Monsanto Co. v. Bowman

United States Court of Appeals
for the Federal Circuit
__________________________

MONSANTO COMPANY AND MONSANTO
TECHNOLOGY LLC,
Plaintiffs-Appellees,

v.
VERNON HUGH BOWMAN,
Defendant-Appellant.
__________________________

2010-1068
__________________________

Appeal from the United States District Court for the
Southern District of Indiana in case no. 07-CV-0283,
Judge Richard L. Young.
__________________________

Decided: September 21, 2011
__________________________

PAUL R. Q. WOLFSON, Wilmer Cutler Pickering Hale
and Dorr LLP, of Washington, DC, for plaintiffs-appellees.
With him on the brief were SETH P. WAXMAN and
GREGORY H. LANTIER; and DAVID B. JINKINS, Thompson
Coburn LLP, of St. Louis, Missouri. Of counsel were
DANIEL C. COX and JEFFREY A. MASSON, Thompson
Coburn, LLP, of St. Louis, Missouri.
2 MONSANTO CO v. BOWMAN

MARK P. WALTERS, Frommer Lawrence & Haug LLP,
of Seattle, Washington, for defendant-appellant. With
him on the brief were DARIO A. MACHLEIDT; and EDGAR H.
HAUG, of New York, New York.

TIMOTHY C. MEECE, Banner & Witcoff, Ltd., Chicago,
Illinois, for amicus curiae Lexmark International, Inc.
__________________________

Before BRYSON, LINN, and DYK, Circuit Judges.
LINN, Circuit Judge.

This case presents the court with another question of
patent infringement by farmers planting the progeny of
genetically altered seeds covered by U.S. patents. Here,
Plaintiffs-Appellees, Monsanto Company and Monsanto
Technology LLC (collectively “Monsanto”), sued Defen-
dant-Appellant, Vernon Hugh Bowman (“Bowman”), in
the United States District Court for the Southern District
of Indiana alleging infringement of U.S. Patent Nos.
5,352,605 (“’605 Patent”) and RE39,247E (“’247E Patent”).
Monsanto Co. v. Bowman, 686 F. Supp. 2d 834 (S.D. Ind.
2009). The district court granted summary judgment of
infringement in favor of Monsanto. Id. at 840. Bowman
appeals. For the reasons discussed below, this court
affirms.

I. BACKGROUND

Monsanto invented and developed technology for ge-
netically modified “Roundup Ready®” soybeans that
exhibit resistance to N-phosphonomethylglycine-
(commonly known as “glyphosate”) based herbicides, such
as Monsanto’s Roundup® product. The ’605 and ’247E
Patents cover different aspects of this Roundup Ready®
technology.
MONSANTO CO v. BOWMAN 3

A. The ’605 Patent

On October 4, 1994, the United States Patent and
Trademark Office (“PTO”) issued the ’605 Patent to
Monsanto for “chimeric genes for transforming plant cells
using viral promoters.” The invention of the ’605 Patent
relates to the use of viral nucleic acid from the cauliflower
mosaic virus (“CaMV”), a virus capable of infecting plant
cells, as a vector for incorporating new genetic material
into plant cells (a “transformation” of the plant cells). To
accomplish this transformation, the CaMV promoter
region is isolated from the CaMV genome and combined
with a heterologous protein-encoding DNA sequence,
forming a chimeric gene to be expressed in the plant cell.
Monsanto alleges infringement of claims 1, 2, 4, and 5 of
the ’605 Patent. Representative claims 1 and 4 cover:

1. A chimeric gene which is expressed in plant
cells comprising a promoter from a cauliflower
mosaic virus, said promoter selected from the
group consisting of a CaMV (35S) promoter iso-
lated from CaMV protein-encoding DNA se-
quences and a CaMV (19S) promoter isolated from
CaMV protein-encoding DNA sequences, and a
structural sequence which is heterologous with
respect to the promoter.

4. A plant cell which comprises a chimeric gene
that contains a promoter from cauliflower mosaic
virus . . . .

’605 Patent, col.15 ll.52-59, 64-65 (emphases added).

