On February 19, the Supreme Court heard the oral argument in Bowman v. Monsanto on the application of patent exhaustion to patented self-replicating seeds.  Under the doctrine of patent exhaustion, “the initial authorized sale of a patented item terminates all of the patent owner’s rights in that item.”  Monsanto holds a patent on a gene which makes plants resistant to glyphosate herbicides.  Farmers use the herbicides on weeds and when using Monsanto’s seeds, has no effect on the plant.

Monsanto sells the herbicide resistant seeds to farmers and licenses the technology to seed producers.  As a condition of sale, all purchasers of the first generation seed must agree to limit the use of their seeds and the technology to a single season and cannot replant the second generation seeds.  This is because through the acts of nature, the herbicide resistant-trait is passed down to each successive generation of seeds.  However, Monsanto does allow farmers to sell the second-generation seeds (restriction free) to local grain elevators as animal feed or commodity seeds (which are purchased for various uses including planting).  Bowman purchased seeds from a local grain elevator and planted them as a second crop (the latter act in double cropping), later discovering that some of the commodity seeds he purchased, included herbicide-resistant seeds.  While Monsanto purchased first generation seeds from a licensed retailer for his first crop, he continued to use the seed offspring of his second crop supplemented with additional commodity seeds during subsequent years.

Monsanto sued Bowman for patent infringement of two of its patents.  Bowman argued that under the doctrine of patent exhaustion, Monsanto’s failure to restrict the authorized sale of second-generation seeds rendered its patents exhausted with respect to the use of that seed.  The district court disagreed, and the federal circuit affirmed, finding that Monsanto’s patents rights in the seeds were not exhausted once sold to a commodity dealer; and that the patent covered the technology of the original seed and all products of the original seeds.  In principle, the federal circuit basically held that patent exhaustion does not apply with respect to self-replicating technologies.  Bowman’s main argument is that the patented seeds were bought to be planted, and the expected and natural use of the product of such seeds is to be planted.  Any patent rights Monsanto had with regard to the sale of its seeds was exhausted with the sale of its second generation seeds without restriction to the grain elevators.  Monsanto claims its patent is on the trait (herbicide-resistance) and therefore seeds containing the trait are covered by the patent.

In a 2008 case involving Intel chips licensed from LG, the court held that once the chips were sold to computer manufacturers, LG’s rights were exhausted.  The case here is different as it involves not only a self-replicating invention, but an invention which self-replicates through mechanisms of nature.  Based on the oral argument, it seems the justices have taken the side of Monsanto.

However is it really the role of patent law to restrict the use of subsequent seed generations that were a known, natural byproduct of an authorized sale?  Or is this really an issue which would be better addressed by contract law.  Monsanto argues that a decision in favor of Bowman would “eviscerate patent protection.”  Couldn’t Monsanto structure its contracts differently or in a more effective matter in order to prevent farmers like Bowman from saving and using subsequent seed generations for planting?

Chief Justice John Roberts asked “Why in the world would anybody spend any money to try to improve the seed if as soon as they sold the first one anybody could grow more and have as many of those seeds as they want?”

Since when does a patent on an innovative invention guarantee a successful marketable product or a return on your investment?  Why should the court create a special exception to a long-standing doctrine to simply accommodate Monsanto?  Monsanto knew what it was doing when it entered the seed business.  Seeds grow into plants, plants produce seeds.  One could reasonable argue that Monsanto should have taken account for the qualities and characteristics of its own “invention” when marketing its product.  Monsanto argues that Bowman’s use of progeny seed is equivalent to making illegal copies of an invention.  Bowman isn’t taking the seed and making an exact copy of the seed.  The seed makes a plant which makes more seeds; this is the nature of the seed, and the natural use and purpose of the seed.  Couldn’t Monsanto modify its gene in a way which would not allow for subsequent generations of seed to maintain the herbicide-resistant trait (effectively making “sterile” seeds)?

