation 1.  Now, it seems to me all to work out without any need
for exception.

Mr.
Walters then accused Monsanto of wanting the farmer to take "all the risks
of farming" but to retain ownership of "the property that is no doubt
owned by that farmer."  Justice Ginsberg did not accept that argument,
saying that "the seeds are owned by the farmer.  But when he uses them to
grow more seeds, he's infringing on that patent.  So I don't think that the ownership
has anything to do with it."

Justice
Kagan asked Mr. Walters to return to the Chief Justice's opening question
regarding incentives to make recombinant seeds in the absence of the ability to
prevent the type of infringement occasioned by Farmer Bowman's actions, noting
that "it seems to me that that answer is [that the incentive is] purely
insufficient in this kind of a case, because all that has to happen is that one
seed escapes the web of these
contracts, and that seed, because it can self-replicate in the way that it can,
essentially makes all the contracts worthless."  Mr. Walters responded by
contrasting the uniformity of seeds as originally purchased with the commodity
seeds obtained from the grain elevator, to the point that such plantings would
not "compete with" Monsanto's seed.  And he closed his argument by reiterating the allegation that Monsanto
wanted farmers to take all the risks of farming while retaining ownership
rights to their crops.

The
government argued next, beginning with the Court's J.E.M. Ag Sciences decision, which Ms. Sherry asserted "largely
resolves this case."  According to
the government, deciding in favor of Farmer Bowman would "read into"
the utility patent statute the seed saving provisions of the PVPA.  The Chief Justice took issue with the
government's position that the patent Exhaustion Doctrine was not implicated
because it had never been applied to such a case, stating that "the reason
it's never is because this is an entirely different case.  It's the reason it's
here, because you have the intersection of the Exhaustion Doctrine and the —
the normal protection of reinvented articles.  So I don't think it gets you very
far to say that we've never applied the Exhaustion Doctrine that way either.  We
have never applied the reinvention doctrine to articles that reinvent
themselves like plant seed."  Ms.
Sherry countered that the Court had always applied the Exhaustion Doctrine to "the
specific article that's sold."  Taking Petitioner's position to the extreme, the government asserted
that the only seed protected by Monsanto's patents would be its first seed,
because every seed sold after that would be a progeny of that first seed and
there would be no incentive to patent recombinant seed as a consequence.

Justice
Scalia responded by saying that:

That's a pretty
horrible result, but let me give you another horrible result, and that is if —
if we agree with you, farmers will not be able to do a second planting by
simply getting the undifferentiated seeds from a grain elevator, because at
least a few of those seeds will always be patented seeds, and no farmer could
ever plant anything from a grain elevator, which means — I gather they use it
for second plantings where the risks are so high that it doesn't pay to buy expensive
seed.  Now they can't do that any more because there's practically no grain
elevator that doesn't have at least one patented seed in it.

That would not be such a
horrible result, according to the government, because farmers do not
traditionally used commodity grain from grain elevators for replanting, citing
the American Soybean Association amicus
brief and the likelihood that some of the commingled commodity grain would be
covered by PVPA Certificates, providing another source of infringement outside
the patent laws and another disincentive for farmers to use commodity grain for
replanting.  The Chief Justice asked the
government for its views on when patent rights to the seed were exhausted, and
Ms. Sherry responded "at the same time they are exhausted with respect to
any other product, upon an authorized sale" and agreeing with Justice
Breyer that "you can do what you want" with the seed purchased from
such an authorized sale.  What requires
the patentee's permission, according to Ms. Sherry, is "mak[ing] a new
generation of seed."  Seeking
clarification, the Chief Justice walked the government through planting and
sale but not replanting, noting that "[t]hat sounds like the patent rights
haven't been exhausted," to which Ms. Sherry responded that they had been exhausted as to the first seeds
sold.  While the Chief Justice
distinguished this case based on its self-replicating nature, the government
discussed "other technologies," such as software.  The Chief Justice then stated that "we haven't
had that case, either," and in response the government directed the Court's attention to
Microsoft v. AT&T which, while "slightly different" had been
analogized to reproduction through biological processes, bringing the argument
full circle.

Ms. Sherry summed up:

And so all we are
asking the Court to do today — I recognize it's a new technology and to the extent
new technologies require different rules, Congress is the body that should be
making those different rules.  And when Congress has acted in this area in the
Plant Variety Protection Act and also in the software context in the Copyright
Act, it has not adopted the wholesale exemption that Petitioner is talking for
here.