B. The ’247E Patent

On August 22, 2006, the PTO reissued U.S. Patent
No. 5,633,435 (“’435 Patent”) as the ’247E Patent for
4 MONSANTO CO v. BOWMAN

“glyphosate-tolerant 5-enolpyruvylshikimate-3-phosphate
synthases [(“EPSPS”)].” The invention of the ’247E
Patent involves the transformation of plant cells—using,
for example, the CaMV promoters disclosed in the ’605
Patent—to transform plant cells with novel protein-
encoding gene sequences that encode for EPSPS, a gly-
phosate-tolerant enzyme. These genetically modified
plants express EPSPS and exhibit glyphosate resistance.
’247E Patent, col.1 ll.15-46. The advantage of this tech-
nology, which can be incorporated into a variety of crops,
is that farmers can treat their fields with glyphosate-
based herbicide to control weed growth without damaging
their crops. Monsanto alleges infringement of seventeen
claims of the ’247E Patent. Representative claims 103,
116, 122, 128, 129, and 130 cover:

103. A recombinant, double-stranded DNA mole-
cule comprising in sequence:

(a) a promoter which functions in plant cells to
cause the production of an RNA sequence;

(b) a structural DNA sequence that causes the
production of an RNA sequence which encodes an
EPSPS enzyme having the sequence of SEQ ID
NO:70; and

(c) a 3’ non-translated region that functions in
plant cells to cause the addition of a stretch of
polyadenyl nucleotides to the 3’ end of the RNA
sequence;

where the promoter is heterologous with respect
to the structural DNA sequence and adapted to
cause sufficient expression of the encoded EPSPS
enzyme to enhance the glyphosate tolerance of a
plant cell transformed with the DNA molecule.
MONSANTO CO v. BOWMAN 5

116. A glyphosate-tolerant plant cell comprising a
DNA sequence encoding and EPSPS enzyme hav-
ing the sequence of SEQ ID NO: 70.

122. A seed of the plant of claim 116, wherein the
seed comprises the DNA sequence encoding an
EPSPS enzyme having the sequence of SEQ ID
NO: 70.

128. A glyphosate[-]tolerant plant cell comprising
the recombinant DNA molecule of claim 103.

129. A plant comprising the glyphosate[-]tolerant
plant cell of claim 128.

130. A method for selectively controlling weeds in
a field containing a crop having planted crop seeds
or plants comprising the steps of:

(a) planting the crop seeds or plants which are
glyphosate-tolerant as a result of a recombinant
double-stranded DNA molecule being inserted
into the crop seed or plant . . .

(b) applying to the crop and weeds in the field a
sufficient amount of glyphosate herbicide to con-
trol the weeds without significantly affecting the
crop.

’247E Patent, col.164 ll.15-29; col.165 ll.18-20, 30-32,
45-55; col.166 ll.3-5 (emphases added to reflect
breadth of coverage).

C. Monsanto’s Technology Agreement

Since 1996, Monsanto has marketed and sold
Roundup Ready® soybean seeds under its own brands, and
licenses its technology to seed producers who insert the
6 MONSANTO CO v. BOWMAN

Roundup Ready® genetic trait into their own seed varie-
ties. Monsanto’s licensed producers sell Roundup Ready®
seeds to growers for planting. All sales to growers,
whether from Monsanto or its licensed producers, are
subject to a standard form limited use license, called the
“Monsanto Technology Agreement” or “Monsanto Tech-
nology/Stewardship Agreement” (both referred to herein-
after as the “Technology Agreement”). J.A. 284-315.
Monsanto’s Technology Agreement covers a variety of its
patented agricultural biotechnologies, including Roundup
Ready® soybeans. Both the ’605 Patent and the ’435
Patent (reissued as the ’247E Patent) are listed as “appli-
cable patents” licensed under the Technology Agreement.

Under the Technology Agreement, the licensed grower
agrees: (1) “to use the seed containing Monsanto gene
technologies for planting a commercial crop only in a
single season”; (2) “to not supply any of this seed to any
other person or entity for planting”; (3) “to not save any
crop produced from this seed for replanting, or supply
saved seed to anyone for replanting”; and (4) “to not use
this seed or provide it to anyone for crop breeding, re-
search, generation of herbicide registration data, or seed
production.” Monsanto’s Standard Form Technology
Agreements, 1998-2007, J.A. 284-315. Monsanto restricts
the grower’s use of the licensed Roundup Ready® seed to a
single commercial crop season because the patented
Roundup Ready® genetic trait carries forward into each
successive seed generation.

