No. 11-796

IN THE

Supreme Court of the United States

VERNON HUGH BOWMAN,

Petitioner,v.

MONSANTO COMPANY, et al.,

Respondents.

On Writ of Certiorari to theUnited States Court of Appeals

for the Federal Circuit

BRIEF OF WASHINGTON LEGAL FOUNDATIONAS AMICUS CURIAE IN SUPPORT OF RESPONDENTS

Richard A. Samp (Counsel of Record)Cory L. AndrewsWashington Legal Foundation2009 Mass. Ave., NWWashington, DC 20036(202) 588-0302rsamp@wlf.org

Date: January 23, 2013

QUESTION PRESENTED

Amicus curiae addresses the following question only:

Whether the first-sale doctrine grants thepurchaser of a patented article the right to make, use,and sell an unlimited number of new copies of thepatented invention that have never been sold.

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TABLE OF CONTENTSPage

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . v

INTERESTS OF AMICI CURIAE . . . . . . . . . . . . . . 1

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . 2

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . 5

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

I. THE PATENT EXHAUSTIONDOCTRINE DID NOT GRANTBOWMAN, BY VIRTUE OF HISCOMMODITY SEED PURCHASES, THERIGHT TO MAKE AN UNLIMITEDNUMBER OF NEW COPIES OF THEPATENTED INVENTION . . . . . . . . . . . . . . . 8

A. The Patent Exhaustion DoctrineDeveloped as a Means ofPromoting Economic Efficiency,Not to Protect the Property Rightsof Purchasers . . . . . . . . . . . . . . . . . . . . 9

B. The Court’s Repair/ReconstructionCase Law Supports the DecisionBelow . . . . . . . . . . . . . . . . . . . . . . . . . 17

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Page

II. ROUNDUP READY® CROPS HAVEBEEN SHOWN TO PROVIDENUMEROUS ENVIRONMENTALBENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 18

A. Decreased Use of More ToxicPesticides . . . . . . . . . . . . . . . . . . . . . . 19

B. Transgenic Crops Have HigherYields . . . . . . . . . . . . . . . . . . . . . . . . . 22

C. Roundup Ready® Crops HaveIncreased Farmers’ Incomes . . . . . . . 23

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

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TABLE OF AUTHORITIESPage(s)

Cases:

Adams v. Burke, 84 U.S. 453 (1873) . . . . . . . . . . . . . . . . 9, 11, 12, 17Aro Mfr. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961) . . . . . . . . . . . . . . . . . . . . . . . 18Bauer & Cie v. O’Donnell, 229 U.S. 1 (1913) . . . . . . . . . . . . . . . . . . . . . . . . . . 9Bloomer v. McQuewan, 55 U.S. 539 (1853) . . . . . . . . . . . . . . . . . . 10, 11, 12Eli Lilly and Co. v. Sun Pharmaceutical Industries, Ltd., 611 F.3d 1381 (Fed. Cir. 2010), cert. denied, 131 S. Ct. 2445 (2011) . . . . . . 1Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094 (Fed. Cir. 2001) . . . . . . . . . . . . . . 17Keeler v. Standard Folding Bed Co., 157 U.S. 659 (1895) . . . . . . . . 12, 13, 14, 15, 16, 18Mitchell v. Hawley, 83 U.S. 544 (1873) . . . . . . . . . . . . . . . . . . . . . . . . 10Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917) . . . . . . . 9, 10, 15, 16Orion IP v. Honda Motor America, 605 F.3d 967 (Fed. Cir. 2010) . . . . . . . . . . . . . . . . 1Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008) . . . . . . . . . . . . . . . . . . . . . . . . 9Therasense Inc. v. Becton, Dickinson and Co., 649 F.33d 1276 (Fed. Cir. 2011) . . . . . . . . . . . . . . 1

Statutes:

35 U.S.C. § 154(a)(1) . . . . . . . . . . . . . . . . . . . . . . 5, 18

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PagesMiscellaneous:

Graham Brookes & Peter Barfoot, GM Crops: The Global Economic and Environmental Impact-The First Nine Years 1996-2004, 8 AgBioForum 2&3 (2005) . . . . . . . . . . . . . . . . . . 23

Economic Research Service/USDA, Adoption of Bioengineered Crops, ERS Agricultural Economic Report No.AER-810, at 26 (2002), available at http://www.ers.usda.gov/media/759233/ aer810h_1_.pdf (last visited Jan. 17, 2013) . . . . . 20

EPA, 1996-1997 Pesticide Market Estimates, available at http://www.epa.gov/opp00001/ pestsales/97pestsales/overview1997.htm (last visited Jan. 17, 2013) . . . . . . . . . . . . . . . . . . 19

EPA, 2006-2007 Pesticide Market Estimates, available at http://www.epa.gov/opp00001/ pestsales/07pestsales/usage2007.htm#3_1 (last visited Jan. 17, 2013) . . . . . . . . . . . . . . . . . . 19

