By Carey Gillam
(Reuters) - A 75-year-old Indiana grain farmer will take on global seed giant Monsanto Co at the U.S. Supreme Court next week in a patent battle that could have ramifications for the biotechnology industry and possibly the future of food production.
The highest court in the United States will hear arguments on Tuesday in the dispute, which started when soybean farmer Vernon Bowman bought and planted a mix of unmarked grain typically used for animal feed. The plants that grew turned out to contain the popular herbicide-resistant genetic trait known as Roundup Ready that Monsanto guards closely with patents.
The St. Louis, Mo.-based biotech giant accused Bowman of infringing its patents by growing plants that contained its genetics. But Bowman, who grows wheat and corn along with soybeans on about 300 acres inherited from his father, argued that he used second-generation grain and not the original seeds covered by Monsanto's patents.
A central issue for the court is the extent that a patent holder, or the developer of a genetically modified seed, can control its use through multiple generations of seed.
The Supreme Court's decision to hear the dispute has sparked broad concerns in the biotech industry as a range of companies fear it will result in limits placed on their own patents of self-replicating technologies.
At the same time, many farmer groups and biotech crop critics hope the Supreme Court might curb what they say is a patent system that gives too much power to biotech seed companies like Monsanto.
"I think the case has enormous implications," said Dermot Hayes, an Iowa State University agribusiness and economics professor who believes Monsanto should prevail. "If Monsanto were to lose, many companies would have a reduced incentive for research in an area where we really need it right now. The world needs more food."
The court battle has ballooned into a show-down that merges contentious matters of patent law with an ongoing national debate about the merits and pitfalls of genetically altered crops and efforts to increase food production.
More than 50 organizations - from environmental groups to intellectual property experts - as well as the U.S. government, have filed legal briefs hoping to sway the high court.
Companies developing patented cell lines and tools of molecular biotechnology could lose their ability to capture the ongoing value of these technologies if the Supreme Court sides with Bowman, said Hans Sauer, deputy general counsel for the Biotechnology Industry Organization.
The case also is important to regenerative medicine that relies on stem cell technologies. A stem cell by definition is a cell that can self-replicate, thus the case may answer the question of whether a patentee can control progeny of a patented stem cell, according to Antoinette Konski, a partner with Foley & Lardner's intellectual property practice group.
Monsanto, a $13 billion behemoth in agricultural seed and chemical sales, also sees the case as much bigger than itself.
"This case really centers on the question of twenty-first century technology such as what we bring in agriculture and other companies bring for say stem cell research or nanotechnology.... and how they're going to be handled under principles of intellectual property law," said Monsanto general counsel Dave Snively.
Because seeds self-replicate, creating progeny when planted, they are unlike more traditional patented products. Using a computer or smartphone does not create more computers or phones. But using a seed can make new seeds.
For generations all around the world, farmers have practiced the art of saving seed, holding onto some of the grain they harvest each season to plant in a subsequent season. The advent of patented biotech seeds has changed that as Monsanto and rival seed developers barred farmers from seed saving, arguing that if farmers do not buy new seed each year the companies cannot recoup the millions they spend to develop the specialty seeds.
Transgenic crops, which splices genes from other species into plant DNA, have given farmers crops that resist insects and tolerate treatments of herbicide, making killing weeds easier for farmers. The majority of U.S. corn and soybean acres are now planted with patented biotech seeds.
The case before the Supreme Court traces its roots to 1999, when Bowman decided to plant a "second crop" of soybeans after he harvested winter wheat from the farmstead he runs near Sandborn, Indiana.
While he used Monsanto's Roundup Ready engineered seeds for his main, or "first" crop, Bowman said he decided to use inexpensive commodity grain that he could purchase from a local grain elevator for his "second" planting of soybeans in late June. Yields are generally lower for late-planted soybeans because conditions tend to be more optimal in April and May.
The mixture of grain Bowman bought, which he dubbed "junk," carried no patent technology agreement and no directive prohibiting seed saving as do the bagged and branded soybean seeds sold by Monsanto and other seed companies.
The soybean crop turned out so good that Bowman saved some of the seed generated by the plants and sowed them the following year for another late crop. He repeated the process year after year, sometimes supplementing his second planting with more commodity grain he used as seed. All the while he continued to buy first-generation seed each year for his main crop of beans. For those purchases, he signed required "technology agreements" pledging not to save the offspring of those seeds.
Monsanto began investigating Bowman's planting activities in 2006 and asserted that even though he was not saving seed from the progeny of the first-generation seeds he bought, his use of commodity grain and the progeny was a patent violation.
Bowman argued that Monsanto's rights to the seeds he purchased from the grain elevator were exhausted because they were not the first generation seeds other farmers had purchased and planted, but rather a mix of later generation progeny.
"It didn't occur to my mind that this would be a problem," said Bowman, who doesn't have a computer at home so he goes to the library to read about his case on the Internet. "Farmers have always been allowed to go buy elevator grain and use for seed. You have no idea what kind of seed you're buying at an elevator. They claim I'm making a new seed by planting it. But that's far-fetched reasoning."
Bowman said he just wanted cheaper seeds. His legal brief states the technology fees for Roundup Ready soybeans have risen to $17.50 per bag by 2009 from about $4.50 in 1996.
BIG STAKES FOR BOTH SIDES
A lower court ruled in favor of Monsanto, and in May 2010 it ordered Bowman to pay the company $84,456. The Federal Circuit Court of Appeals also sided with Monsanto in September 2011.
The Supreme Court's decision to hear the case has raised the hopes of those backing Bowman.
In one of a dozen briefs filed in his support, farmer, environmental and food safety groups claim the courts have carved out an exception to existing patent law that gives biotech companies too much control. They want the Supreme Court to broaden farmers' abilities to use seed, not restrict them.
"Through a patenting system that favors the rights of corporations over the rights of farmers and citizens, our food and farming system is being held hostage by a handful of companies," said Andrew Kimbrell, executive director of the Center for Food Safety, one of the groups supporting Bowman. "Nothing less than the future of food is at stake."
Bowman's attorneys allege specifically that the appellate court created a "conditional sale" exception to a long-standing doctrine of patent exhaustion in a way that conflicts with existing law.
But Monsanto backers say without extended patent protection, technology companies will not be able to recoup their investment in research and development, and advantageous new technologies could be shelved.
"This case presents a matter of great importance to America's farmers and the decision will have acute impacts on how agricultural producers will... meet the nutritional demands of a growing global population," states one brief filed by 20 soybean, corn, wheat and sugar beet growers groups.
Back on his farm in Indiana, Bowman is looking forward to his trip to Washington and said he does not understand what all the fuss is about. He said few farmers make use of commodity grain for planting, and he doesn't see how a few hundred acres of soybeans hurts Monsanto's billions in annual revenues.
"I bought new seed every year for my first crop. If I had such a good scheme why did I do that," said Bowman.
"If I done something wrong I should pay for it. If I didn't then I shouldn't. I don't think I did," he said.
(Reporting By Carey Gillam; Editing by Tiffany Wu and Leslie Gevirtz)