By
Kevin E. Noonan —

A
patent issue exerted its Circe-like effect on the Supreme Court again today in Gunn v. Minton, a decision overruling
the Texas Supreme Court on the question of whether the existence of a patent
issue in a legal malpractice action implicated Federal District Court
jurisdiction under 28 U.S.C. § 1338(a) (also known as "arising under"
jurisdiction).  And even when the Court
is not reviewing Federal Circuit decisions directly, this case shows that it
can take the occasion to overturn one or two of the appellate court's decisions
along the way.

The
matter below involved purported malpractice in the handling of a patent
infringement lawsuit on behalf of Mr. Minton by lawyers Gunn et al.  The patent in suit was found invalid due to an "on-sale" bar under
35 U.S.C. § 102(b) that arose from a lease of the claimed invention ("a
computer program and telecommunications network designed to facilitate
securities trading") to a securities brokerage more than one year before
the patent's earliest priority date.  In
a motion for reconsideration of the District Court's invalidity determination,
Mr. Minton raised ("for the first time," according to the Supreme
Court's opinion) the assertion that the lease to the brokerage was part of on
going testing of the invention and thus fell within the "experimental use"
exception to public use and on-sale bars under § 102(b).  The District Court ruled that this attempt to
avoid the on-sale bar had been waived by Mr. Minton; the Federal Circuit
affirmed.

Mr.
Minton responded to these reverses by suing his lawyers in Texas state court
for malpractice, alleging that the experimental use exception should have been
raised during the original trial and that his patent would not have been
invalidated if the lawyers had done so.  His lawyers successfully defended this claim by contending the lease was
not part of continuing testing of the
invention, and thus that the experimental use exception did not apply.  On appeal, Mr. Minton argued that the Texas
state court did not have jurisdiction because his claim "arose under"
the Federal patent laws and that Federal district court thus had exclusive
jurisdiction.  The Texas appellate court
agreed and affirmed the trial court judgment in the lawyers' favor, but the
Texas Supreme Court reversed.  The basis
for the Texas Supreme Court's decision rested on two Federal Circuit decisions,
Air Measurement Technologies, Inc. v.
Akin Gump Strauss Hauer & Feld, L.L.P., 504
F. 3d 1262 (2007), and Immunocept,
LLC v. Fulbright & Jaworski, LLP, 504
F. 3d 1281 (2007), because "[a]djudication of Minton's claim in
federal court was consistent with the appropriate balance between federal and
state judicial responsibilities," and because "the federal
government and patent litigants have an interest in the uniform application of
patent law by courts well-versed in that subject matter."

The
Supreme Court reversed, in a unanimous opinion written by Chief Justice
Roberts.  The Chief Justice distinguished
two ways in which a lawsuit can "arise under" Federal law:  either the
cause of action is created by a Federal statute, citing American Well Works Co. v. Layne & Bowler Co., 241
U.S. 257, 260
(1916); or because the cause of action belongs to a "special and small category"
of cases, the contours of which are not only "not a blank canvas" for
the Court to use but one that "looks like [] Jackson Pollock got to [it] first."  However, the Chief was able to identify
recent jurisprudence from the Court that attempted to bring order to these
circumstances, Grable & Sons Metal
Products, Inc. v. Darue Engineering & Mfg., 545
U.S. 308, 314
(2005).  The Grable case set forth a four factor test for deciding that Federal
jurisdiction was proper in cases where the cause of action arose under state
law.  These are if a federal issue is:  (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable
of resolution in federal court without disrupting the federal-state balance
approved by Congress, and all four prongs must be satisfied.

In
this case, the Court recognized that the first two prongs of the Grable test were satisfied.  Resolution
of the federal patent question (specifically, whether the lease was entitled to
the experimental use exception) was necessary to satisfy one of the
requirements of a malpractice cause of action under Texas state law ("Under
Texas law, a plaintiff alleging legal malpractice must establish four elements:  (1) that the defendant attorney owed the plaintiff a duty; (2) that the
attorney breached that duty; (3) that the breach was the proximate cause of the
plaintiff 's injury; and (4) that damages occurred.").  The federal issue, of whether the
experimental use exception applied to the lease and thus immunized Mr. Minton
from the on-sale bar, was "actually disputed" and thus satisfied the
second prong.