EPA, Glyphosate, R.E.D. Facts (Sept. 1993), available at http://www.epa.gov/oppsrrd1/ REDs/factsheets/0178fact.pdf (last visited Jan. 17, 2013) . . . . . . . . . . . . . . . . . . 20

Wade A. Givens, David R. Shaw, Greg R. Kruger, et al., Survey of Tillage Trends Following the Adoption of Glyphosate-Resistant Crops, 23 WEED TECHNOLOGY (Jan.-Mar. 2009) . . . . . . . 21

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Page(s)

Terrance M. Hurley, Paul D. Mitchell, & George B. Frisvold, Effects of Weed Resistance Concerns and Resistance Management Practices on the Value of Roundup Ready Crops, 12 AGBIOFORUM 3&4 (2010) . . . . . . . . . . . . . . . . 23

Michele C. Marra, Nicholas E. Piggott, & Gerald A. Carlson, The Net Benefits, Including Convenience, of Roundup Ready Soybeans: Results From a National Survey (Sept. 2004), available at http://www.docstoc.com/docs/ 34733342/THE-NET-BENEFITS-INCLUDING- CONVENIENCE-OF-ROUNDUP (last visited Jan. 17, 2013) . . . . . . . . . . . . . . . 21, 23

National Research Council, Impact of Genetically Engineered Crops on Farm Sustainability in the United States (National Academies Press 2010) 22

Steven Sexton & David Zilberman, How Agricultural Biotechnology Boosts Food Supply and Accommodates Biofuels, National Bureau of Economic Research (January 2011) . . . . . . . . 22

INTERESTS OF AMICUS CURIAE

The Washington Legal Foundation (WLF) is apublic interest law and policy center with supporters inall 50 States. WLF devotes a substantial portion of itsresources to defending free enterprise, individualrights, and a limited and accountable government.1

To that end, WLF has regularly appeared beforethis Court and other federal courts in cases raisingimportant issues regarding the scope and enforceabilityof patents. See, e.g., Eli Lilly and Co. v. SunPharmaceutical Industries, Ltd., 611 F.3d 1381 (Fed.Cir. 2010), cert. denied, 131 S. Ct. 2445 (2011) (doublepatenting doctrine); Therasense Inc. v. Becton,Dickinson and Co., 649 F.33d 1276 (Fed. Cir. 2011)(inequitable conduct doctrine); Orion IP v. HondaMotor America, 605 F.3d 967 (Fed. Cir. 2010)(anticipation by prior art).

The nation’s farmers have experiencedtremendous advances in seed technology in recentyears, thanks in large measure to major expendituresfor research and development in this area byRespondent Monsanto Co. and others. WLF isconcerned that the extremely broad interpretation ofthe patent exhaustion doctrine espoused by Petitionerwould, if accepted by the Court, throw into question thenation’s ability to sustain those advances. Thatdoctrine has never previously been understood to

1 Pursuant to Supreme Court Rule 37.6, WLF states thatno counsel for a party authored this brief in whole or in part; andthat no person or entity, other than WLF and its counsel, made amonetary contribution intended to fund the preparation andsubmission of this brief. All parties have consented to the filing ofthis brief; letters of consent have been lodged with the clerk.

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permit purchasers of a patented product to “use” theproduct to create an entirely new product on thetemplate of the original.

WLF is submitting this brief to focus on thehistory of the patent exhaustion doctrine and to explainwhy the rationale for that doctrine is inapplicable tothe facts of this case. WLF does not address issuesrelated to the “conditional sales” doctrine, a doctrinenot relied on by the Federal Circuit in issuing itsdecision and which this Court need not address inresolving the case.

WLF is also submitting this brief to respond toallegations by Petitioner and some supporting amicithat the technology developed by Monsanto has beenbad for the environment. Those environmentalarguments are not directly relevant to the QuestionsPresented in this case. But rather than allow theseinaccurate environmental charges to color the Court’sperception of the case, WLF briefly responds to theallegations.

STATEMENT OF THE CASE

Petitioner Vernon Bowman is an Indiana farmerwho since 1999 has purchased soybean seeds from aseed producer licensed by Respondents Monsanto Co.,et al. (collectively “Monsanto”). Monsanto hasdeveloped a patented technology that enables cropsgrown from those seeds to tolerate glyphosate, a widely

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used agricultural herbicide.2 In order to purchasethose seeds, Bowman was required to sign aTechnology Agreement, acknowledging that Monsanto’stechnology was protected under U.S. patent law andagreeing not to replant harvested Roundup Ready®soybeans. Each spring, Bowman planted the licensedseeds (as the Agreement authorized him to do), andthere is no evidence that he ever replanted soybeansgrown from the seeds.

At issue here are soybeans grown by Bowman asa late-season “second crop.” In a highly unusualprocedure, Bowman obtained the seeds for his secondcrop by purchasing commodity seeds from a local grainelevator. Bowman suspected that many of those seedscarried the Roundup Ready® trait. His suspicionproved accurate when he applied glyphosate to thesecond crop and most of the soybeans survived. Hesaved seeds from this second-crop harvest andthereafter used the saved seeds to plant each year’ssecond-crop soybeans.3 By then he was aware that allof these seeds carried the Roundup Ready trait, and hewas thus able to apply glyphosate to each year’s crop.