Although the express terms of the Technology Agree-
ment forbid growers to sell the progeny of the licensed
Roundup Ready® seeds, or “second-generation seeds,” for
planting, Monsanto authorizes growers to sell second-
generation seed to local grain elevators as a commodity,
without requiring growers to place restrictions on grain
elevators’ subsequent sales of that seed. Commodity
seeds are a mixture of undifferentiated seeds harvested
MONSANTO CO v. BOWMAN 7
from various sources, including from farms that grow
Roundup Ready® soybeans and those that do not, al-
though nearly ninety-four percent of Indiana’s acres of
soybeans planted in 2007 were planted using herbicide
resistant varieties. Damages Report at 2, Monsanto v.
Bowman, No. 07-cv-0283 (S.D. Ind. Sept. 30, 2008), ECF
No. 62-7. Before this court, Monsanto has twice eschewed
any reading of the Technology Agreement to prohibit
unrestricted seed sales to grain elevators as a commodity.
First, Monsanto stated in its appeal brief that “[a] li-
censed grower who has harvested a soybean crop from
Roundup Ready® seeds obtained in an authorized manner
may sell that crop to be used as feed or otherwise as a
commodity.” Appellee Br. 7 (emphases added). Again, at
oral argument, when asked by the panel whether a
grower “exceed[s] the license by selling to the grain eleva-
tor without securing some promise from the grain elevator
not to sell the seeds for planting,” Monsanto’s attorney
responded: “No, I don’t think the grower is exceeding his
authority there . . . that is a channel of commerce that
Monsanto has authorized.” Oral Arg. at 19:34-20:14,
available at http://www.cafc.uscourts.gov/oral-argument-
recordings/all/bowman.html. Based on Monsanto’s state-
ments, the only permissible reading of the Technology
Agreement for purposes of this appeal is that it authorizes
growers to sell seed to grain elevators as a commodity.

D. Bowman’s Activities

Pioneer Hi-Bred (“Pioneer”) is one of Monsanto’s li-
censed seed producers. In 2002, Pioneer sold Pioneer Hi-
Bred® brand seeds containing the Roundup Ready® tech-
nology to Bowman, a grower in Knox County, Indiana. In
making the sale, Pioneer required Bowman to execute the
“Pioneer Hi-Bred Technology Agreement,” which contains
language and restrictions identical to the Technology
Agreements discussed above. See J.A. 673. Bowman
8 MONSANTO CO v. BOWMAN

purchased from Pioneer and planted seeds containing the
Roundup Ready® technology each year, beginning as early
as 1999. Bowman planted Roundup Ready® seeds as his
first-crop in each growing season during the years 1999
through 2007. Consistent with the terms of the Technol-
ogy Agreement, Bowman did not save seed from his first-
crop during any of those years.

In 1999, Bowman also purchased commodity seed
from a local grain elevator, Huey Soil Service, for a late-
season planting, or “second-crop.” Because Bowman
considered the second-crop to be a riskier planting, he
purchased the commodity seed to avoid paying the signifi-
cantly higher price for Pioneer’s Roundup Ready® seed.
That same year, Bowman applied glyphosate-based
herbicide to the fields in which he had planted the com-
modity seeds to control weeds and to determine whether
the plants would exhibit glyphosate resistance. He con-
firmed that many of the plants were, indeed, resistant. In
each subsequent year, from 2000 through 2007, Bowman
treated his second-crop with glyphosate-based herbicide.
Unlike his first-crop, Bowman saved the seed harvested
from his second-crop for replanting additional second-
crops in later years. He also supplemented his second-
crop planting supply with periodic additional purchases of
commodity seed from the grain elevator. Bowman did not
attempt to hide his activities, and he candidly explained
his practices with respect to his second-crop soybeans in
various correspondence with Monsanto’s representatives.

