De Facto Covenant Not to Sue Ends Anti-Biotech Activists’ Suit to Invalidate Seed Patent

Genetically-enhanced corn
Genetically-enhanced corn

Guest Commentary

by Stephanie Chipley, a 2013 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

It has been a tough year in court for activists opposed to agriculture biotechnology. Just last month, the United States Supreme Court unanimously held that patent exhaustion does not allow a farmer who buys Monsanto’s patented seeds to reproduce them through planting and harvesting without Monsanto’s permission. See Bowman v. Monsanto Co., 133 S. Ct. 1761, 1765-69 (2013). More recently, on June 13, the U.S. Court of Appeals for the Federal Circuit also ruled in Monsanto’s favor when it concluded that a group of appellants lacked standing to challenge Monsanto’s patents. See Organic Seed Growers & Trade Ass’n v. Monsanto Co., No. 2012-1298, 2013 WL 2460949, at *8 (Fed. Cir. June 10, 2013).

The latter case commenced in March 2011, when a coalition of agricultural organizations, seed sellers, and farmers, filed a complaint against Monsanto in the Southern District of New York. The plaintiffs sought a declaratory judgment that twenty-three of Monsanto’s genetically modified seed patents were “invalid, unenforceable, and not infringed.” The plaintiffs, who “do not want to use or sell transgenic seed,” feared that they might be accused of patent infringement if their crops became intermingled with Monsanto’s transgenic seed because, for example, some seed or pollen blew onto their land. Further, they alleged that their crops would be contaminated and that they would be sued for infringement if they did not take costly precautions, such as testing seeds and creating buffer zones between their farms and farms using Monsanto’s transgenic seed.

Subsequently, the plaintiffs asked Monsanto for a written covenant not to sue for patent infringement. Instead, Monsanto refused and directed appellants to a statement on its website, which states in part: “It has never been, nor will it be Monsanto policy to exercise its patent rights where trace amounts of our patented seeds or traits are present in farmer’s fields as a result of inadvertent means.” Moreover, Monsanto’s counsel sent the plaintiffs a letter assuring them that Monsanto had no intention of asserting patent-infringement claims against them because of the plaintiffs’ representation that none of them “intend[ed] to possess, use or sell any transgenic seed, including any transgenic seed potentially covered by Monsanto’s patents.” Taking that representation as true, Monsanto assured the plaintiffs that any fear of suit was unreasonable, and any decision not to grow crops unjustified. Thus, a covenant not to sue was unnecessary. The district court determined that there was no “justiciable case or controversy” or injury traceable to Monsanto and dismissed for lack of subject matter jurisdiction.

On appeal, the Federal Circuit affirmed. Although the Supreme Court’s recent decision in Bowman left open “the possibility that merely permitting transgenic seeds inadvertently introduced into one’s land to grow would not be an infringing use,” the Federal Circuit assumed (without deciding) that using or selling windblown seeds would infringe patents covering those seeds, “regardless of whether the alleged infringer intended to benefit from the patented technologies.” The court noted that it is “likely inevitable” that conventional crops will be contaminated by genetically modified seeds from nearby fields, despite precautionary measures to prevent such happenings. Thus, a grower who harvests, uses, or sells such crops runs the risk of incurring infringement liability.

Nevertheless, Monsanto argued that its representations to the plaintiffs mooted any potential controversy. Indeed, in Already, LLC v. Nike, Inc., the Supreme Court held that a covenant not to sue a declaratory judgment plaintiff can moot a controversy. See Already, LLC v. Nike, Inc., 133 S. Ct. 721, 732 (2013). There, Nike’s covenant not to sue the alleged infringer of its trademark defeated declaratory judgment jurisdiction because “Already’s only legally cognizable injury—the fact that Nike took steps to enforce its trademark—is now gone and, given the breadth of the covenant, cannot reasonably be expected to recur.” Id. Consequently, even though Monsanto was unwilling to give the plaintiffs a covenant not to sue, the court found that its commitment not to take legal action against inadvertent growers was “equally effective.” The court stated that “[t]aken together, Monsanto’s representations unequivocally disclaim any intent to sue [plaintiffs] for inadvertently using or selling ‘trace amounts’ of genetically modified seeds,” and that “those representations are binding as a matter of judicial estoppel.”

Although Monsanto is subsequently bound by its representations, the court’s ruling is nevertheless a victory for Monsanto and its biotech patents. In a statement released on the day of the ruling, Jim Gerritsen, president of the Organic Seed Growers and Trade Association, stated that the organization was disappointed that the court would not hear its case, but that it was “encouraged by the court’s determination that Monsanto does not have the right to sue farmers for trace contamination.” Gerritsen noted that “the farmers went to court seeking justice not only about contamination, but also the larger question of the validity of Monsanto’s patents. Justice has not been served.” Andrew Kimbrell of the Center for Food Safety said the decision is “a very real threat to American farmers,” and is definitely appealable. Dan Ravicher of the Public Patent Foundation (PUBPAT), who viewed the decision as a partial victory, stated that the appellants are considering an appeal to the Supreme Court.

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