The result was that Bowman grew second-cropsoybeans that he knew contained Monsanto’s patentedglyphosate-tolerant genetic trait, and he did so without

2 Monsanto manufactures glyphosate under the trademarkRound-Up ®. Soybeans to which the glyphosate-tolerant genetictrait has been added are known as Round-Up Ready® soybeans.

3 Bowman occasionally supplemented his second-crop seedsupply by purchasing additional commodity seeds from the localgrain elevator.

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Monsanto’s authorization and without paying a royalty. When Monsanto discovered Bowman’s activity, it filedsuit for patent infringement.

The trial court rejected Bowman’s argument thatthe doctrine of patent exhaustion barred enforcementof Monsanto’s patents. It granted Monsanto’s motionfor summary judgment, ruling that Bowman hadinfringed the patents.

The Federal Circuit affirmed. Pet. App. 1a-18a. The appeals court held that patent exhaustion did notbar Monsanto’s infringement claim. Id. at 10a. Itdeemed irrelevant Bowman’s claim that Monsanto’spatent rights in the commodity seeds purchased byBowman were exhausted. Even if that claim wereaccurate, the court concluded, Bowman infringed thepatent by growing a new generation of RoundupReady® soybeans without obtaining a license fromMonsanto to do so. Id. The court explained:

The fact that the patented technology canreplicate itself does not give a purchaser theright to use replicated copies of the technology. Applying the first sale doctrine to subsequentgenerations of self-replicating technology wouldeviscerate the rights of the patent holder. Theright to use does not include the right toconstruct an essentially new article on thetemplate of the original, for the right to makethe article remains with the patentee.

Id. (citations omitted). The appeals court said thatBowman was free to use his commodity seed as animalfeed “or for any other conceivable use” other than for

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the purpose of growing new Roundup Ready®soybeans. Id.

SUMMARY OF ARGUMENT

Federal law grants patent holders the “right toexclude others from making, using, offering for sale, orselling the invention.” 35 U.S.C. § 154(a)(1). Monsantonever authorized Bowman to “mak[e]” RoundupReady® soybeans from the commodity seeds hepurchased from the local grain elevator, but Bowmannonetheless knowingly did so. Accordingly, heinfringed Monsanto’s patents, and the lower courtsproperly awarded damages.

Bowman contends that under the doctrine ofpatent exhaustion, Monsanto retained no patent rightsin the commodity seed that he purchased from thegrain elevator. If so, Bowman was free to use thecommodity seed as he saw fit; for example, he couldhave used it as animal feed. But his right to use thecommodity seed did not encompass the right to make abrand new soybean plant containing the glyphosate-tolerant genetic trait protected by Monsanto’s patents. Federal courts have long imposed strict limitations onthe rights of the purchaser of a patented invention touse that product to make brand new copies of theinvention. In the absence of such a limitation,patentees would quickly lose the ability to profit fromtheir inventions.

The history of the patent exhaustion doctrinedemonstrates that it was never intended to apply in themanner espoused by Bowman. Bowman suggests thatthe doctrine arose from an aversion to limitations on

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private property rights, that once an individual gainedtitle to property courts were reluctant to allow a seller– even one holding a patent on the item sold – tointerfere with the buyer’s right to do as he wished withhis own property. Pet. Br. 42-44. This Court’s case lawsuggests otherwise. The exhaustion doctrine was bornof a desire to promote efficiency in economictransactions. The courts concluded that the greatestefficiency could be achieved if, in general, patenteeswere required to be paid their entire royalty (i.e., thevalue added to the product by virtue of the patentee’smonopoly rights) at the time of first sale.

Any other rule would be inefficient, the courtsconcluded, because (among other things): (1)subsequent buyers would have difficulty knowing forcertain the extent of the patentee’s continued claim tothe property and thus would be less willing topurchase; and (2) the absence of a first sale rule wouldcreate uncertainty even between the contractingparties regarding the patentee’s continuing rights.

The efficiency-enhancing explanation for thepatent exhaustion doctrine undercuts Bowman’sposition that a purchaser’s unrestricted right to “use”his property free from patent restrictions includes theright to fashion a new patented product from theexisting one. The exhaustion doctrine assumes that inan efficient market, the patentee on average willreceive a fair royalty – no more and no less – each timeone of his patented products is placed into the streamof commerce. That assumption cannot be squared withBowman’s contention, because if (as he contends) thepurchaser of a single Roundup Ready® soybean seedcan parlay that seed into a thousand new seeds, the

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commercial use of those thousand seeds will generateonly one royalty for Monsanto.

