By Kevin E. Noonan —

Somewhat
lost in the hubbub over the Supreme Court's ruling in AMP v. Myriad was the Federal Circuit's decision, just a few days
earlier, in Organic Seed Growers & Trade Ass'n v. Monsanto Co.  That case is the latest windmill tilt by
Cardozo Law School's Public Patent Foundation (PubPat) over biotechnology
patents, which it brought on behalf of "a
coalition of [several dozen] farmers, seed sellers, and agricultural
organizations."

The
case involved a declaratory judgment action against 23 Monsanto patents* brought
by plaintiffs who alleged that they were at risk of patent infringement
liability due to "inadvertent" infringement of Monsanto's patents
relating to recombinant seeds, specifically the company's Roundup Ready® seeds used with the glyphosate
herbicide, Roundup®.  Plaintiffs alleged as
their injury that they were at risk for inadvertent infringement, that they
were forced to forego planting even conventional "corn,
cotton, canola, sugar beets, soybeans, and alfalfa" due to the extent to
which these crops were transgenic ("over 85-90% of all soybeans, corn,
cotton, sugar beets, and canola grown in the U.S. contains Monsanto's patented
genes") and that they were burdened by the cost and efforts they expended to avoid
infringing.  Plaintiffs also noted that Monsanto
has brought 144 infringement suits between 1997 and 2010, and settled ~700 more
over that time.  Showing that PubPat had
learned the lessons of the Myriad case
regarding standing, "[a]t least one plaintiff
[Bryce Stephens] declared that the fear of suit by Monsanto is the sole reason
he refrained from cultivating organic corn and soybeans, and that he would
resume growing those crops if that threat were eliminated."

Shortly
after they initiated the lawsuit, plaintiffs asked Monsanto for an express
covenant not to sue.  While demurring
from supplying such a covenant, Monsanto referred plaintiffs to its website,
wherein there was an explicit statement regarding "inadvertent"
contamination and infringement:

It has never been, nor will
it be Monsanto policy to exercise its patent rights where trace amounts of our
patented seeds or traits are present in farmer's fields as a result of
inadvertent means.

Moreover,
Monsanto's attorneys by letter further expanded on the company's absence of any
intent to sue plaintiffs:

Monsanto is unaware of any circumstances that would give rise to any claim for
patent infringement or any lawsuit against your clients.  Monsanto therefore
does not assert and has no intention of asserting patent-infringement claims against
your clients.  You represent that "none of your clients intend to possess,
use or sell any transgenic seed, including any transgenic seed potentially
covered by Monsanto's patents."  Taking your representation as true, any
fear of suit or other action is unreasonable, and any decision not to grow
certain crops unjustified.

In
view of these representations, the District Court found that plaintiffs did not
have standing to sue under the Declaratory Judgment Act and dismissed the
lawsuit.

The
Federal Circuit affirmed, in an opinion by Judge Dyk joined by Judges Bryson
and Moore.  The opinion set forth the "ground rules" of standing from
the Supreme Court's decision in MedImmune, Inc. v. Genentech, Inc., 549
U.S. 118, 127 (2007):

"Basically, the question in each case is whether the facts alleged,
under all the circumstances, show that there is a substantial controversy,
between parties having adverse legal interests, of sufficient immediacy and
reality to warrant the issuance of a declaratory judgment," citing Md.
Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941).

The
Federal Circuit had applied these rubrics in implementing this precedent:

Although there is no bright-line rule applicable to patent cases, we have held
that "Article III jurisdiction may be met where the patentee takes a
position that puts the declaratory judgment plaintiff in the position of either
pursuing arguably illegal behavior or abandoning that which he claims a right
to do," citing SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d
1372, 1380–81 (Fed. Cir. 2007)

Here,
"the question in this case is not whether the appellants' subjective fear
of suit by Monsanto is genuine, but whether they have demonstrated a "'substantial
risk' that the harm will occur, which may prompt [them] to reasonably incur
costs to mitigate or avoid that harm," citing Monsanto Co. v. Geertson
Seed Farms, 561 U.S. ___, ___, 130 S.Ct. 2743, 2754–55 (2010).  The plaintiffs' asserted basis for their
belief that they were at risk for infringement liability was "Monsanto's
evident history of aggressive assertion of its transgenic seed patents against
other growers and sellers"; however, simply a patentee's activities
against other defendants are not always enough to confer jurisdiction,
according to the panel opinion, relying on Arkema Inc. v. Honeywell Int'l,
Inc., 706 F.3d 1351, 1356 (Fed. Cir. 2013), Micron Tech, Inc. v. MOSAID
Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 2008), Prasco, LLC v. Medicis
Pharm. Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008), and Holder v.
Humanitarian Law Project, 561 U.S. ___, 130 S.Ct 2705, 2717 (2010), and
requires the court to look at the totality of the circumstances in each
case.  Which, on these facts, required
the court to assess whether Monsanto's "representations" regarding
inadvertent infringers was sufficient to negate the company's "evident
history of aggressive assertion" of it patents.

