Monday, May 13, 2013

A Grudging Acknowledgment that Monsanto Deserved to Win

By Mike Dorf

In the circles in which I sometimes run (vegans, hippies, commies, etc.), Monsanto is considered a very evil company.  For one thing, the company has never quite shed its image as one of the two chief manufacturers of Agent Orange (along with Dow).  More directly to the current topic--i.e., the Supreme Court's decision today in Bowman v. Monsanto Co.--the company is the single most important promoter of conventional farming.  Although I'm not as worried about the inherent dangers of GMOs as some of my fellow crunchy green hippies are, I do share the concern that Monsanto's "Roundup Ready" seeds raise serious problems.  More about that below, but first, a few words on today's decision.

Monsanto makes and markets both Roundup--a weed killer--and Roundup Ready (RR) seeds.  Plants grown from the RR seeds have been genetically modified to survive the application of Roundup to the field.  Thus, farmers buy the seeds, plant them, then spray the field with Roundup, which kills just about everything except the plants the farmer is trying to grow, in this particular case, GM soybeans from RR seeds.

As a condition of sale, Monsanto tells farmers that they can plant the RR seeds they buy but they cannot plant the RR seeds produced by the plants that grow from those seeds.  Bowman, however, did just that, and Monsanto sued him for patent infringement.  (Bowman also planted soybeans he bought from other farmers who had grown them from RR seeds.)  He said that the suit was impermissible because the doctrine of "patent exhaustion" gives the purchaser of a patent item (here the RR seeds) the right to control secondary uses and sales.  The SCOTUS, in a unanimous opinion by Justice Kagan, disagreed.  To plant second and successive generations of seeds from the plants grown from the original RR seeds is to make new copies of the patented product, which both the patent and the license prohibit.

The opinion is short and persuasive.  If Monsanto had lost, there would be little incentive for companies to develop seeds or other potentially self-replicating products because after the initial sale, the original manufacturer would not be able to capture the monopoly profits that warrant the initial investment in developing the product.  If you think Monsanto's RR seeds are evil (more on that in a moment, I promise), you might think that's a good non-investment in this particular case, but the general principle espoused by the Court is sound.  Consider a patented 3d printer capable of making innumerable sorts of useful (or fanciful) objects, including an exact replica of itself.  Surely the patent rights of the inventor of the 3d printer include the right to block its use for making (and then selling without any royalties) such second and successive generations of 3d printers.  (Seriously, self-replicating machines are possible and not at all evil.  What could possibly go wrong?)

Are seeds different?  The SCOTUS did not think so, and in the context of this case, I agree.  Bowman deliberately set his mind to growing second and successive generations of RR seeds and plants. However, lurking just below the surface--and expressly set aside as outside the scope of the holding in Bowman--is a far more troubling question: What about farmers who do not deliberately set out to grow infringing RR plants but find that their fields are contaminated by the RR plants?  Bees and even the wind spread seeds from the fields of farmers who purchased RR seeds to those who didn't.

Some of these farmers may consider the contamination a benefit.  They were already using Roundup  but with unmodified seeds.  Now they get higher yields and make more money.  Should these farmers have to pay Monsanto on an unjust enrichment theory?  In one sense, they have "made" infringing copies of Monsanto's product, but if they were truly passive, then in another sense they didn't.  To hold such passive recipients of Monsanto's bounty liable feels unfair.  At the same time, however, a rule that excuses these accidentally benefited farmers from having to pay royalties could be difficult to administer.  How is Monsanto or its minions to prove that the seeds were not just blowin' in the wind?  Who bears the burden of proof on the question of whether there was deliberate planting or a kind of second-hand high from the RR seeds?

A second category of farmers stands in a very different position: Organic farmers who want to grow--and get paid a premium for growing--non-GMO plants without the application of Roundup or (with respect to insecticide-resistant seeds) insecticides to their crops.  There have been reported cases of organic farmers experiencing contamination of RR crops, which, for them, is definitely not a benefit.  Do they have to pay Monsanto a royalty for infringement?  Conversely, should they be able to sue Monsanto and/or their neighbors for taking inadequate precautions to prevent the RR seeds from spreading?

There are also systemic harms that blow from one farm to the next.  A recent study indicates that RR seeds and, more generally, the reliance on seeds that have been genetically modified to resist herbicides, leads to increasing use of herbicides because extensive use of Roundup breeds Roundup-resistant weeds.  Eventually this could mean that Roundup is no longer effective, which would actually be unfortunate for people who don't buy exclusively organic: As herbicides go, Roundup is relatively benign.  The herbicides that will be used in its place may not be.  A similar fate probably awaits insecticide-resistant seeds and their respective complementary insecticides.

Thus, in the long run, the Monsanto strategy looks bad for sustainable agriculture and maybe even bad for Monsanto.  But that's in the long run.  In the short run, Monsanto makes a lot of money from its RR seed business and deserved to win in the Bowman case.  Here, as elsewhere, we shouldn't confuse the right legal outcome with generally good news.