Bowman objects to the Federal Circuit’s relianceon case law that prohibits a purchaser fromconstructing essentially new items on the template ofthe original. Pet. Br. 38 (“Bowman’s use of commodityseeds for planting has nothing in common with‘reconstruction.’ No parts were worn out and replaced;the seeds were simply used.”). That objection iswithout merit. The Court has long cautioned that thepurchase of a patented product carries with it the rightto use the product only so long as it is capable of use. Bowman’s assertion that “no parts were worn out”undercuts his position. Had individual parts of hisseeds been worn out, he would have been permitted torepair those parts in order to extend the useful life ofthe seeds. But that right to repair has never beendeemed to include the right to make an entirely newproduct. There is no plausible argument that thesecond-crop glyphosate-tolerant soybeans grown byBowman were simply repaired versions of thecommodity seed that he purchased from the grainelevator.

Several of Bowman’s amici have largely ignoredpatent exhaustion case law and instead have focusedon alleged environmental harms that supposedly flowfrom use of Roundup Ready® crops. See, e.g., Brief forAmici Curiae Center for Food Safety and Save OurSeed (“CFS Br.) at 2-25. Those allegations are notwell-founded. Their claim that Roundup Ready®technology has led to an increase in “overall pesticideuse,” CFS Br. at 4, is false; pesticide usage has beendeclining. Many attribute the decline to the increased

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use of Roundup Ready® crops, which in turn permitssubstitution of Roundup® for less efficient herbicidesthat needed to be applied in greater quantities. Use ofRoundup Ready® crops is also associated withdecreased soil tillage. That trend is applauded byenvironmentalists; tillage causes soil erosion and canendanger water quality.

Contrary to CFS’s contention, transgenic cropsproduce higher yields than traditional crops. Thehigher yield derives from their glyphosate tolerance, atrait that permits better weed control and thus reducedcrop damage caused by weeds. Although CFS decriesincreased expenditures for resisting weeds that havebegun to develop resistance to glyphosate, it ignoresthe significant increase in net farm income associatedwith Roundup Ready® technology.

ARGUMENT

I. THE PATENT EXHAUSTION DOCTRINEDID NOT GRANT BOWMAN, BY VIRTUEOF HIS COMMODITY SEED PURCHASES,THE RIGHT TO MAKE AN UNLIMITEDNUMBER OF NEW COPIES OF THEPATENTED INVENTION

Beginning in 1999, Bowman regularly grewsoybean crops that he well knew exhibited Monsanto’spatented glyphosate-tolerant genetic trait. He assertsthat the patent exhaustion doctrine prevents Monsantofrom charging him with infringement. That assertionmisconceives the exhaustion doctrine, which grants thea purchaser of a patented product the right to use thatproduct free from patent law restrictions, not an

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unbounded right to make and sell new copies of theproduct.

Bowman contends that the commodity seed hepurchased from the local grain elevator was sold to himwithout any of Monsanto’s patent restrictions. If so, hewas entitled to use the seed as he saw fit. But nothingin the patent exhaustion doctrine granted Bowman theright to make brand new Roundup Ready® soybeans.

A. The Patent Exhaustion DoctrineDeveloped as a Means of PromotingEconomic Efficiency, Not to Protectthe Property Rights of Purchasers

Understanding why the patent exhaustiondoctrine does not protect a purchaser’s right to “use”his purchased goods to make or grow duplicateproducts requires an examination of the developmentof that doctrine over the past 150 years.

As the Court recently explained, “Thelongstanding doctrine of patent exhaustion providesthat the initial authorized sale of a patented itemterminates all patent rights to that item.” QuantaComputer, Inc. v. LG Electronics, Inc., 553 U.S. 617,625 (2008). After an authorized sale has occurred, theCourt has invoked the doctrine to hold that a patenteemay not rely on patent law to restrict, inter alia, thelocations at which the patented item may be used,Adams v. Burke, 84 U.S. 453 (1873); the price at whichit may be sold, Bauer & Cie v. O’Donnell, 229 U.S. 1(1913); and the method by which it may be operated. Motion Picture Patents Co. v. Universal Film Mfg. Co.,243 U.S. 502 (1917). The patentee is entitled to

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negotiate a contract with the purchaser for the purposeof limiting the manner in which the purchaser may usethe item, but enforcement of any such agreement mustbe through contract law, not patent law. Id. at 514. Moreover, if the purchaser resells the item, thepatentee will likely be unable to enforce the contractwith the new owner, with whom he lacks privity.

Bowman suggests that the patent exhaustiondoctrine is a byproduct of a desire by courts to protectthe property rights of the purchaser of a patented item. Pet. Br. 43 (“In essence, exhaustion arises from anylawful title transfer. . . . That title vests in someoneother than the seed seller amounts to exhaustion ofpatent rights in progeny seeds.”); id. at 44 (“Farmerssuch as Bowman who choose to plant commodity grainfor their second crop lawfully own the next-generationseeds. . . . And because title in seed that farmers growvests with those farmers, exhaustion logically extendsto those seeds as well.”). But that theory does notexplain why courts permit patentees to resort tocontract law for the purpose of continuing to exertdominion over patented items that they have sold. Nordoes it explain why patent law permits patentees toexert dominion over a patented item that was never thesubject of an authorized sale, even though title to theitem is lodged firmly with the alleged infringer. See,e.g., Mitchell v. Hawley, 83 U.S. 544 (1873).

