Last month a coalition of farmers, seed sellers, and agricultural organizations (i.e., hereafter “farmers”), recently received an unfavorable but hardly shocking decision from the United States Court of Appeals for the Federal Circuit. See Organic Seed Growers v. Monsanto. These farmers filed a declaratory judgment action seeking a determination of non-infringement and invalidity with respect to twenty-three patents owned by Monsanto Co. and Monsanto Technology, LLC (collectively, “Monsanto”). The twenty-three patents-in-suit relate to technologies for genetically modifying seeds. The patented technologies are used to incorporate various traits into soybeans, corn, and other agricultural crops, including traits conferring resistance to the herbicide glyphosate (the active ingredient in Monsanto’s product Roundup).
The farmers do not want to use or sell transgenic seed incorporating Monsanto’s technologies. They also oppose the use of glyphosate and do not use it on their crops. So what is the problem then? If they don’t want to infringe and don’t plan on infringing Monsanto patents how could they possibly support a declaratory judgment action against Monsanto? They say they were concerned that if they do indeed become contaminated by transgenic seed Monsanto may come knocking and assert claims of infringement despite the fact that they have done nothing affirmative, unlike farmer Bowman, to infringe the Monsanto patents.
Such a generalized fear, without any preparations to engage in potentially infringing activity, has never been enough to support declaratory judgment jurisdiction. Neither would it be found to support declaratory judgment jurisdiction in this case simply because Monsanto is one of the most hated corporations in the world. Thus, unrealistic hatred and irrational fear of a patent holder, as it turns out, is insufficient to support declaratory judgment jurisdiction.
But the farmers must have had some theory, right? Well, I suppose you could say they had something up their sleeves. In order to fabricate a case or controversy where clearly none existed, the farmers — AFTER filing the declaratory judgment action — sent Monsanto a letter, which asked Monsanto to expressly waive any claim for patent infringement they may ever have against the farmers and memorialize that waiver by providing a written covenant not to sue. The farmers explained that without such a covenant, they would at risk.
With such a disingenuous attempt to fabricate declaratory judgment jurisdiction you really need to ask yourself exactly who the evil party is here! To ask for such a ridiculously broad covenant not to sue was nothing more than grandstanding. Thus, Monsanto understandably refused to provide a blanket covenant not to sue for any and all actions both known and unknown that maybe undertaken by the farmers. Monsanto referred the farmers 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 patent rights where trace amounts of our patented seeds or traits are present in farmer’s fields as a result of inadvertent means.
Through counsel, Monsanto assured the farmers that it was unaware of any circumstances that would give rise to any claim for patent infringement or any lawsuit. Further, counsel for Monsanto explained that Monsanto had no intention of asserting patent-infringement claims against the farmers. You represent that “none of your clients intend to possess, use or sell any transgenic seed, including any transgenic seed potentially covered by Monsanto’s patents.”
Monsanto further alleged that a covenant not to sue is unnecessary because it would not have an incentive to bring suit in the first place because it could not collect significant damages for low levels of inadvertent infringement.
The district court concluded that “these circumstances do not amount to a substantial controversy and . . . there has been no injury traceable to defendants,” and granted Monsanto’s motion to dismiss for lack of subject matter jurisdiction.
On appeal, the Federal Circuit recognized that the Supreme Court has said that a covenant not to sue a declaratory judgment plaintiff moots any case or controversy that would otherwise support a valid action. Here, Monsanto did not provide a covenant not to sue, but that does not mean ipso facto that a declaratory judgment action is appropriate. The Federal Circuit explained:
Taken together, Monsanto’s representations unequivocally disclaim any intent to sue appellant growers, seed sellers, or organizations for inadvertently using or selling “trace amounts” of genetically modified seeds. Monsanto makes clear that this covers “USDA [United States Department of Agriculture]-certified organic farm or handling operation[s],” Appellees’ Br. 6–7, which are prohibited from using genetically modified seed, see 7 C.F.R. § 205.105; J.A. 497–505. While the USDA has not established an upper limit on the amount of trace contamination that is permissible, the appellants argue, and Monsanto does not contest, that “trace amounts” must mean approximately one percent (the level permitted under various seed and product certification standards). We conclude that Monsanto has disclaimed any intent to sue inadvertent users or sellers of seeds that are inad- vertently contaminated with up to one percent of seeds carrying Monsanto’s patented traits.
The Federal Circuit acknowledged that Monsanto’s representation are not, in fact, a covenant not to sue, but would be treated as binding on Monsanto in the same way through judicial estoppel. The Federal Circuit wrote:
While Monsanto’s representations are not a covenant not to sue, they have a similar effect. If we rely on Monsanto’s representations to defeat the appellants’ declaratory judgment claims (as we do), those representations are binding as a matter of judicial estoppel. It is well-established that a party who successfully argues one position is estopped from later adopting a contrary position in a case involving the same patent.
In conclusion the Federal Circuit explained:
In sum, Monsanto’s binding representations remove any risk of suit against the appellants as users or sellers of trace amounts (less than one percent) of modified seed. The appellants have alleged no concrete plans or activities to use or sell greater than trace amounts of modified seed, and accordingly fail to show any risk of suit on that basis. The appellants therefore lack an essential element of standing.
This seems like the right resolution to the case. It was wholly unreasonable for the farmers to ask for a blanket covenant not to sue without them paying for a license. While it is understandable that they would not want to be sued for infringement when they have not engaged in any affirmative activity to reproduce and violate the patent rights, Monsanto has never gone after farmers who have only incidentally infringed. It seems to me that Monsanto hatred fueled this case. Monsanto is considered one of the most evil corporations on the planet for reasons I don’t fully comprehend. I can understand people not personally wanting to eat genetically modified foods, but I fail to see how feeding the planet is evil. Nevertheless, given the utter contempt for Monsanto in the industry we can rest assured that there will be other cases challenging Monsanto patents in the future.- - - - - - - - - -
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Posted in: Biotechnology, Federal Circuit, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patents
About the Author
Gene Quinn is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.