The
Court's opinion then states that "Minton's argument founders on Grable's
next requirement," that the federal issue was "substantial."  The Texas Supreme Court erred in applying
this prong because the standard is not whether the issue is substantial to the
parties, according to Chief Justice Roberts ("that will always be
true when the state claim 'necessarily raise[s]' a disputed federal issue, as Grable
separately requires").  Rather, to
satisfy this prong of the Grable test
the federal issue must be of substantial importance to "the federal system
as a whole."  This type of
substantiality is illustrated in the Chief's opinion by the Grable case itself, which involved the
proper procedure for IRS seizure and sale of property to satisfy delinquent
taxes, and Smith v. Kansas City Title
& Trust Co., 255
U.S. 180 (1921) (the "classic example" according to Grable) having to do with the question
of whether a state bank could purchase bonds that plaintiffs contended the U.S.
government had not constitutionally issued.

"Here,
the federal issue carries no such significance," and the Court found that
Minton failed to satisfy this prong of the Grable
test.  The federal question is a "hypothetical"
one in the malpractice context:  if
Mr. Minton's lawyers had properly raised the experimental use exception would
his patent have been invalidated?  Whether the state court finds in Mr. Minton's or his lawyers' favor on
this question will not affect the "real world" effect of the failure
to do so; Minton's patent will remain invalidated.  And "allowing state courts to resolve
these cases [will not] undermine 'the development of a uniform body of [patent]
law' per Bonito Boats, Inc. v. Thunder
Craft Boats, Inc., 489
U.S. 141, 162
(1989), because actual patent cases are tried exclusively in Federal district
court and whatever decision the Texas state court may come to in this case will
not have any bearing on Federal patent case law.  After all, the opinion notes, it is likely
that the state courts will adapt their decisions to "pertinent federal
precedents" because it is those precedents that would have been followed
had Mr. Minton's attorneys raised the experimental use exception during the
underlying patent litigation.  Even if
some unique or novel patent law questions arise within the "case within a
case" needed to decide the malpractice question, "they will at some
point be decided by a federal court in the context of an actual patent case,
with review in the Federal Circuit" and thus ultimately be "resolved
within the federal system."  Finally
in this regard, the opinion voices skepticism regarding Mr. Minton's
apprehension of a res judicata effect
on future patent prosecution of related (continuation) application(s), finding
no support for the proposition that state court decisions would have such an
effect on the PTO.  Returning to an
earlier theme, the opinion notes that any such preclusive effect would be
limited to these (actually, this) parties and thus suffer the same infirmities
noted above in failing to satisfy the third prong.

Mr.
Minton's case fails to satisfy the fourth prong as well, having to do with "the
appropriate 'balance of federal and state judicial responsibilities'" under
Grable.  For malpractice cases, this balance is struck
in favor of the states, who "have 'a special responsibility for
maintaining standards among members of the licensed professions,'" citing Ohralik v. Ohio State Bar Assn., 436
U.S. 447, 460
(1978).

In
closing, the opinion notes the principle that Federal jurisdiction over
patent matters has long be recognized to be exclusive but that "not [] all
questions in which a patent may be the subject-matter of the controversy,"
citing New Marshall Engine Co. v. Marshall
Engine Co., 223
U.S. 473, 478
(1912).  Because there is no "serious
federal interest in claiming the advantages thought to be inherent in a federal
forum," Texas state courts are not precluded by § 1338(a) from hearing Mr.
Minton's malpractice complaint against his lawyers.

Thus,
Mr. Minton has had his day in court and has lost his malpractice claim.  And two more Federal Circuit precedents have
been overturned, sub silentio but no
less finally, by the Court's decision on Wednesday.