The exhaustion doctrine began as an effort bythe courts to determine the intent of the parties to asales contract between a patentee and the purchaser ofa patented item. In Bloomer v. McQuewan, 55 U.S. 539(1853), the 1833 sales contract for a planing machinedid not specify what the effect on the purchaser’s rights

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would be if the patent term (then scheduled to expire in1849) were extended. Congress did, in fact, laterextend the patent term by seven years, to 1856. Notingthat patentees’ rights under federal patent law were nogreater after 1849 than they had been before 1849 withrespect to sold items, the Court looked solely tocontract law to determine whether the purchaser’srights to use the machine remained in force during thepatent-extension period. 55 U.S. at 549-50. The Courtconcluded that the parties must have assumed at thetime of the 1833 contract signing that the purchaserwould be permitted to continue to use the machine foras long as it lasted. Id. at 550-51. The Court held,“[U]nder the general law [i.e., the federal common lawof contracts], in force when the special act of Congresswas passed [in 1845], a party who had purchased theright to use a planing machine during the period towhich the patent was first limited, was entitled to useit during the extension authorized by that law.” Id. at550.

The Court later concluded that Bloomer v.McQuewan had established a patent exhaustiondoctrine, whereby a patented item’s initial authorizedsale terminates all patent rights to that item, notsimply (as in McQuewan) an alleged patent right torescind a previously granted license to use a patenteditem.4 Thus, in Adams, the Court held that a patenteecould not invoke the patent law to prevent a purchaserof a patented coffin lid (who was not in privity of

4 The patentee in McQuewan had argued that the 1845congressional statute had granted him just such a right ofrescission. Id. at 551-54.

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contract with the patentee) from using the lid whereverhe chose. The Court explained:

But in the essential nature of things, when thepatentee, or the person having his rights, sells amachine or instrument whose sole value is in itsuse, he receives the consideration for its use andhe parts with the right to restrict that use. Thearticle, in the language of the court, passeswithout the limit of the monopoly. That is tosay, the patentee or his assignee having in theact of sale received all the royalty orconsideration which he claims for the use of hisinvention in that particular machine orinstrument, it is open to the use of the purchaserwithout further restriction on account of themonopoly of the patentees.

84 U.S. at 456 (citing McQuewan).

Adams nonetheless made clear that apurchaser’s right to make use of patented technologydid not continue indefinitely. Rather, it continued only“so long as [the purchased machine] was capable ofuse.” Id. at 455.

The Court more fully explained the rationale forthe patent exhaustion rule 22 years later, in Keeler v.Standard Folding Bed Co., 157 U.S. 659 (1895). Inconcluding that “one who buys patented articles ofmanufacture from one authorized to sell them becomespossessed of an absolute property in such articles,unrestricted in time or place,” the Court explained thatits rule was justified by a need to avoid “[t]heinconvenience and annoyance to the public that an

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opposite conclusion would occasion.” Keeler, 157 U.S.at 666-67. The Court emphasized that its rule was notbased on solicitude for the property rights ofpurchasers, noting that a patentee was free to turn tocontract law if he desired to restrict the purchaser’sfuture use of the product being sold. Id. at 666.

An examination of the facts in Keeler illustratesthe sort of “inconvenience and annoyance to the public”that the Court believed that the patent exhaustiondoctrine would prevent. The plaintiff in Keeler held anexclusive license to sell patented bedsteads inMassachusetts. The defendants purchased identicalpatented bedsteads in Michigan from the Michiganlicensee, then began reselling them in Massachusetts. The Court held that the patent exhaustion doctrinebarred the plaintiff from using the patent laws toprevent the defendants from selling in Massachusetts,even though the defendants knew that the companyfrom which they purchased the bedsteads was onlylicensed to make sales in Michigan. Id. To illustratethe knotty legal issues that would arise—and therebywould inhibit the free flow of commerce—if the patentlaw did not assume that a purchaser of a patented itemwas free to use and sell his property wherever he chose,the Court set forth a series of hypothetical cases:

Suppose, however, the patentee has exercisedhis statutory rights of assigning by conveying toanother an exclusive right under the patent to aspecified part of the United States. What arethe rights of a purchaser of patented articlesfrom the patentee himself within the territoryreserved to him? Does he thereby obtain anabsolute property in the article, so that he can

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use and vend it in all parts of the United States,or, if he take the article into the assignedterritory, must he again pay for the privilege ofusing and selling it? If, as is often the case, thepatentee has divided the territory of the UnitedStates into 20 or more ‘specified parts,’ must aperson who has bought and paid for the patentedarticle in one part, from the vendor having anexclusive right to make and vend therein, onremoving from one part of the country toanother, pay to the local assignee for theprivilege of using and selling his property, orelse be subjected to an action for damages as awrongdoer? And is there any solid distinction tobe made, in such a case, between the right to useand the right to sell? Can the owner of thepatented article hold and deal with it the sameas in case of any other description of propertybelonging to him, and, on his death, does it pass,with the rest of his personal estate, to his legalrepresentatives, and thus, as part of the assetsto be administered, become liable to be sold?