Regardless of the justices’ decision here, the holding can potentially raise a broad range of implications and questions.  What happens when Monsanto seeds blow onto another farm…does that farmer then become liable for infringement?  If a grain elevator unknowingly sells Monsanto seeds, is the grain elevator infringing?  Some argue that a decision for Monsanto may increase monopolies and make it harder for the consumer to bring anti-trust suits.  Others argue a decision for Bowman has a negative impact on innovation and research in the seed market, cause an increase in price on the sale of seeds, and have an impact on the protection of patented software (which also has the ability to self-replicate).  We hope to have the answer to some of these questions by June.

This past Tuesday, the US Department of Commerce and Cornell University announced that a patent officer will be assigned to the new Cornell NYC Tech School set open in January. The school will be run by Cornell and the Technion-Israel Institute of Technology and will admit approximately 20 students to the first class of its master’s degree program. The patent worker will give classes on how to best write patents, obtain financial assistance, and what commercial strategies to engage in. David Kappos, Director of the patent office, believes that stationing personal at a major research institution will “help move research from the lab into the marketplace.”

Facebook Officially Hits One Billion Users

This past Thursday, Facebook announced that on September 14 at 9:45 AM Eastern, it had topped one billion users whom actively visited the site within a single month. Facebook celebrated the milestone by commissioning their first-ever commercial appropriately titled “The things that connect us.” Founder, Mark Zuckerberg concluded his announcement with the statement “I am committed to working every day to make Facebook better for you, and hopefully together one day we will be able to connect the rest of the world too.” Only 6 billion more people to connect!

Facebook also decided to share some interesting statistics on its billion users.

• People have hit the “Like” button more than 1.1 trillion times since its inception in February 2009.
• There have been over 140 billion friend connections
• There have been approximately 265 billion photos uploaded. (46 billion have been deleted)
• They have approximately 600 million mobile users.
• The median age of Facebook’s one billion users is 22 years old.

SpaceX launches 1^st capsule in $1.6 billion NASA contract

SpaceX is a private company, run by Elon Musk, the co-found of Paypal. This past May, SpaceX made history by sending an unmanned capsule to the International Space Station (ISS). This test run marked the first time a private company had ever sent a cargo payload to the ISS. On Sunday, October 7 at 8:43 PM Eastern, SpaceX will launch another capsule with the plan to deliver approximately 1,000 pounds of supplies to the ISS. This flight will mark the first of 12 flights under a $1.6 billion deal contracted with NASA. Since NASA retired the space shuttle fleet last year, the United States has relied on Russian spacecraft to reach the ISS. However, due to the expensive cost, NASA has turned to the private sector to take over the duty. You can watch the launch live from Cape Canaveral, Florida via NASA TV.

Apple’s Victory Is Helping Samsung?

According to the marketing firm Localytics, sales of Samsung’s Galaxy S III have actually been helped by Apple’s recent patent victory and iPhone 5 release. The Galaxy S III has seen an average growth of 9% every week since August 1 with two huge spikes occurring after the lawsuit verdict and the announcement of the iPhone 5. Apparently, the post-litigation coverage put Samsung in the spotlight and suggested the two devices were similar enough. After the iPhone 5 announcement, hundreds of reviews suggested the two phones had similar capabilities. Localytics suggests that this analysis may demonstrate that smartphone consumers are not necessarily tied to a specific mobile operating system.

Genetically Modified Tail-less Cow Produces Non-Allergenic Milk

Scientists in New Zealand have genetically engineered a cow to produce milk without beta-lactoglobulin (BLG), the protein which triggers allergic reactions for approximately 1.3 million children. According to the study, recently published in the scientific journal Proceedings of the National Academy of Sciences, the researchers used RNA interference (RNAi) to inhibit the expression of genes which code for BLG. According to Mike Van Amburgh, a professor at Cornell University, this is the first time scientists have been able to tinker with the protein composition of milk before it left the cow. The study shows that RNAi may act as a useful tool in genetically modifying livestock to have more “desired traits.” Interestingly enough, the scientists do not know why the cow’s tail is missing and will have to further inquire into this odd mystery when the cow grows older.