Monsanto v. David

Planting Seed Containing a Gene Sequence Infringes a Patent Covering That Sequence

07-1104

February 05, 2008

Giannelli Ph.D., Maximilienne (Bishop)

Decision

Last Month at the Federal Circuit - March 2008

Judges: Lourie (author), Bryson, Moore

[Appealed from: E.D. Mo., Judge Autrey]

In Monsanto Co. v. David, No. 07-1104 (Fed. Cir. Feb. 5, 2008), the Federal Circuit affirmed the district court’s finding of infringement in favor of Monsanto Company and Monsanto Technology LLC(collectively “Monsanto”), but vacated-in-part the district court’s damages award and remanded.

Monsanto sells Roundup® brand herbicide, a glyphosate-based herbicide that kills all types of plants, whether the plant is a weed or a crop. Monsanto has also developed Roundup Ready® Technology. Crops grown from seeds with Roundup Ready® Technology are resistant to Roundup and other glyphosate-based herbicides. When Roundup Ready® seeds are planted and used in conjunction with a glyphosate-based herbicide, Roundup Ready® plants will survive, while weeds and other plants lacking the Roundup Ready® Technology will be killed. Monsanto has claimed this technologyin U.S. Patent No. 5,352,605 (“the ’605 patent”).

Roundup Ready® Technology has been introduced into numerous agricultural products, including soybeans. Monsanto licenses seed companies to incorporate the Roundup Ready® Technology into their plants and to sell soybean seeds containing that technology. All purchasers of such seeds are required to enter into a Technology Agreement, which provides that buyers may use the seeds for the planting of only a single commercial crop and that no seeds from that crop may be saved for future harvests. The agreement assures Monsanto that farmers must purchase new Roundup Ready® seeds each harvesting season, rather than simply saving seeds from the prior year’s harvest, as they normally would with conventional soybean seeds. The agreement also provides Monsanto legal fees and costs incurred in enforcing the agreement.

“[T]he right to save seed of plants registered under the [Plant Variety Protection Act] does not impart the right to save seeds of plants patented under the Patent Act.” Slip op. at 7 (citation omitted).

In 1999, Loren David, a commercial soybean farmer, signed a Monsanto Technology Agreement. This case arose from the soybean seed David planted in 2003. Monsanto claims that the seeds that David planted were Roundup Ready® soybeans improperly saved from the previous year’s harvest. In April 2004, after David’s 2003 crop had already been harvested and sold, Monsanto obtained and tested samples of the soybean plant material remaining from some of David’s fields. Based on the testing, Monsanto filed suit for patent infringement, breach of contract, unjust enrichment, and conversion, alleging that David had illicitly saved and planted Roundup Ready® seeds.

After a bench trial, the district court entered judgment against David. It held that David had willfully infringed the ’605 patent and breached the Technology Agreement by planting saved seed from a prior year’s crop. It awarded Monsanto $226,214.40 in compensatory damages. In addition, the district court awarded Monsanto enhanced damages, attorneys’ fees, prejudgment interest, and costs, bringing the total damages award to $786,989.43. David appealed.

With respect to infringement, David argued that because the ’605 patent claims a gene sequence, not a plant variety or a seed, it could not be infringed merely by saving seeds from plants containing the patented gene sequence. He contended that under J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001), plants can only receive patent protection under the Plant Patent Act of 1930, 35 U.S.C. §§ 161-164; the Plant Variety Protection Act of 1970, 7 U.S.C. § 2321 (“PVPA”); or under a utility patent on a plant variety (as opposed to a gene sequence). The Federal Circuit disagreed, reasoning that nothing in J.E.M. invalidated or limited the ’605 patent or any utility patent on a gene sequence in a seed or a plant. The Court explained that the ’605 patent covering the gene sequence was infringed by planting a seed containing the gene sequence because the seed contains the gene. It noted that the gene itself was being used in the planting, an infringing act.

The Federal Circuit noted that David’s real complaint was that he should be able to save seed from his harvest, regardless of the ’605 patent. The Federal Circuit again disagreed. The Court noted that it had addressed a similar argument in Monsanto Co. v. McFarling, 302 F.3d 1291 (Fed. Cir. 2002), where it held that a farmer who saved seed containing a patented gene was liable for patent infringement and established that the right to save seed of plants registered under the PVPA did not impart the right to save seeds of plants patented under the Patent Act. The Federal Circuit noted that because McFarling also dealt with the ’605 patent, it could not disregard that case.

David also argued that the district court’s finding of infringement was clearly erroneous and that there was no evidence from which to infer that he saved Roundup Ready® soybeans from his 2002 harvest for planting in 2003. The Federal Circuit rejected this argument. The Court reviewed the relevant evidence and concluded that the district court did not clearly err in determining that David planted saved seed. Finally, David argued that the district court erred by allowing Monsanto’s expert to testify about the results of tests establishing that David planted his fields with Roundup Ready® soybean seed. David did not challenge the reliability of the testing methods or data, but argued that Monsanto’s scientific team had conducted the tests, rather than Monsanto’s expert. The Federal Circuit also rejected this argument, explaining that experts may base their opinions on scientific test results prepared by others and that Monsanto’s expert testimony was therefore properly admitted.

David also appealed the district court’s attorneys’ fees and cost awards, as well as the reasonable royalty award. With respect to the attorneys’ fees and cost awards, the Federal Circuit affirmed. The Court explained that the district court had not erred in finding the case exceptional and in awarding attorneys’ fees, noting that this was “a case of a farmer with apparent disregard for patent rights, license agreements, and the judicial process.” Slip op. at 12. The Court also rejected David’s challenge to the attorney fee clause in the Technology Agreement, noting that it had already decided this issue in McFarling, which involved a nearly identical Technology Agreement, and held that absent a showing of fraud, a party who signs an agreement is bound by its terms. The Court noted that David had not claimed that Monsanto used fraud to procure his signature on the Technology Agreement. Finally, the Federal Circuit also disagreed with David’s argument that attorneys’ fees should be limited to those recoverable under 35 U.S.C. § 285 and costs should be limited to those available under 28 U.S.C. § 1920. The Court reasoned that there was no reason to limit fees or costs because the Technology Agreement explicitly provided for fees and costs with no limit.

Regarding the damages award based on a reasonable royalty, David challenged both the royalty rate and the number of units to which this rate was applied. The Federal Circuit affirmed the district court’s royalty rate, but vacated its determination of the seed density that was used to calculate the number of units. The Court explained that based on the evidence, the district court clearly erred in estimating the seed density. The Court provided specific guidelines that the district court could use to determine the seed density and remanded.