[Ip-health] Kaptur compulsory licensing bill, motivated by Monsanto seed patent disputes

Jamie Love james.love at keionline.org
Tue Feb 19 22:26:35 PST 2013

The bill itself is a statutory license to reuse sees, and disregard
patent license terms from Monsanto.   The details of the royalty
setting are left to the Secretary to decide later.  BNA and others are
not optimistic on the chances of the bill passing, but you never know
what could change things down the road.  She has been offering the
bill for nine years.   Jamie


Kaptur Reintroduces Seed Replanting Bill But Supreme Court Decision Coming Soon
Tuesday, January 15, 2013
from Patent, Trademark & Copyright Law Daily™

Rep. Marcia C. Kaptur (D-Ohio) reintroduced Jan. 4 the Seed
Availability and Competition Act (H.R. 193) that would “require
persons who seek to retain seed harvested from the planting of
patented seeds to register with the Secretary of Agriculture and pay
fees set by the Secretary for retaining such seed.”

The fees would be deposited in a “Patented Seed Fund” administered by
the secretary for payment to patent holders. Farmers paying the fees
would “not be bound by any contractual limitation on retaining such
seed, or by any requirement to pay royalties or licensing or other
fees, by reason of the patent, for retaining such seed.”

The effect of the bill would essentially be a compulsory licensing of
patents owned by Monsanto Co., which has successfully litigated patent
infringement cases against farmers who harvest the company's Roundup
Ready seeds and replant them in second and subsequent years.

H.R. 193 was referred to both the Agriculture Committee and the Ways
and Means Committee, but action on the bill would be a surprise.
Kaptur has been fighting for such legislation since 2004, it has been
referred to those two committees each time, and there is no record of
any activity on the bill in either committee.

The U.S. Supreme Court, however, will be addressing the issue in its
current session and could give farmers more relief than would H.R.
193. The case the high court will decide challenges whether the
second-generation seed is subject to the patent exhaustion doctrine,
such that farmers would be free to replant without infringing.

Monsanto's Many Wins

Monsanto licenses its technology to seed producers, who in turn
sublicense it to farmers, under the terms of the Monsanto Technology
Agreement. The agreement limits a farmer's planting of seeds to a
single season, but the Roundup Ready trait carries forward to each
successive seed generation. Monsanto's litigation has generally been
to fight instances of seed planting in a second or subsequent season
without license payments.

After initial success in a Canadian court, the company won multiple
cases against farmers at the Federal Circuit:

• Farmer Homan McFarling was found likely to infringe two patents
(U.S. Patent Nos. 5,352,605 and 5,633,435), and he was prohibited in a
preliminary injunction from continuing to plant saved Roundup Ready
seeds. Monsanto Co. v. McFarling, 302 F.3d 1291, 64 U.S.P.Q.2d 1161
(Fed. Cir. 2002). The farmer had challenged the forum selection clause
in the Technology Agreement. Two years later, the court upheld the
dismissal of McFarling's antitrust counterclaim and his patent misuse
defenses. 363 F.3d 1336, 70 U.S.P.Q.2d 1481 (Fed. Cir. 2004).

• Two years after that, the court also held that the Technology
Agreement does not constitute an illegal tying arrangement or patent
misuse, in a case covering the '605 patent and three more (Nos.
5,322,938; 5,164,316; and 5,196,525). Monsanto Co. v. Scruggs, 459
F.3d 1328, 79 U.S.P.Q.2d 1813 (Fed. Cir. 2006).

• The '605 patent was again found infringed in 2008, as the appellate
court rejected the farmer's argument that plant varieties are only
patentable under the Plant Protection Act of 1930 or the Plant Variety
Protection Act of 1970, in Monsanto Co. v. David, 516 F.3d 1009, 85
U.S.P.Q.2d 1963 (Fed. Cir. 2008).

• The court held in September 2011 that the result of self-replicating
technology--the next generations of harvested seeds--is a “newly
infringing article.” Thus, even if the original seed is subject to
patent exhaustion after its first sale, replanting the second
generation is not. Monsanto Co. v. Bowman, 657 F.3d 1341, 100
U.S.P.Q.2d 1224 (Fed. Cir. 2011).

The Federal Circuit is currently considering one more challenge, this
time a declaratory judgment action brought by farmers and organic food
organizations. The court heard oral argument on Jan. 10 of an appeal
of the U.S. District Court for the Southern District of New York's
decision that the plaintiffs lack standing to seek a declaration of
patent ineligibility under 35 U.S.C. §101. Organic Seed Growers and
Trade Association v. Monsanto Co., 851 F. Supp. 2d 544, 103 U.S.P.Q.2d
1623 (S.D.N.Y. 2012).

Supreme Court Will Hear Issue Feb. 19

The Supreme Court granted the cert petition in Bowman on Oct. 5.
Bowman v. Monsanto Co., No. 11-796, review granted Oct. 5, 2012. The
grant was a mild surprise after a recommendation by the solicitor
general to deny review.

Indiana soybean farmer Vernon Hugh Bowman is appealing the Federal
Circuit's ruling described above.

According to the petition, Monsanto has exhausted its patent rights
after an authorized sale “for their natural and foreseeable
purpose--namely, for planting.” Should the Federal Circuit's ruling
stand, the petition said, this would create an exception to the patent
exhaustion doctrine for self-replicating technologies.

The high court will hear oral argument in the case on Feb. 19.

By Tony Dutra

Text of the bill can be found at: http://pub.bna.com/ptcj/HR19313Jan4.pdf.

James Love.  Knowledge Ecology International
http://www.keionline.org, +1.202.332.2670, US Mobile: +1.202.361.3040,
Geneva Mobile: +41.76.413.6584, efax: +1.888.245.3140.

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