Id. at 661-62. Having identified these “inconvenience[s]and annoyance[s] to the public” that would arise in theabsence of patent exhaustion doctrine, the Courtdeemed the doctrine an appropriate means of avoidingthem. The Court further explained that the doctrinedoes not unfairly penalize patentees by depriving themof royalty rights: “The conclusion reached does notdeprive a patentee of his just rights, because no articlecan be unfettered from the claim of his monopolywithout paying its tribute.” Id. at 666-67.

The Court provided a further explanation of the

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rationale underlying the patent exhaustion doctrine inMotion Picture Patents. In that case, the patenteesought to invoke the patent laws to control post-saleuses of its patented motion picture projectors, evenuses by purchasers with whom it was not in privity. Among other things, the patentee sought to requirepurchasers to display only those films produced by thepatentee. It went so far as to require that all projectorsdisplay a plate (whose removal would eliminate thelicense to use the projector at all) explaining the fullextent of the patentee’s rights, including the right toimpose additional license terms during the life of thepatent. In affirming a decision that invoked the patentexhaustion doctrine to deny an injunction againstviolation of the license terms, the Court made clearthat it deemed tie-in arrangements of this sort toconstitute unauthorized restraints on trade. 243 U.S.at 513. The Court said that the “fair as well as thestatutory measure of [the patentee’s] reward for hiscontribution to the public stock of knowledge” was thefunds derived from the sale of “the right to an exclusiveuse of the new and useful discovery which has beenmade.” Id. It viewed the tie-in arrangement as aneffort by the patentee to derive an unwarranted profitfrom the sale of items not covered by the patent. Id. at515.

In further support of the patent exhaustiondoctrine, the Court also repeated the inconvenience/annoyance rationale articulated in Keeler: “The patentlaw furnishes no warrant for such a practice [of usingthe patent law to restrict post-sale use of patenteditems in order to derive a monopoly profit fromunpatented items], and the cost, inconvenience, andannoyance to the public which the opposite conclusion

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would occasion forbid it.” Id. at 516.

To sum up, case law indicates that the patentexhaustion doctrine developed as a means of promotingefficiency in economic transactions and of preventingthe patentee from imposing unreasonable restraints ontrade as a means of deriving a profit in excess of whathis invention warranted. It was never intended toprotect purchasers, once they acquire title to apatented item, against all incursions on their “right” todo with as they please with their property.

Understood in that light, the patent exhaustiondoctrine is inapplicable to this case. It would beapplicable only if, as Bowman contends, his naked titleto the commodity seeds (and to the infinite generationof soybeans seeds that might follow) were sufficient topermit him to do whatever he desires with hisproperty. But simply because Bowman held title to thesecond-planting soybeans does not mean that thepatent exhaustion doctrine gave him the unlimitedright to make, sell, and use those soybeans. The patentexhaustion doctrine has always presupposed a “firstsale” of some sort, and Monsanto never sold Bowmanany rights with respect to the second-plantingsoybeans.

Moreover, the rationale for the patentexhaustion doctrine, as explained in Keeler and MotionPicture Patents, has no application to Bowman’s claims. Patent-related restrictions on use of property to whichone holds title can cause serious “inconvenience” and“annoyance” to the public when the extent of thoserestrictions cannot be clearly delineated. Unclaritymay exist when the law permits such products to be

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“used” for some purposes but not others. But the linebeing drawn here—Bowman may “use” commodity seedeven though it may be Roundup Ready®, but he maynot “make” new Roundup Ready® soybeans – is easilyunderstood. Moreover, as Monsanto has demonstrated,affirming the judgment below will result in its receiptof only a single royalty for each Roundup Ready®soybean that is made/grown by farmers.

B. The Court’s Repair/ReconstructionCase Law Supports the DecisionBelow

In support of its decision, the Federal Circuitrelied on case law that prohibits a purchaser fromconstructing a new patented item by using the original:

The right to use “do[es] not include the right toconstruct an essentially new article on thetemplate of the original, for the right to makethe article remains with the patentee.”

Pet. App. 14a (quoting Jazz Photo Corp. v. Int’l TradeComm’n, 264 F.3d 1094, 1102 (Fed. Cir. 2001)).

Bowman objects to the reliance on cases thatpermit the purchaser of a patented item to “repair” theitem but not to “reconstruct” it. He asserts, “Bowman’suse of commodity seeds for planting has nothing incommon with ‘reconstruction.’ No parts were worn outand replaced; the seeds were simply used.” Pet. App.38a.

