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  • Agricultural patent case will have far-reaching effects

    Decision for Monsanto would bring seed-industry consolidation, activists say; others say a ruling against it would inhibit research
  • When farmer Vernon Hugh Bowman walked into an Indiana courtroom four years ago to face off against biotechnology giant Monsanto Co., he argued in his own defense.
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  • When farmer Vernon Hugh Bowman walked into an Indiana courtroom four years ago to face off against biotechnology giant Monsanto Co., he argued in his own defense.
    On Tuesday, standing in the U.S. Supreme Court, the 75-year-old will have a fleet of attorneys beside him — and the eyes of the business world on his case.
    The hearings bring the Creve Coeur, Mo.-based company into the country's highest court, and could have consequences that go well beyond the company's interests, and beyond agriculture.
    In 2007, Monsanto sued Bowman, saying he infringed on its patent when he planted the offspring of the company's Roundup Ready soybeans. Bowman argued that the progeny of those beans fell beyond the reach of the patent.
    The district court ruled in Monsanto's favor, as did the U.S. Court of Appeals. But Bowman, now represented by a big law firm donating its time, took the case upward. Now the high court is considering for the first time how to handle these new technologies.
    Dozens of briefs have been filed. Those supporting Monsanto, from the University of Missouri to Microsoft Corp., say a decision for Bowman would have a massive chilling effect on innovation. If, the thinking goes, patents don't extend to the progeny of self-replicating products — such as seeds or live viruses or software that writes its own code — why would companies and universities pour billions into research?
    "Our case is the template for a broader discussion," said David Snively, Monsanto's general counsel. "This is just really about how patent law concepts apply to tomorrow's technologies."
    Bowman's supporters, including food advocacy, farmer and antitrust watchdog groups, argue the patent applies only to the original product. They contend that allowing patents to cover second-generation seeds would further consolidate the industry's control over the seed market, leaving farmers fewer choices of suppliers and varieties, and leading to rising prices.
    "If the Supreme Court affirms what the federal court decided, that's going to create a very uncertain expansion of patent rights," said Peter Carstensen, a law professor at the University of Wisconsin who co-wrote a brief supporting Bowman. "That's going to make it much more difficult for new enterprises to function free of patent litigation."
    In 1996, Monsanto released its first genetically engineered soybeans, designed to survive applications of the company's herbicide, Roundup, enabling farmers to kill weeds but not crops. The Roundup Ready system quickly became the world's most widely used seed technology, and now 90 percent of the soybeans grown in the U.S. are Roundup Ready.
    To use it, farmers were required to sign agreements saying they would not plant the original seeds' offspring, which contain the genetically engineered trait.
    But farmers — supported by government policies and law — have a long tradition of replanting seeds. Some violated the contracts, and Monsanto pursued them vigorously: The company has sued farmers 146 times, prevailing in the 11 cases that went to trial. More than 400 farmers in 27 states were involved.
    The company says 146 is not a high number of suits given the 275,000 licenses issued a year. The Washington-based Center for Food Safety, long critical of Monsanto and a supporter of Bowman, tracked the cases and says Monsanto has been awarded $23.5 million from the lawsuits, and "hundreds of millions more through confidential out-of-court settlements."
    Most of those farmers simply saved and replanted second-generation seeds. Bowman did things differently.
    Monsanto does not require a separate agreement to purchase commodity beans, which are second-generation beans typically used for animal feed and in industrial applications, not for planting.
    Bowman, for years, grew Roundup Ready beans on his 300-acre farm in southwestern Indiana. He signed the licensing agreement and adhered to the agreement not to save and replant seeds. But in 1999, looking for bargain-priced soybeans to plant a second, late-season crop, Bowman bought some commodity beans. He figured they were Roundup Ready as well, and he was right.
    When Monsanto learned that Bowman was, in its view, making an end run around its contract, the company sued, arguing it retained rights even though there was no agreement specific to that transaction. The district court agreed, delivering an $84,456 judgment against Bowman; the appellate court concurred.
    A group of attorneys and academics came to Bowman's aid. Their concern, they say, is that Monsanto and the biotechnology industry have used hundreds of patents to control research and innovation that belong in the public domain.
    Until 1970, Congress did not allow patents on staple crops, and thereafter only allowed exclusive marketing rights that allowed farmers to save seeds. But in 1980, the Supreme Court decided in a controversial 5-4 case that living organisms could be patented.
    In the rush to claim patents, four companies - Monsanto, DuPont, Syngenta and Dow - emerged as the dominant forces, according to a report last week from the Center for Food Safety.
    "Dozens of mergers and acquisitions followed; at least 200 independent seed companies were bought and consolidated from 1996 to 2009," the center wrote. "As a consequence, what was once a freely exchanged, renewable resource is now privatized and monopolized."
    As a result, the center says, the average cost to plant one acre of soybeans has risen 325 percent since the introduction of genetically engineered seed, to $56.68 from $13.32.
    Critics also say that farmers have fewer seed choices.
    "The companies are making their best, highest-yielding variety seeds available only in the genetically engineered version," said Bill Freese, a policy analyst at the Center for Food Safety, "so they don't have a choice of good conventional seed."
    Freese challenges Monsanto's claim that a win for Bowman would kill seed innovation. According to a Bloomberg analysis, roughly 13 percent of the company's $13.5 billion revenue in 2012 revenue came from soybean sales. "The majority of revenue in the industry comes from corn seeds that no one replants anyway," he said.
    Monsanto says it spends roughly $1.5 billion a year on research and development - money it says it can't recoup if patent law doesn't cover seed progeny. Many supporters from business and academia agree that R&D budgets will be decimated unless there is a return on the investment.
    "In a short period of time, the market for the technology would become saturated with copies," wrote the authors of a brief filed by 16 universities and representative groups.
    "This would devalue existing patents directed to artificial, progenitive technologies and remove any incentive for private sector entities to license and develop future technologies of this kind. Ultimately, the public may never benefit from such inventions."
    The brief goes on to say that while Bowman was authorized to use the first-generation seed, he "was not authorized to plant subsequent generations of seeds for the purpose of 'making' even more generations of seeds containing the patented trait."
    The difference here, some attorneys say, is that the patented item is a product of nature that regenerates on its own.
    "Are they going to take nature into account? Are they going to take into account that this is what beans do?" asked Yvette Liebesman, a law professor at St. Louis University. "You can patent anything under the sun created by a human. If a plant is doing what plants do, is that something that humans have done?"
    Monsanto has an answer for that.
    "This is not just a seed," Snively said, "and to suggest that plants just grow themselves is preposterous."
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