Monsato Company v. McFarling, 302 F.3d 1291 (2002)
Facts: Monsato developed Roundup® resistance in plants, including seeds to produce the plants, the genes to enable the Roundup resistance, and the method of producing the genetically modified plants. 302 F.3d at 1293. Roundup, an herbicide used for weed control around plantings, is applied to a crop via controlled spraying. This enables a producer to save an enormous amount of labor costs. Id.
Producers purchase the seeds from licensed distributors. Id. When purchasing the seeds, the crop farmer signs a “Technology Agreement,†stating that he or she will only use the seeds in one season’s planting; seeds produced from the grown plants may not be used, nor may a producer supply seeds to another for replanting.
Even though McFarling signed the agreement, he saved 1,500 bushels of Roundup-ready soybeans from his previous year’s harvest and planted them. Id. He then repeated the process again for a second year. Id. McFarling admits to breaching the Technology Agreement. Id.
Procedural Posture: Monsato brought an infringement and breach of contract suit against McFarling in the Eastern District of Missouri. Id. at 1294. After the Supreme Court ruled, upon certified questioning from the district court, that plant seeds and seed-grown plants are Section 101 subject matter, Monsato was awarded a preliminary injunction. Id. McFarling appealed, challenging the district court’s analysis of Monsato’s success on the merits. Id.
Issues:1) Does the Technology Agreement create an illegal tying arrangement by requiring producers to buy new seeds every year, instead of allowing them to produce their own seeds from a previous year’s crop? 2) Does the contractual prohibition against using the patented soybeans to produce additional seeds for planting violate the doctrines of patent exhaustion and first sale? 3) Does the prohibition against using the previous year’s seeds, when only enough seeds are produced for the farmer’s personal use, violate Section 2543 of the Plant Variety Protection Act (PVPA), a section that permits farmers to save seeds of plants registered under the PVPA? 4) Does it matter that Monsato sells its seeds at a lower price in another country, that Roundup-ready seeds are more expensive than conventional soybean seeds, and that McFarling can produce Round-up ready seeds himself, at a cheaper cost than what he can buy them for?
Rules on Preliminary Injunctions:The granting of a preliminary injunction is reviewed under an abuse of discretion standard. Id. at 1296. A preliminary injunction must establish 1) a reasonable likelihood of success on the merits; 2)irreparable harm, or harm not readily remediable monetarily; 3) a balance of hardships tipping in favor of the complainant; and 4) that the public interest is not disserved by the injunction. Id. at 1296-1297.
Holding:1) No. McFarling is not required to buy future patented seeds from Monsato in order to buy present patented seeds. Id. at 1298. 2) No. The original sale of the seeds did not confer a license to construct new seeds, and since the seeds were not sold by the patentee, they entailed no principle of patent exhaustion. Id. at 1299. Furthermore, the first sale doctrine of the patent right is not implicated because the original batch had never been sold. Id. 3) No. The right to save seed of plants registered under the PVPA does not impart the right to save seed of plants patented under the Patent Act. Id. 4) No. A patentee may charge for his product whatever the market will bear. Id.
Reasoning: McFarling is not required to buy future, patented seeds from Monsato in order to buy present patented seeds. Id. at 1298. A purchaser’s desire to buy a superior product does not require a benevolent behavior by the provider of the product. Id. There were no impediments requiring McFarling to purchase Monsato’s seeds. Id. There are over 200 commercial sources of soybean seeds, including some seeds that are herbicide resistant. Id.
The restrictions in the Technology Agreement are within the scope of the patent grant, for the patents cover the seeds as well as the plants. Id. at 1298-99. The price paid by the producer reflects only the value of the “use†rights conferred by the patentee. Id. at 1299.
The PVPA and the Patent Act are complementary forms of statutory protection of plant breeders’ rights. Id. However, plants can meet utility requirements of patentability, independent of and in addition to rights under the PVPA. Id.
Facts: Monsato developed Roundup® resistance in plants, including seeds to produce the plants, the genes to enable the Roundup resistance, and the method of producing the genetically modified plants. 302 F.3d at 1293. Roundup, an herbicide used for weed control around plantings, is applied to a crop via controlled spraying. This enables a producer to save an enormous amount of labor costs. Id.
Producers purchase the seeds from licensed distributors. Id. When purchasing the seeds, the crop farmer signs a “Technology Agreement,†stating that he or she will only use the seeds in one season’s planting; seeds produced from the grown plants may not be used, nor may a producer supply seeds to another for replanting.
Even though McFarling signed the agreement, he saved 1,500 bushels of Roundup-ready soybeans from his previous year’s harvest and planted them. Id. He then repeated the process again for a second year. Id. McFarling admits to breaching the Technology Agreement. Id.
Procedural Posture: Monsato brought an infringement and breach of contract suit against McFarling in the Eastern District of Missouri. Id. at 1294. After the Supreme Court ruled, upon certified questioning from the district court, that plant seeds and seed-grown plants are Section 101 subject matter, Monsato was awarded a preliminary injunction. Id. McFarling appealed, challenging the district court’s analysis of Monsato’s success on the merits. Id.
Issues:1) Does the Technology Agreement create an illegal tying arrangement by requiring producers to buy new seeds every year, instead of allowing them to produce their own seeds from a previous year’s crop? 2) Does the contractual prohibition against using the patented soybeans to produce additional seeds for planting violate the doctrines of patent exhaustion and first sale? 3) Does the prohibition against using the previous year’s seeds, when only enough seeds are produced for the farmer’s personal use, violate Section 2543 of the Plant Variety Protection Act (PVPA), a section that permits farmers to save seeds of plants registered under the PVPA? 4) Does it matter that Monsato sells its seeds at a lower price in another country, that Roundup-ready seeds are more expensive than conventional soybean seeds, and that McFarling can produce Round-up ready seeds himself, at a cheaper cost than what he can buy them for?
Rules on Preliminary Injunctions:The granting of a preliminary injunction is reviewed under an abuse of discretion standard. Id. at 1296. A preliminary injunction must establish 1) a reasonable likelihood of success on the merits; 2)irreparable harm, or harm not readily remediable monetarily; 3) a balance of hardships tipping in favor of the complainant; and 4) that the public interest is not disserved by the injunction. Id. at 1296-1297.
Holding:1) No. McFarling is not required to buy future patented seeds from Monsato in order to buy present patented seeds. Id. at 1298. 2) No. The original sale of the seeds did not confer a license to construct new seeds, and since the seeds were not sold by the patentee, they entailed no principle of patent exhaustion. Id. at 1299. Furthermore, the first sale doctrine of the patent right is not implicated because the original batch had never been sold. Id. 3) No. The right to save seed of plants registered under the PVPA does not impart the right to save seed of plants patented under the Patent Act. Id. 4) No. A patentee may charge for his product whatever the market will bear. Id.
Reasoning: McFarling is not required to buy future, patented seeds from Monsato in order to buy present patented seeds. Id. at 1298. A purchaser’s desire to buy a superior product does not require a benevolent behavior by the provider of the product. Id. There were no impediments requiring McFarling to purchase Monsato’s seeds. Id. There are over 200 commercial sources of soybean seeds, including some seeds that are herbicide resistant. Id.
The restrictions in the Technology Agreement are within the scope of the patent grant, for the patents cover the seeds as well as the plants. Id. at 1298-99. The price paid by the producer reflects only the value of the “use†rights conferred by the patentee. Id. at 1299.
The PVPA and the Patent Act are complementary forms of statutory protection of plant breeders’ rights. Id. However, plants can meet utility requirements of patentability, independent of and in addition to rights under the PVPA. Id.