That objection is without merit. The Court haslong cautioned that the purchase of a patented product

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carries with it the right to use the product only so longas it is capable of use. See, e.g., Adams, 84 U.S. at 455;Keeler, 157 U.S. at 663; Aro Mfr. Co. v. Convertible TopReplacement Co., 365 U.S. 336, 346 (1961).

Bowman’s assertion that “no parts were wornout” undercuts his position. Had individual parts of hisseeds been worn out, he would have been permitted torepair those parts in order to extend the useful life ofthe seeds. Id. But the right to repair has never beendeemed to include the right to make an entirely newproduct. WLF recognizes that there are many closecases, where the line between repair andreconstruction is not easily drawn; but this is not aclose case. There is no plausible argument that thesecond-crop glyphosate-tolerant soybeans grown byBowman were simply repaired versions of thecommodity seed that he purchased from the grainelevator.

Bowman’s careful cultivation of second-cropsoybeans constituted the “making” of a product that isprotected by Monsanto’s patents. In the absence ofpermission from Monsanto to engage in such conduct,the Federal Circuit properly concluded that Bowmanviolated 35 U.S.C. § 154(a)(1).

II. ROUNDUP READY® CROPS HAVE BEENSHOWN TO PROVIDE NUMEROUSENVIRONMENTAL BENEFITS

Several of Bowman’s amici have largely ignoredpatent exhaustion case law and instead have focusedon alleged environmental harms that supposedly flowfrom use of Roundup Ready® crops. See, e.g., Brief for

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Amici Curiae Center for Food Safety and Save OurSeed (“CFS Br.) at 2-25. Those allegations are notwell-founded.

By enabling farmers to use glyphosate ratherthan other herbicides, Roundup Ready® technologyoffers several economic and environmental benefits. Roundup Ready® technology has replaced more toxicpesticides, enabled farming practices that promoteconservation, bolstered yield protection, and boostedfarmers’ incomes. In its amicus brief, CFS repeatedlyoverstates environmental concerns, and downplays thepositive effects of agricultural bioengineering. ThoughCFS has concerns over herbicide use and agriculturalbiotechnology in principle, it neglects to mention thatin the absence of glyphosate and Roundup Ready®technology, farmers would be using more dangerousherbicides and more environmentally harmful farmingpractices.

A. Decreased Use of More ToxicPesticides

Contrary to CFS’s allegation that RoundupReady® technology has led to an increase in “overallpesticide use,” CFS Br. 4, EPA figures indicate thatoverall pesticide use declined between 1997 and 2007.5 A USDA study attributes this decline in pesticide use

5 Compare EPA, 1996-1997 Pesticide Market Estimates,available at http://www.epa.gov/opp00001/pestsales/97pestsales/overview1997.htm (last visited Jan. 17, 2013) with EPA, 2006-2007Pesticide Market Estimates, available at http://www.epa.gov/opp00001/pestsales/07pestsales/usage2007.htm#3_1(last visitedJan. 17, 2013).

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to the rise of genetically engineered soybeans.6 Roundup® is more effective than its predecessorherbicides, meaning that less Roundup® is requiredrelative to other herbicides to protect one’s crops fromweeds. Additionally, Roundup® is non-selective,meaning it is capable of killing a wide variety of plants. As a result, it can be used in lieu of several targetedherbicides. Before use of Roundup® became an option,growers were forced to administer (and then monitor)combinations of several herbicides. The creation ofRoundup Ready® seeds has allowed farmers to replacethis costly, dangerous, and time-consuming practicewith the use of Roundup®. EPA and USDA data, aswell as Roundup® ’s effectiveness and ability to controla wide spectrum of weeds, contradict CFS’s claim thatRoundup Ready seeds have led to greater pesticide use.

As CFS notes, use of glyphosate has increased. But given that glyphosate is considered less toxic andmore environmentally friendly than other herbicides,7

6 Economic Research Service/USDA, Adoption ofBioengineered Crops, ERS Agricultural Economic Report No.AER-810, at 26 (2002), available at http://www.ers.usda.gov/media/759233/aer810h_1_.pdf (last visited Jan. 17, 2013).

7 The USDA has concluded, “Glyphosate has a half-life inthe environment of 47 days, compared with 60-90 days for theherbicides it commonly replaces. The herbicides that glyphosatereplaces are 3.4 to 16.8 times more toxic, according to a chronic riskindicated based on the EPA reference dose for humans.” EconomicResearch Service/USDA, at 28. The EPA has deemed glyphosate “ofrelatively low oral and dermal acute toxicity,” and categorized theherbicide in Toxicity Category III (on a scale of I to IV, IV being theleast dangerous.) It is not considered carcinogenic. EPA conducteda “worst-case scenario” study and concluded that human dietaryexposure and risk are minimal. See EPA, Glyphosate, R.E.D. Facts

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its increased use is an environmental benefit. Glyphosate breaks down rapidly in the environment,and its adsorptive nature makes it unlikely to migrateto ground water. Unlike other herbicides, glyphosatekills weeds without substantially harming exposedanimals, the soil, or water quality.