In winter 2006, Monsanto contacted Bowman, seeking
to investigate his planting activities. On October 12,
2007, Monsanto sued Bowman in the Southern District of
Indiana alleging infringement of the ’605 and ’247E
Patents. On November 2, 2007, Monsanto investigated
eight of Bowman’s fields, totaling 299.1 acres, and con-
firmed that Bowman’s second-crop soybean seeds (the
progeny of the commodity seeds) contained the patented
MONSANTO CO v. BOWMAN 9
Roundup Ready® technology. The Technology Agreement
signed by Bowman extended only to seeds purchased from
Monsanto or a licensed dealer; thus, Bowman’s use of the
commodity seeds was not within the scope of the agree-
ment. Monsanto did not allege infringement or breach of
the Technology Agreement with respect to Bowman’s
planting of first-generation seeds purchased from Pioneer.

On September 30, 2009, the district court granted
summary judgment of infringement and entered judg-
ment for Monsanto in the amount of $84,456.20. Am.
Final J. and Order Granting Pls.’ Rule 59 Mot., Bowman,
No. 07-cv-0283 (May 12, 2010), ECF Nos. 130, 131.
Bowman appeals, and this court has jurisdiction under 35
U.S.C. § 1295(a)(1).

II. DISCUSSION

A. Standard of Review

This court reviews a district court’s order granting a
motion for summary judgment de novo. See, e.g., Leviton
Mfg. Co. v. Universal Sec. Instruments, Inc., 606 F.3d
1352, 1358 (Fed. Cir. 2010).

B. Patent Exhaustion

Bowman argues that Monsanto’s patent rights are
exhausted with respect to all Roundup Ready® soybean
seeds that are present in grain elevators as undifferenti-
ated commodity. According to Bowman, the “[s]ales of
second-generation seeds by growers to grain elevators,
and then from grain elevators to purchasers (like Bow-
man) are authorized according to the terms of Monsanto’s
[T]echnology [A]greement[], and are thus exhausting sales
. . . under the Supreme Court’s analysis in Quanta [Com-
puter, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008)].”
Appellant Br. 23.
10 MONSANTO CO v. BOWMAN

Bowman further argues that if the right to use pat-
ented seeds does not include the unlimited right to grow
subsequent generations free of liability for patent in-
fringement, then any exhaustion determination “is use-
less.” Appellant Br. 31. Bowman urges the court to hold,
under Quanta, that each seed sold is a “substantial em-
bodiment” of all later generations, thus adopting a “ro-
bust” exhaustion doctrine that encompasses the progeny
of seeds and other self-replicating biotechnologies. Ac-
cording to Bowman, “[t]he Supreme Court disapproved
undermining the exhaustion doctrine by categorically
eliminating its application [to] method patents [and t]his
[c]ourt should not condone effectively eliminating the
doctrine for self-replicating products.” Appellant Br. 31.

Monsanto counters that licensed growers’ sales of sec-
ond-generation seeds to grain elevators as commodity
seeds did not exhaust Monsanto’s patent rights in those
seeds “[b]ecause of the express condition [in the Technol-
ogy Agreement] that the progeny of licensed seed never be
sold for planting.” Appellee Br. 32. According to Mon-
santo, “a grower’s sale of harvested soybeans to a grain
elevator is not an ‘authorized sale’ when it results in those
soybeans subsequently being planted.” Id.

Monsanto argues that, even if there was exhaustion
with respect to commodity seeds, Bowman is nevertheless
liable for infringement by planting those seeds because
patent protection “is independently applicable to each
generation of soybeans (or other crops) that contains the
patented trait.” Id. 15-16. See Monsanto Co. v. Scruggs,
459 F.3d 1328 (Fed. Cir. 2006); Monsanto Co. v. McFar-
ling, 302 F.3d 1291 (Fed. Cir. 2002). Monsanto contends
that “under Bowman’s analysis, patent protection for self-
replicating inventions would be eviscerated.” Appellee Br.
20. Monsanto further cites J.E.M. Ag Supply, Inc. v.
Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001), a
Plant Variety Protection Act (“PVPA”) case, for the propo-
MONSANTO CO v. BOWMAN 11
sition that patent exhaustion in seeds, if applicable, must
be limited to the seeds sold. In J.E.M., in explaining the
differences between seed variety protection under the
PVPA and utility patents, the Court stated: “Most nota-
bly, there are no exemptions for research or saving seed
under a utility patent.” Id. at 143 (emphases added).