Gunn v. Minton (2013)
Opinion
by Chief Justice Roberts

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.

By
Kevin E. Noonan —

On
the brink of oral argument before the Supreme Court on Tuesday, it may be
helpful to reiterate (as do the parties) the arguments from Petitioner Farmer
Bowman and Respondent Monsanto, Inc. in Bowman
v. Monsanto.

Farmer
Bowman reprises his argument that the sale of the patented seed exhausts any
future rights to the progeny of those seeds.  The first part of this argument focuses on authorized uses, sales and
offers to sell, where he argues (not necessarily incorrectly) that an
authorized sale from patentee exhausts patent rights to the seed.  Ignoring the Technology Agreement issues for
a moment, it is certainly true that, had Farmer Bowman purchased seed from
Monsanto and then decided not to plant it, he could have resold those seeds to
another farmer.  That, of course, is not
the scenario before the Court in this case. 
This portion of the brief explicates for the Court its own jurisprudence
on patent exhaustion from the 19th Century to date, and focuses on
the Federal Circuit's Mallinckrodt v.
Medipart line of cases to strengthen the Court's perception that there is
an error below requiring correction.

Somewhat
surprisingly, the brief concedes that, in some circumstances patentees may
enter into licensing agreements enforceable under patent law, but consistent
with the rest of his argument, Farmer Bowman contends that such restrictions
cannot be enforced on authorized purchasers. 
"Any" seeds purchased in such an authorized sale have had all patent rights exhausted according to
Farmer Bowman in the first section of his brief.

These
principles of exhaustion also apply to seeds produced as the result of
planting, i.e., progeny seeds. 
Analogizing (somewhat inappositely) to statements in the Supreme Court's
Quanta Computer v. LG Electronics
decision, Farmer Bowman contends that "like method claims, subsequent
generations of seeds are 'embodied' in seeds sold" in authorized
sales.  While appealing in a 15th
Century way (bringing to mind Pythagoris, preformationism and myths such as
homunculi and others), the brief then uses this argument to support Farmer
Bowman's contention that replanting seeds is not "making" but is
rather an authorized use and thus an exhaustion of Monsanto's patent
rights.  This relationship then vests "title"
in progeny seeds to the first authorized purchaser, and any decision otherwise
would amount to a restraint on the alienation of personal property.  The scope and reach of these arguments is
breathtaking in its inclusion of perhaps every argument that could be made,
once its proponents go down the rabbit hole of their premise (that each seed
literally embodies every other seed that can ever be produced from that seed).

Finally,
the brief goes back to the theme, developed in the Questions Presented, that
the Federal Circuit created an "exception" to the patent exhaustion
doctrine for "self-replicating technologies."  Its inclusion late in the brief may be an
admission by Farmer Bowman that this argument does not comport with the facts,
as set forth in the Federal Circuit's opinion, Monsanto's brief, and the
government's amicus brief.  No matter how inclined the Federal Circuit
has been to carve out what the Supreme Court has decided are "special"
rules for patent cases (and which rules the Court has been happy to strike
down), that is not what the Federak Circuit did in this case.  In this abbreviated version of this argument,
Farmer Bowman contends simply that any such "changes" in the patent
exhaustion doctrine should come from Congress, or be left to contractual
arrangements between patentees and parties in privity through sales of
inventions comprising "self-replicating technologies.  (But of course Farmer Bowman's intentions are
not to help patentees to protect their technology, but rather to expose such
contractual avenues to antitrust scrutiny.)

Monsanto's
brief begins with a recitation of Monsanto's patented technology, the
Technology Agreement, the "Petitioner's Conduct" (including the
purported illegality of purchasing commodity seeds from grain elevators for
replanting) and what transpired below. 
Turning to its arguments, Monsanto contends that sales, even "authorized"
sales, do not exhaust patent rights to the extent argued by Farmer Bowman.  As an initial matter, Monsanto argues that
the "first sale" doctrine of patent exhaustion is inapplicable to
Farmer Bowman's conduct because the seeds had not been sold.  Thus, Monsanto rejects Farmer Bowman's
predicate that there was an
authorized sale and consequently that patent exhaustion does not apply.