Justice Kagan asked for one
clarification:  where the government
diverged (if it did) with Monsanto's position.  Specifically, the Justice asked whether the Federal Circuit's "conditioned
sales" doctrine "is causing trouble as it presently exists in the
Federal Circuit" and whether they should ignore the doctrine in this case
or was it necessary for the Court to address it.  Ms. Sherry responded that the government
believed that the Court did "not need to do something about it in this
case," and that "Quanta largely decided the issue."

Seth Waxman then presented
Monsanto's argument, beginning by addressing some "science or technology"
questions, including the life cycle of the soybean (to answer Justice Kennedy's
earlier question).  He also affirmed
Justice Scalia's understanding that inadvertently growing Roundup Ready®
commodity seed obtained from a grain elevator would be infringement, but noted
that if the farmer did not treat his fields with Roundup® herbicide "neither
the farmer nor Monsanto would ever know that there was an act of infringement."  He then characterized Farmer Bowman's
decisions in using commodity seed with regard to the economics of the situation, specifically Farmer Bowman's
economic incentive to take advantage of Monsanto's technology to control for
weeds while not paying the price for the patented seed.  All from the Farmer's own testimony before
the District Court.

Justice Kagan brought up the
"worrisome" issue that Monsanto could "make infringers out of
everybody," specifically with regard to seed blown onto a farmer's
field.  While conceding that the Justice's
point about the ubiquity of Monsanto's recombinant soybeans was "a fair
one," Mr. Waxman noted that the success of a product had never been able to affect the scope of
patent rights.  As a practical matter,
Mr. Waxman noted that soybeans were not likely to blow onto a farmer's field ("I
mean, it would take Hurricane Sandy to blow a soybean into some other farmer's
field").  But as a practical matter,
even for crops such as alfalfa where this could occur, "[t]he farmer
wouldn't know, Monsanto wouldn't know, and in any event, the damages would be
zero because you would ask what the reasonable royalty would be, and if the farmer doesn't
want Roundup Ready technology and isn't using Roundup Ready technology to save
costs and increase productivity, the — the royalty value would be zero."

This answer piqued Justice
Breyer's interest, who stated that it raised an interesting question with
regard to self-replicating items (including, somewhat ominously, "genetic
patents").  Was there any provision
in patent law to deal with self-replicating technology that "end[s] up
inadvertently all over the place?" he asked.  While conceding that literal infringement is
a "strict liability tort," Mr. Waxman contended that it required "volitional
conduct" that would be absent under Justice Kagan's scenario.  Mr. Waxman was also quick to agree with the
government that there was no need for the Court to address the conditioned
sales doctrine in this case.  Justice
Sotomayor further questioned whether Monsanto's views were entirely congruent
with the government's, and Mr. Waxman clarified where Monsanto and the
government differ:

Our single
submission here is that where you have a technology that cannot be leased
because it will consume itself in whatever use one makes of it, and therefore has to be — an
article embodying the invention has to be sold and where the invention cannot be
commercialized if it — if the inventor has to realize its full costs of
development and a reasonable rate of return on the first sale, the fact that
there is this necessary sale in order to commercialize the invention cannot ipso
facto make all such conditions unenforceable.  And that's all — if you were to
reach the conditional sale issue in this case, that is all we think this case
stands for.

Mr.
Waxman completed his argument by responding to Justice Kennedy's question regarding
the problem of grain elevators containing a multiplicity of patented grain, by
explaining that grain elevators cannot legally sell seed for replanting, that
most of the seed will be covered by PVPA Certificates that prohibit
reproductive uses, and that Farmer Bowman could use the commodity seed, or seed
he withheld from his own planting, provided he was willing to forego the
advantages of Monsanto's herbicide resistance technology and control weeds the
old fashioned way.

While
Mr. Walters in his rebuttal argument attempted to refute some of the points Monsanto raised in its
argument — such as whether grain
elevators were permitted by law to sell commodity grain for replanting or
whether commodity grain is covered by PVPA Certificates that preclude
reproductive use — questioning from Justices Breyer, Scalia, and the Chief
Justice indicated that the Court was not sympathetic to the argument that
Monsanto was attempting to prevent all uses of progeny seed by objecting to
replanting without authorization.

A
decision is expected by the end of the Court's current term in June.