In McFarling and Scruggs, the court dealt with unau-
thorized planting of second-generation seeds. In McFar-
ling, one of Monsanto’s licensed growers, McFarling,
violated the terms of his Technology Agreement by saving
1500 bushels of Roundup Ready® soybeans from his
harvest during one growing season, and replanting those
seeds in the next season. 302 F.3d at 1293. McFarling
repeated this activity, without paying any license fee in
either year for the saved seed, which retained Monsanto’s
Roundup Ready® technology. Id. McFarling defended
against Monsanto’s patent infringement allegation on the
ground that, inter alia, the conditions in the Technology
Agreement “violate[d] the doctrine of patent exhaustion
and first sale.” Id. at 1298. This court held, based on
Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed.
Cir. 1992), that the conditions in Monsanto’s Technology
Agreement were valid and legal and did not implicate the
doctrine of patent exhaustion. McFarling, 302 F.3d at
1298-99. In any event, the court stated, “[t]he ‘first sale’
doctrine of patent exhaustion . . . [wa]s not implicated, as
the new seeds grown from the original batch had never
been sold. The price paid by the purchaser ‘reflects only
the value of the ‘use’ rights conferred by the patentee.’”
Id. at 1299 (citing B. Braun Med., Inc. v. Abbott Labs.,
124 F.3d 1419, 1426 (Fed. Cir. 1997)).

In Scruggs, Scruggs purchased Roundup Ready® soy-
bean seeds from one of Monsanto’s authorized seed com-
panies and never executed the Technology Agreement.
459 F.3d at 1333. Scruggs planted the purchased seeds,
harvested them, and replanted the second-generation
12 MONSANTO CO v. BOWMAN

seeds containing the Roundup Ready® trait. Id. Scruggs
asserted the doctrine of patent exhaustion as one of many
defenses, and the court held that it was inapplicable:
“There was no unrestricted sale because the use of the
seeds by seed growers was conditioned upon obtaining a
license from Monsanto.” Id. at 1334.

Thus, the doctrine of patent exhaustion did not bar
the infringement claims in McFarling or Scruggs. Simi-
larly, here, patent exhaustion does not bar an infringe-
ment action. Even if Monsanto’s patent rights in the
commodity seeds are exhausted, such a conclusion would
be of no consequence because once a grower, like Bow-
man, plants the commodity seeds containing Monsanto’s
Roundup Ready® technology and the next generation of
seed develops, the grower has created a newly infringing
article. See, e.g., ’247E Patent, col.164 ll.15-29. “The fact
that a patented technology can replicate itself does not
give a purchaser the right to use replicated copies of the
technology. Applying the first sale doctrine to subsequent
generations of self-replicating technology would eviscerate
the rights of the patent holder.” Scruggs, 459 F.3d at
1336. The right to use “do[es] not include the right to
construct an essentially new article on the template of the
original, for the right to make the article remains with the
patentee.” Jazz Photo Corp. v. Int’l Trade Comm’n, 264
F.3d 1094, 1102 (Fed. Cir. 2001). The court disagrees
with Bowman that a seed “substantially embodies” all
later generation seeds, at least with respect to the com-
modity seeds, because nothing in the record indicates that
the “only reasonable and intended use” of commodity
seeds is for replanting them to create new seeds. See
Quanta, 553 U.S. at 631. Indeed, there are various uses
for commodity seeds, including use as feed. While farm-
ers, like Bowman, may have the right to use commodity
seeds as feed, or for any other conceivable use, they
cannot “replicate” Monsanto’s patented technology by
planting it in the ground to create newly infringing ge-
MONSANTO CO v. BOWMAN 13
netic material, seeds, and plants. See, e.g., ’247E Patent,
col.164 ll.15-29; col. 165 ll.18-20, 30-32, 45-48.