The
brief also discusses the relationship between patent law and laws specifically
relating to plant protection (specifically the Plant Protection Act and the
Plant Variety Protection Act), and argues that the Court should not thwart the
Congressional statutory scheme and the Court's own precedent relating to
protections for technological innovation in plants.  The brief specifically cautions the Court
against itself creating "exceptions" that would disfavor
biotechnological innovation.

The
brief also broaches the more risky grounds of the extent to which a patentee
can convey limited rights to embodiments of a patented invention.  The brief parses out the various rights in
the patentee's bundle of rights (making, using, selling) and asserts the
patentee's right to convey less than the entirety of the bundle, and reminds
the Court that is has "never held that a sale per se renders unenforceable
reasonable restrictions imposed by a license" (running the risk that this
Court will take up the challenge and do just that).  Arguing against this eventuality, the brief
contends that any such per se rule would harm both the patent law and the exhaustion doctrine.  Finally, and in the briefest section of
Monsanto's brief, Monsanto argues that contractual remedies by themselves are
inadequate to protect and therefore encourage innovation in "readily
reproducible" technologies.

In
his reply brief, Farmer Bowman identifies another basis for patent exhaustion,
asserting that an authorized sale exhausts rights to using the article soled for
the ordinary pursuits of life.  It
characterizes Monsanto's arguments as an attempt to "control post-sale use
and disposition of seed," which it asks the Court to reject, and urges the
Court to prevent Monsanto from suppressing a "cheaper, non-infringing
source of seed."  The brief rejects
Monsanto's characterization of the PVPA and the Court's precedent interpreting
the Act, and asserts that Monsanto (and "its" amici) have "overstate[d]
the economic impact of patent exhaustion for self-replicating products."

Patent Docs will provide an assessment of the
oral argument in due course.

By Donald Zuhn —

A group of universities,
entities affiliated with universities, higher education associations, and
entities involved in university technology management, in an amici brief filed in Bowman v. Monsanto, argue that reversal
of the decision that petitioner Vernon Bowman infringed Monsanto's patents on
glyphosphate-resistant soybeans "would weaken patent rights for
artificial, progenitive technologies and upset the flourishing innovation
system created by U.S. patent law through the Bayh-Dole Act and technology
transfer organizations."  Amici therefore urge the Supreme Court
to affirm the decision of the Federal Circuit in Bowman v. Monsanto.  Oral
argument in the case is scheduled for tomorrow.

The brief begins by
discussing the impact of the Bayh-Dole Act in helping federally funded technologies
reach the public, noting that before the Bayh-Dole Act was passed in 1980, "only
5 percent of patents owned by the Federal Government were used by the private
sector."  The brief also notes that
while U.S. universities obtained only 264 patents in 1979, more than 37,000
patents issued to U.S. universities from 2002-2011.  The brief points out that from 2007-2011, more
than 3,000 startup companies were formed as a result of research performed
under the Bayh-Dole Act.

In a footnote, the brief
indicates that universities spent $65.1 billion for research in 2011 — more
than half of which was spent in the life sciences — with nearly two-thirds of
the expenditures coming from the federal government.  Quoting an article in the Harvard Journal of Law and Technology, which states that "[s]tudies have shown that for every dollar of
government-sponsored research, up to $10,000 is required to fully develop,
commercialize, and realize a useful product," amici argue that "[p]rivate
sector entities will incur these costs only if they are properly incented to do
so," adding that "[p]atents, and the valuable exclusionary rights
they confer, provide the necessary incentive."