Roundup Ready® crops are also associated withdecreased tillage. A 2009 study showed that use ofRoundup Ready® seeds led to a 23% increase inconservation tillage practices,8 while another confirmedthat “[t]illage trips decrease, percent of soybean acresin no-till systems increase, and the value of time savedin tillage activities increases as farmers shift fromtraditional to [Roundup Ready®] soybeans.”9 Tillagecauses soil erosion, requires more labor, demandshigher fuel costs and energy use, and endangers waterquality by increasing the risk of surface waterpollution.

(Sept. 1993), available at http://www.epa.gov/oppsrrd1/REDs/factsheets/0178fact.pdf (last visited Jan. 17, 2013).

8 Wade A. Givens, David R. Shaw, Greg R. Kruger, et al.,Survey of Tillage Trends Following the Adoption of Glyphosate-Resistant Crops, 23 WEED TECHNOLOGY at 152 Jan.-Mar. (2009).

9 Michele C. Marra, Nicholas E. Piggott, & Gerald A.Carlson, The Net Benefits, Including Convenience, of RoundupReady Soybeans: Results From a National Survey, at 17 (Sept.2004), available at http://www.docstoc.com/docs/34733342/THE-NET-BENEFITS-INCLUDING-CONVENIENCE-OF-ROUNDUP(last visited Jan. 17, 2013).

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B. Transgenic Crops Have Higher Yields

Transgenic crops have higher yields than theirnon-genetically modified counterparts.10 CFS obscuresthis fact by repeatedly stating that the sole reason that genetically engineered crops have been engineered is toincrease herbicide resistance. CFS Br. at 3. But seedsneed not be engineered for the purpose of increasingyields to achieve the same result. Indeed, severalstudies point to evidence that agriculturalbiotechnology increases yields and, as a result, lowersfood prices.11 Roundup Ready® technology improvesyields by reducing crops’ susceptibility to herbicides,which in turn combats crop destroying weeds. Thus,the technology increases overall yields by reducing theamount of damage caused by weeds.

The purpose of the CFS’s attack is to disparagethe motives behind agricultural biotechnology. According to CFS, Monsanto’s “favorite myth abouttheir product is that they are needed in order to ‘feedthe world.’” CFS Br. at 8. But yield is notdeterminative of whether Roundup Ready crops haveameliorated hunger or had an effect on food supply. Asa National Research Council study has recognized,“[Herbicide resistant] crops have not substantiallyincreased yields, but their use has facilitated more

10 Steven Sexton & David Zilberman, How AgriculturalBiotechnology Boosts Food Supply and Accommodates Biofuels,National Bureau of Economic Research at 9 (January 2011).

11 See id.

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cost-effective weed control[.]”12 In places without suchtechnology, costlier and more ineffective means ofcombating weeds prevail.

C. Roundup Ready® Crops HaveIncreased Farmers’ Incomes

Roundup Ready® technology has not onlyencouraged farmers to adopt environmentally-friendlyfarming practices, but also has led to increased farmincome. Roundup Ready® crops have reducedproduction costs and enabled more efficient weedingpractices.13 Due to glyphosate’s non-selective nature,farmers have reduced costs by ceasing to apply andmonitor toxic combinations of herbicides to controldifferent varieties of weeds. Conservation tillagetechniques have further lowered production costs. While agricultural biotechnology has had a positiveimpact on incomes in many farming sectors, the largestgains have been seen in soybeans, where herbicideresistance generated $4.14 billion in added income in2004, or an additional 9.5% to the value of the crop.14

12 National Research Council, Impact of GeneticallyEngineered Crops on Farm Sustainability in the United States 9(National Academies Press 2010).

13 See Terrance M. Hurley, Paul D. Mitchell, & George B.Frisvold, Effects of Weed Resistance Concerns and ResistanceManagement Practices on the Value of Roundup Ready Crops, 12AGBIOFORUM 3&4 (2010).

14 Graham Brookes & Peter Barfoot, GM Crops: The GlobalEconomic and Environmental Impact-The First Nine Years 1996-2004, 8 AgBioForum 2&3 (2005).

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CFS alleges that use of Roundup® leads to weedresistance, and weed resistance in turn leads to highercosts. But CFS ignores the significant improvementsin efficiency offered by Roundup® and RoundupReady® crops. One estimate places the savings fromuse of Roundup Ready® seeds—due to decreased laborand herbicide costs and reduced tillage—at up to $37per acre.15 Another major study confirms those savingsestimates.16

CONCLUSION

Amici curiae request that the Court affirm thejudgment of the court of appeals.

Respectfully submitted,

Richard A. Samp (Counsel of Record)Cory L. AndrewsWashington Legal Foundation2009 Massachusetts Avenue, NWWashington, DC 20036(202) 588-0302rsamp@wlf.org

Dated: January 23, 2013

15 Marra, supra, at 2.

16 See Hurley, supra.