Monsanto
(at oral argument) defined "inadvertent" infringers to be those whose
crops become accidentally contaminated and who don't spray their fields with
Roundup (consistent with their position in Bowman).  The District Court, the parties, and the panel
accepted as inevitable that the plaintiffs' crops would be contaminated with
Monsanto's recombinant seed, based on the predominance (~50% on average, with
some crops comprising 90%) of such seeds in the seed stock of many conventional
crops, stemming from "windblown pollen or seeds from genetically modified
crops or other sources" (a high standard in view of their counsel's
assertion, at oral argument in the Bowman
case, that it would take winds such as those in Hurricane Sandy to blow a
transgenic soybean seed onto a farmer's field).

The
opinion also notes that "[t]here is [] a substantial risk that at least
some of the appellants could be liable for infringement if they harvested and
replanted or sold contaminated seed" despite the opinion also stating that
"the [Supreme] Court's recent decision in Bowman v. Monsanto Co. leaves
open the possibility that merely permitting transgenic seeds inadvertently
introduced into one's land to grow would not be an infringing use."  The Federal Circuit's own precedent is to the
contrary, such that "one who, within the meaning of the Patent Act, uses
(replants) or sells even very small quantities of patented transgenic seeds
without authorization may infringe any patents covering those seeds,"
according to the opinion, citing SmithKline Beecham Corp. v. Apotex Corp.,
403 F.3d 1331, 1336, 1339–40 (Fed. Cir. 2005); Abbott Labs. v. Sandoz, Inc.,
566 F.3d 1282, 1299 (Fed. Cir. 2009); and Embrex, Inc. v. Serv. Eng'g Corp.,
216 F.3d 1343, 1352–53 (Fed. Cir. 2000), regarding the non-existence of "de minimis infringement" (none of
these cases involved seeds or other "self-replicating"
technologies).  Accordingly, the Court
assumed inadvertent infringement would likely occur.

But
these technical considerations were not the issue; it was standing, not the
merits, that was before the Court.  The
question was whether Monsanto's "representations" that it will not sue
for inadvertent infringement were sufficient to "moot any potential
controversy" and thus defeat standing.  The Court looked for guidance from the Supreme Court's recent Already,
LLC v. Nike, Inc. case, where an express covenant not to sue from a trademark
owner defeated declaratory judgment jurisdiction.  568 U.S. ___, ___, 133 S.Ct.
721, 732 (2013).  Thus the Federal Circuit was
faced with determining whether an express covenant was required or if Monsanto's
reassurances would do.

The Court found that they would.  "Taken
together, Monsanto's representations unequivocally disclaim any intent to sue
appellant growers, seed sellers, or organizations for inadvertently using or
selling 'trace amounts' of genetically modified seeds," the panel found,
wherein the panel interpreted "trace amounts" to be approximately one
percent.  "We conclude that Monsanto
has disclaimed any intent to sue inadvertent users or sellers of seeds that are
inadvertently contaminated with up to one percent of seeds carrying Monsanto's patented
traits," said the Court.

Important
to the panel decision was the effect of judicial estoppel on Monsanto and its
representations to the Court that it had "no intention of asserting
patent-infringement claims" against plaintiffs or other "inadvertent"
infringers.  The opinion set forth the "main
factors" that raise the estoppel:

(1) a party's later position is "clearly inconsistent" with its prior
position, (2) the party successfully persuaded a court to accept its prior
position, and (3) the party "would derive an unfair advantage or impose an
unfair detriment on the opposing party if not estopped," citing New
Hampshire v. Maine, 532 U.S. 742, 750–51 (2001).

Any
future lawsuit brought by Monsanto against these plaintiffs would satisfy "all
three [of these] factors," according to the Court.  Somewhat wryly, the opinion notes that this
conclusion was "wisely acknowledged" by Monsanto's counsel at oral
argument.