Of the many technologies
discovered and developed under the Bayh-Dole Act, amici argue that significant and numerous artificial, progenitive
technologies have been conceived, developed, and licensed as a result of the
Act.  The brief defines "artificial,
progenitive technology" as "a broad classification that includes any
human-made technology in which a 'parent' combination, substance, or
manufacture is used to generate progeny having the same genetic makeup or characteristics
as the parent."  Amici contend that reversal in this case
"would effectively shorten the patent term for patents covering
artificial, progenitive technologies, thus making it much more difficult, if
not impossible, for patent owners and their licensees to recover the costs of
developing such inventions for market," and in effect "force patent
owners to try to recoup all of their research and development costs in the
first sale of the technology."  The
brief declares that the "practical result" of a reversal in this
case:

[W]ould be to
create disparate patent terms — a shorter term for artificial progenitive
technologies and a longer term for all other inventions.  For the former, patentees and their licensees
would receive protection only for as long as it takes first buyers to saturate
the market with progeny.  For the latter,
patentees and their licensees would receive protection for the full statutory
patent term.

Stating that "Bowman
and his supporting amici erroneously
suggest that the only way to 'make' the patented seeds as envisioned by §
271(a) is to genetically engineer
them using the techniques disclosed in Monsanto’s patents," amici argue that "it cannot be that
under § 271(a), 'making' a patented article requires engineering it from square
one."  The brief instead indicates
that "[t]here is, however, no support in this Court's precedent for the
notion that 'making' an infringing article necessarily involves building that
article from its starting materials or building blocks."  Amici
suggest that "[g]enetic modification is one way to 'make' Roundup Ready®
seeds, but not the only way."

In response to the argument
that "affirmance will render 'innocent infringers' vulnerable to liability
for inadvertently planting Monsanto's Roundup Ready® seeds and thereby making
new infringing seeds," the brief counters that "patent holders like
Monsanto have no incentive to litigate against truly innocent infringers,"
as "[t]he cost of doing so would dwarf the value of available remedies."  Amici
also note that:

[T]he supposed "innocently"
infringing farmer would achieve the benefits of the patented invention only if,
while believing his crop to be susceptible to Roundup® herbicide, he
nevertheless applied Roundup®, an application that would (in his mind) likely
decimate his crop.  Of course, if a
farmer harvested the inadvertently present patented seeds once, realized they
were Roundup Ready®, yet continued to plant the progeny seeds, apply Roundup®,
and reap the benefits of the patented Roundup Ready® trait, he could no longer
claim to be an "innocent infringer."

As for the petitioner, amici point out that "[t]he record dispels
any notion that Bowman 'innocently' made Monsanto's patented seeds,"
noting that "Bowman systematically used the grain elevator as a type of straw-man
to circumvent Monsanto's patent rights."

Amici
on the brief include the Wisconsin Alumni Research Foundation, Association of
University Technology Managers (AUTM), Association of Public and Land-grant
Universities, Association of American Universities, The Regents of the
University of California, The Board of Trustees of the University of Illinois,
University of Florida, Duke University, Emory University, University of Georgia
Research Foundation, Inc., Iowa State University of Science and Technology,
NDSU Research Foundation, University of Iowa, University of Missouri-Columbia,
South Dakota State University, NUtech Ventures, University of Nebraska-Lincoln,
University of Kentucky, University of Kansas, Kansas State University, Montana
State University, and University of Delaware.

For additional information
regarding this topic, please see:

• "WLF Files Amicus Brief in Support of Respondents
in Bowman v. Monsanto," February
7, 2013
• "U.S. Government
Requests Argument Time in Bowman v.
Monsanto — at Monsanto's Expense," February 5, 2013
• "It Ain't
Necessarily So Down on the Farm: Not All Farmers Agree with Farmer Bowman in Bowman v. Monsanto," January 31,
2013
• "BayhDol25 Files Amicus Brief in Bowman v. Monsanto," January 30, 2013
• "Government Sticks
to Its Guns in Bowman v. Monsanto Amicus
Brief," January 28, 2013
• "IPO Files Amicus Brief in Support of Respondents
in Bowman v. Monsanto," January
24, 2013