Trace Contamination by Patented Seeds Insufficient to Establish Standing to Challenge Patents

Flying under the AMP v. Myriad radar was the Federal Circuit’s decision in Organic Seed Growers v. Monsanto. Let’s first recall the story of Bowman v. Monsanto. A small farmer purchased a batch of mixed seeds from an authorized vendor, expecting the batch to contain Monsanto’s patented Roundup Ready^® seeds. The farmer then planted the seeds, selected for those with the Roundup Ready^® trait, and saved them for future plantings. The Supreme Court unanimously held that the patent exhaustion doctrine does not excuse the small farmer from liability for infringing Monsanto’s patents.

In my commentary on Bowman, a hypothetical scenario was posed where the small farmer was more unwitting and had inadvertently planted Monsanto’s patented Roundup Ready^® seeds. In such a scenario, would the unwitting small farmer nevertheless have been liable for infringing Monsato’s patented seed technology? The Supreme Court’s decision in Bowman, which is narrowly tailored to only the case’s specific set of facts, offers no guidance as to how the hypothetical might be resolved. Luckily, the Federal Circuit’s Organic Seed Growers decision might.

In Organic Seed Growers, the Federal Circuit denied declaratory relief to a band of more than 60 farmers, seed vendors, and agricultural organizations from California to Florida (and even Canada) seeking to invalidate 23 of Monsanto’s patents relating to various technologies for genetically modified seeds. The band of agriculturists grows, uses, or sells conventional seeds that do not incorporate Monsanto’s technologies. Many have organic certifications, and generally eschew transgenic seeds and glyphosate-based herbicides such as Monsanto’s Roundup^® herbicide.

The concerns that precipitated the agriculturists’ lawsuit were primarily two-fold: the proliferation of Monsanto’s transgenic seeds, and Monsanto’s reputation as an aggressive and vigilant enforcer of its patent rights. The plaintiffs asserted that the prevalence of Monsanto’s patented seeds increases the risk that those seeds would accidentally contaminate an innocent crop. This increased risk, in turn, cultivates fear of a patent infringement suit by the litigious Monsanto. The plaintiffs further noted that Monsanto had refused their request for a covenant not to sue. Instead, Monsanto directed the plaintiffs to a statement posted on its website, which reads in relevant part:

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

A declaratory judgment is warranted only by the existence of an actual controversy of sufficient immediacy and reality. The party seeking declaratory judgment must demonstrate a “substantial risk” that some objectively identified harm or threat of harm will occur. In the context of patent infringement, this usually means that a declaratory judgment plaintiff needs to show “significant, concrete steps” to engage in potentially infringing activity, and therefore an imminent threat of lawsuit. That is, there must be some degree of certainty that the declaratory plaintiff would conduct infringing activity.

In denying declaratory relief to the plaintiffs, the Federal Circuit focused on Monsanto’s explicit representation on its website that it will not pursue patent infringement lawsuits against farmers whose crops inadvertently contain traces of Monsanto’s transgenic seeds. The Federal Circuit determined that while this representation does not amount to a covenant not to sue, it has a similar effect as an unequivocal disclaimer of any intent to sue growers or seed sellers for inadvertently using or selling “trace amounts” of Monsanto’s seeds. Further, typical organic certification standards cap the permissible amount of contamination by genetically modified seeds at one percent, which the Federal Circuit adopted as the definition of “trace amounts”.

The Federal Circuit acknowledged the limited scope of Monsanto’s disclaimer, which applies only to inadvertent growers or sellers of inadvertent “trace amounts”, i.e., one percent or less, of the seeds. Nevertheless, since Monsanto is relying on the disclaimer to defeat the plaintiffs’ declaratory judgment claims, Monsanto is therefore judicially estopped from suing the plaintiffs for future action falling within the scope of the disclaimer.

The Federal Circuit easily found that Monsanto’s disclaimer mooted any potential controversy between the parties. None of the plaintiffs could demonstrate a “substantial risk” of inadvertently using or selling more than one percent of Monsanto’s seeds. In other words, none of the plaintiffs could show that they were engaging in activities which could place them outside the scope of Monsanto’s disclaimer, or had taken “significant, concrete steps” toward such activities. In fact, the nature of the plaintiffs’ businesses as growers, users, and sellers of conventional, non-transgenic seeds meant that the risk of contamination by Monsanto’s seeds was insubstantial, and even speculative.

The Organic Seed Growers decision is particularly interesting for its dicta on “inadvertent infringement”. Disclaimer and judicial estoppel aside, could Monsanto assert its patents, and prevail, against a grower if wind blows Monsanto’s seeds onto the grower’s fields and the grower inadvertently and innocently harvests and replants, or sells the seeds? Supreme Court’s decision in Bowman seems to imply a possibility that passively permitting the seeds to grow, that is, when the seeds’ multiplication is outside the grower’s control, might not amount to an infringing use.[1] The Federal Circuit, however, is not reading much, if anything, into that possibility.

A patent infringer is plainly one who uses or sells a patented invention without authorization. The presence or absence of guilty intent is not a factor in determining patent infringement. Neither is the extent of infringement, for that matter. Indeed, the Federal Circuit premised that “[f]or purposes of this appeal, we will assume (without deciding) that using or selling windblown seeds would infringe any patents covering those seeds, regardless of whether the alleged infringer intended to benefit from the patented technology” (emphasis added). Thus, even though the Federal Circuit, like the Supreme Court, declined to broadly decide on the issue of the liability of an inadvertent infringer, its opinion does give us a glimpse of the Federal Circuit’s position. It’s a position that, if true, would certainly be to Monsanto’s liking.

At oral argument in Organic Seed Growers, Monsanto protested that it has neither sued nor intended to sue “inadvertent infringers”. This is a rather shallow protest, however, as Monsanto defines “inadvertent infringers” in a narrow, most self-advantageous way. Monsanto admits as much in Organic Seed Growers, “[making] clear that its view of what constitutes an ‘inadvertent infringer’ is quite narrow, excluding those growers whose crops become accidentally contaminated . . . but who, knowing of the contamination, harvest and replant or sell the seeds.” Monsanto was careful to resist expanding the scope of “inadvertent infringers” and to never represent that it would forgo suits against any inadvertent infringers. As such, despite the disclaimer, Monsanto has cleverly reserved the right to enforce its patents against at least those growers or sellers who accidentally use or sell greater than trace amounts of the seeds. Monsanto has also wilily limited the scope of the disclaimer to those growers or sellers who are truly ignorant of the contamination. The Federal Circuit articulated the disclaimer as “[disclaiming] 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” (emphasis added). Growers or sellers’ knowledge of the contamination at any time would likely unbind Monsanto from the disclaimer and allow Monsanto to assert its patents against the growers or sellers, even if the amount of Monsanto’s seeds at play remains less than one percent.

Monsanto emerged the obvious victor in this case. However, while Monsanto’s patents dodged being challenged, the growers, seed sellers, and agricultural organizations did not walk away entirely empty-handed. Monsanto is as legally crafty as it is litigious. Without a case such as Organic Seed Growers to compel Monsanto’s binding promise not to sue, Monsanto surely would not have agreed to relinquish any opportunities for a lawsuit.