One
drawback to the Court's certainty regarding this conclusion is the limitation in
Monsanto's representations that only individuals producing crops having only "trace
amounts" produced from infringing recombinant seed would fall within the
scope of those representations, including the company's reluctance to include
within their commitment not to sue crops having greater than such trace amounts
but that were not produced using Roundup® treatment.  While the panel noted that "we cannot
conclude that Monsanto has disclaimed any intent to sue a conventional grower
who never buys modified seed, but accumulates greater than trace amounts of
modified seed by using or selling contaminated seed from his fields," none
of the plaintiffs was willing to allege that they did, would or planned to "fall
outside Monsanto's representations" to the Court in this regard.  All plaintiffs alleged that they were "using
their best efforts" not to
produce crops comprising more than "trace amounts" of recombinant
seed, and thus they did not allege activities that would put them at patent
infringement risk — a requirement for the plaintiffs to have standing under
Supreme Court (Already) as well as
Federal Circuit precedent (e.g., Benitec Austl., Ltd. v. Nucleonics, Inc.,
495 F.3d 1340, 1346–50 (Fed. Cir. 2007)).

Finally,
the Court found that allegations of a "chilling effect" or other
subjective apprehensions of patent infringement liability risk were not
sufficient to confer standing, because they did not amount to "a claim of
specific present objective harm or a threat of specific future harm,"
citing Laird v. Tatum, 408 U.S. 1, 13–14 (1972) or a "substantial
risk" of liability:

The appellants have not made that showing here, because the future harm they
allege — that they will grow greater than trace amounts of modified seed, and
therefore be sued for infringement by Monsanto — is too speculative to justify
their present actions.  Parties "cannot manufacture standing merely by
inflicting harm on themselves based on their fears of hypothetical future harm,"
citing Clapper v. Amnesty Int'l USA, 568 U.S. ___, _____, 133 S.Ct. 1138,
1151 (2013)

Because
the Court found that Monsanto had made binding representations that removed any
risk of suit against plaintiffs who produced crops comprising trace amounts of
Monsanto's recombinant seed, and that plaintiffs had made no allegations that
they had any "concrete plans or activities" to make, use or sell
greater than trace amounts of Monsanto's seed, these plaintiffs had failed to
show any risk of suit and thus "lacked an essential element of standing"
required by the Declaratory Judgment Act.

At
least until the Supreme Court decides to grant certiorari.

Organic
Seed Growers & Trade Ass'n v. Monsanto Co. (Fed. Cir.
2013)
Panel:
Circuit Judges Dyk, Bryson, and Moore
Opinion by Circuit Judge Dyk

*
U.S. Patent Nos. 5,322,938 ("DNA sequence for enhancing the efficiency of
transcription"); 5,352,605 ("Chimeric genes for transforming plant
cells using viral promoters"); 5,362,865 ("Enhanced expression in
plants using non-translated leader sequences"); 5,378,619 ("Promoter
for transgenic plants"); 5,424,412 ("Enhanced expression in plants");
5,463,175 ("Glyphosate tolerant plants"); 5,530,196 ("Chimeric
genes for transforming plant cells using viral promoters"); 5,554,798 ("Fertile
glyphosate-resistant transgenic corn plants"); 5,593,874 ("Enhanced
expression in plants"); 5,641,876 ("Rice actin gene and promoter");
5,659,122 ("Enhanced expression in plants using non-translated leader
sequences"); 5,717,084 ("Chimaeric gene coding for a transit peptide
and a heterologous peptide"); 5,728,925 ("Chimaeric gene coding for a
transit peptide and a heterologous polypeptide"); 5,750,871 ("Transformation
and foreign gene expression in Brassica species"); 5,859,347 ("Enhanced
expression in plants"); 6,025,545 ("Methods and compositions for the
production of stably transformed, fertile monocot plants and cells thereof");
6,040,497 ("Glyphosate resistant maize lines"); 6,051,753 ("Figwort
mosaic virus promoter and uses"); 6,083,878 ("Use of N-
(phosphonomethyl) glycine and derivatives thereof"); 6,753,463 ("Transformed
cotton plants"); 6,825,400 ("Corn plants comprising event
PV-ZMGT32(nk603)"); RE38,825 ("Glyphosate tolerant plants"); and
RE39,247 ("Glyphosate-tolerant 5-enolpyruvylshikimate-3-phosphate synthases").