C. Notice Under 35 U.S.C. § 287(a)

1. Waiver

Bowman argues that Monsanto cannot recover pre-
Complaint damages because it did not provide actual
notice and did not mark or require growers to mark
second-generation seeds in compliance with 35 U.S.C.
§ 287(a). Section 287(a) provides that a patent owner may
recover damages for patent infringement only after pro-
viding actual notice to the accused infringer or construc-
tive notice through marking the patented article or its
package with the applicable patent number(s). 35 U.S.C.
§ 287(a); Dunlap v. Schofield, 152 U.S. 244, 247-48 (1894).
Bowman argues that, although he did not expressly cite
§ 287(a) at the district court, Monsanto’s failure to provide
notice formed one of his primary arguments on summary
judgment, and that he should be entitled to leniency as a
pro se litigant.

Monsanto counters that Bowman waived this argu-
ment by failing to raise it at the district court. Monsanto
argues that even if not waived, Monsanto complied with
§ 287(a) because Monsanto gave Bowman actual notice of
infringement in a 1999 letter and again in the Technology
Agreement, and alternatively put Bowman on construc-
tive notice by marking and requiring all seed partners to
mark first-generation seeds containing Monsanto’s pat-
ented technology.

This court holds that Bowman did not waive his lack
of notice argument under § 287(a) because he argued
before the district court that Monsanto failed to put any
growers or grain elevators on notice of its patent rights
14 MONSANTO CO v. BOWMAN

with respect to commodity grain. For example, Bowman
argued that “Monsanto did not take the necessary steps to
keep their patented grain from being mixed with non-
patented grain at the grain elevators.” Def.’s Resp. to
Pls.’ Mot. Summ. J. at 2, Bowman, No. 07-cv-0283 (Nov.
18, 2008), ECF No. 73. He contended that “if Monsanto is
going to complain about farmers using the age old prac-
tice of buying commodity grain for seed; they could have .
. . had their Technology Agreements require farmers to
sell their patented grain to pre-approved grain dealers
who would keep Monsanto’s patented traits separate . . . .”
Id. at 3. While Bowman did not cite § 287(a) as the legal
basis for this “lack of notice” contention, this court holds
that, as a pro se litigant, he alleged facts and proffered
argument sufficient to preserve the issue for appeal.

2. Actual Notice

Monsanto sent Bowman a letter on June 11, 1999,
specifically notifying Bowman of its patents covering
Roundup Ready® soybeans and informing Bowman that
the “[p]lanting of seed that is covered by a patent would
be making the patented invention and using the patented
invention.” Supp. Auth. of May 25, 2011. This letter was
in the district court record attached to Bowman’s memo-
randum in opposition to Monsanto’s motion for summary
judgment. See Bowman, No. 07-cv-0283 (Nov. 18, 2008),
ECF No. 73-2. The letter (1) identified the allegedly
infringing product (Roundup Ready® soybeans), (2) en-
closed a Technology Agreement identifying the patents
covering the Roundup Ready® soybeans, (3) explained
that Bowman would infringe the identified patents by
planting any unlicensed Roundup Ready® seeds, and (4)
informed Bowman that he could not pay a fee to save
Roundup Ready® seeds, but may license seeds only
through the purchase of new seeds subject to the Technol-
ogy Agreement. Id. This letter is an “affirmative com-
MONSANTO CO v. BOWMAN 15
munication to the alleged infringer of a specific charge of
infringement by a specific accused product or device,”
Gart v. Logitech, Inc., 254 F.3d 1334, 1345 (Fed. Cir.
2001) (internal citation omitted), and it is “sufficiently
specific to support an objective understanding that the
recipient may be an infringer,” Funai Electric Co. v.
Daewoo Electronics Corp., 616 F.3d 1357, 1373 (Fed. Cir.
2010).

The fact that this letter does not specifically mention
commodity seeds is of no import because the specific
accused products are not commodity seeds as a class, but
rather Monsanto’s Roundup Ready® seeds. Bowman
planted Roundup Ready® seeds with actual notice that
Monsanto considered this activity to infringe its patents.
Because Bowman received actual notice under § 287(a) as
of June 11, 1999, the court need not reach the issue of
constructive notice through marking. Accordingly, Mon-
santo may recover damages under § 287.

III. CONCLUSION

For the foregoing reasons, this court affirms the dis-
trict court’s holding that patent exhaustion does not apply
to Bowman’s accused second-crop plantings.

AFFIRMED

COSTS

Each party shall bear its own costs.