By Kevin E. Noonan —

Like a broken clock that nonetheless tells the right time twice a day, it was inevitable that The New York Times would eventually run a story where they got it right on patenting (see "Crop Scientists Say Biotechnology Seed Companies Are Thwarting Research").  It was, of course, a story about how large companies seem to be abusing the power conferred by the patent grant.

The story involves the following statement by 26 academic scientists to the Environmental Protection Agency:

The scientists are described on the EPA website as being "leading corn insect scientists working at public research institutions located in 16 corn producing states."  Their names are withheld from the public docket, because "virtually all of [them] require cooperation from industry at some level to conduct [their] research" according to the EPA.  (Some of them did permit their names to be used for their interviews with the Times.)  Indeed, Dr. Elson J. Shields (at right), an entomology professor at Cornell University, noted that support for agricultural research has shifted from the public to the private sector, making agricultural scientists increasingly dependent on seed companies for financing and technical support.

Their complaint stems from restrictions on their research imposed by industry, specifically companies selling herbicide-resistant and other genetically-engineered crops.  As reported in the Times on Friday by science reporter Andrew Pollack, the scientists allege that companies make purchasers of genetically-engineered seed sign an agreement used in other contexts to prevent farmers from regrowing seed (violations of these agreements by farmers have been the bases of several patent infringement and breach-of-contract lawsuits; see, e.g., Monsanto Co. v. McFarling; Monsanto Co. v. David).  For the scientists, these agreements have been used to prevent recombinant seeds from being grown for research purposes.  While companies can give scientists permission to use recombinant seeds for their research, they can also impose (and have imposed) restrictions on what research can be done, as well as demanding review of the results prior to publication, according to Mr. Pollack.

This results in de facto censorship of research, since the companies can prevent negative results from being published.  This also limits the information and evidence available to government regulators, including the EPA.  Dr. Shields says this gives the companies the opportunity to "launder the data."  Dr. Ken Ostlie (at left), a University of Minnesota entomologist, illustrated the type of control by the companies by describing a study for which he had received permission from three companies selling genetically-engineered seed, comparing how well each of their corn seed resisted predation by Minnesota rootworms.  One year later, Syngenta withdrew its permission and Dr. Ostlie was forced to discontinue the study.  And Dr. Mark Boetel described the refusal by both Monsanto and Syngenta to grant permission for a study, prior to market launch, of their genetically-engineered sugar beets and how the crop would respond to an insecticide. 

Perhaps predictably, the companies defend their behavior.  Dr. William S. Niebur (at right), Vice President for DuPont Crop Genetics Research and Development (DuPont owns Pioneer Hi-Bred), cites the need to comply with government regulations on how recombinant crops are grown to justify the restrictions.  Monsanto and Syngenta spokesmen were quoted in the article as using their intellectual property rights as a defense, as well as compliance with government regulations.  (The Syngenta agreement prohibits any comparisons between Syngenta's product and any other crop.)  An EPA spokesman, Dale Kemery, contradicted the regulatory rationale, saying that the government only required "management of the crops' insect resistance and that any other contractual restrictions were put in place by the companies" not the EPA.

The EPA has published an announcement in the Federal Register for a meeting on insect-resistant biotech crops (see 73 Fed. Reg. 75099).

The seed companies' activities are legal, of course.  The Federal Circuit has deemed the types of restrictions imposed on farmers not to be an abuse of the patent grant, and has affirmed patent infringement and breach-of-contract judgments when they have been appealed (see, e.g., McFarling; David).  However, these judgments have been in the context of commercial activity and commercial agreements.  They have involved farmers, some of whom have extensive holdings, breaching their agreements in an effort to avoid the cost of new seed.  They have also involved allegations, some persuasive, that the defendants had been less than forthcoming about their conduct or have attempted to deceive the court.  In short, in decisions favorable to Monsanto, the company's conduct (while criticized) has not been the issue.

The scientists raise very different issues.  It is one thing to prevent a customer from reneging unilaterally on commercial agreements entered into to obtain a commercial advantage (i.e., greater crop yields due to herbicide resistant recombinant seed).  It is quite another to use the exclusionary right granted under the patent laws to enforce contractual agreements restricting research use.  Genetically-modified foods, while facing much less resistance in the U.S. than in, for example, Europe, have ambiguous public support.  And in the present environment, behavior that could be characterized as an abuse of the patent grant is risky.  For example, seed companies are already at risk from the Supreme Court's Quanta Computer, Inc. v. LG Electronics, Inc. decision, which reaffirmed the principle of patent exhaustion:  a patentee's rights to a patented product are exhausted upon first sale of the product.  The contractual restrictions on reseeding can be argued to be contrary to this principle, although this theory has not yet been advanced with any success.  This is particularly relevant because this situation comprises the confluence of two private activities "affected with a public interest":  patenting and public health.  Where U.S. common law has traditionally limited legal restrictions on contract terms between two parties dealing at arms' length, the law has permitted restrictions based on public policy (limiting enforceability on adhesion contracts, for example).  The allegations by these scientists raise the real possibility that the restrictions recombinant seed companies have successfully included in their commercial contracts will, at least with regard to research science, be deemed unenforceable.  In view of the other possible consequences (such as patent misuse or antitrust allegations), such a determination may turn out to be the best the seed companies may be able to hope for.