Federal Circuit Holds Monsanto’s Anti-Litigation Promises Binding, Dismisses Case

Organic Seed Growers and Trade Ass’n v. Monsanto Co. By Kathleen McGuinness – Edited by Jennifer Wong [caption id="attachment_3381" align="alignleft" width="150"] Photo By: the yes man - CC BY 2.0[/caption] Organic Seed Growers and Trade Ass’n v. Monsanto Co., 2012-1298, (Fed. Cir. Jun. 10, 2013). Slip Opinion On June 10, the U.S. Court of Appeals for the Federal Circuit dismissed an action seeking a declaratory judgment of non-infringement and invalidity with respect to three biotechnology patents owned by Monsanto, affirming the lower court’s holding that there was no justiciable case or controversy and dismissing for lack of jurisdiction. The court held that Monsanto’s assurances that it would not take legal action in cases of inadvertent contamination by their proprietary transgenic seeds constituted a legally binding disclaimer of intent to sue. Since the plaintiffs had taken no steps to remove themselves from the protection of this disclaimer, any controversy was moot. Reuters provides a summary of the case. Bloomberg discusses the factual background in more detail. Patently-O briefly explains the legal holding. Previously, Monsanto enforced its patents against farmers who had planted its proprietary seeds without authorization or who had saved and replanted such seeds. The appellants in the present case were agriculture-related businesses who “d[id] not want to use or sell transgenic seed.” Organic Seed Growers, slip op. at 6. They sought a declaratory judgment against Monsanto, arguing that the patents were invalid, unenforceable, and not infringed. They also claimed that they had been forced to stop growing various crops and to take expensive precautions out of the fear that they would face litigation if the crops were contaminated with Monsanto’s transgenic seeds, since Monsanto had refused to provide them with a written covenant not to sue. Id. at 7. Despite its unwillingness to provide a written covenant, Monsanto argued that the businesses’ fear of litigation was “unreasonable.” Id. at 8. Pointing out that it would be impossible to collect significant damages for low levels of inadvertent infringement, Monsanto told the plaintiffs that it had no intention to sue them. Id. at 9. The district court dismissed the case for lack of subject matter jurisdiction, concluding that there was no “substantial controversy” and that “there [had] been no injury traceable to defendants.” Id. at 10. The Federal Circuit affirmed, holding that Monsanto’s disclaimer of intent to sue negated the plaintiffs’ otherwise reasonable fear of litigation. The court noted that Monsanto did have an “evident history of aggressive assertion” of its patents, that its “quite narrow” view of inadvertent infringement would exclude farmers who knowingly replant seeds after inadvertent genetic contamination, and that precedent would allow litigation over even de minimis, hard-to-detect infringement. Id. at 10 – 11; SmithKline Beecham Corp. v. Apotex Corp. 403 F.3d 1331, 1336, 1339–40 (Fed. Cir. 2005). It also pointed to the Supreme Court’s decision in Bowman v. Monsanto Co., which did not foreclose the possibility that permitting accidentally-introduced transgenic seeds to grow might constitute infringement, noting that some “gene flow” between genetically modified and conventional crops is probable. 569 U.S. ___, 133 S.Ct. 1761 (2013); Organic Seed Growers, slip op. at 12, 14. The Federal Circuit held, however, that Monsanto had “unequivocally disclaim[ed] any intent to sue appellant[s]” or any other “inadvertent users or sellers of seeds that are inadvertently contaminated with up to one percent of [patented] seeds” through its stated commitment not to sue and through a similar statement published on its website. Because of its reliance on these claims, the court decided, Monsanto would be judicially estopped from suing any of the parties in this case, mooting any controversy between the parties. Id. at 17. While the appellants had hoped for a broader declaratory judgment, none of them alleged plans to engage in activities that Monsanto had not disclaimed. Any “chilling effect” or fear of legal action was “too speculative.” Id. at 20. In Bowman, the Supreme Court held that a farmer who had deliberately replanted “Roundup Ready” seeds had violated Monsanto’s patent rights, despite the natural process by which the seeds replicated themselves. In Organic Seed Growers, the Federal Circuit showed skepticism towards Monsanto’s “aggressive” assertion of patents against inadvertent growers. While the court found for Monsanto in this instance, the two cases illustrate the court’s continuing attempts to balance robust intellectual property rights against potential over-deterrence in cases involving self-replicating organisms.