Bowman v. Monsanto: Patent Exhaustion and the Self-Replicating Invention

What’s the case about?

The Doctrine of Patent Exhaustion holds that the authorized sale of a patented item extinguishes all of the patent holder’s rights to it.  Any subsequent use of that item by the purchaser is not infringement.  In other words, the purchaser of a patented item can do whatever he or she likes with it.  But what if that item is capable of self-replication?  Does the patent holder have the right to control subsequent generations of the item?  This was the issue the Supreme Court confronted in Bowman v. Monsanto.

The story is this: Mr. Bowman, a farmer from Indiana, would plant soybeans two times each year.  For his first crop, he purchased Monsanto’s Roundup Ready seeds.  These seeds contained a patented genetic modification that made them resistant to the weed-killer Roundup.  To make this purchase, Bowman had to agree not to replant any of the 2nd generation soybeans.  He was allowed to plant the seeds once, but was prohibited from replanting the offspring.

Bowman complied with the terms of this agreement for his first crop, but he also planted a second crop of soybeans each year.  He purchased the seeds for this second crop not from Monsanto, but from a local grain elevator at a significantly lower price.  Bowman would sell some of the offspring from this crop and use the rest for replanting.

So how did Bowman infringe Monsanto’s patent?  Well, as it turned out, some of the seeds from the grain elevator contained the Roundup Ready technology.  Bowman knew this—he would plant these seeds and apply herbicide to them, killing all but the Roundup Ready ones.  Monsanto told Bowman to discontinue this practice.  When he refused, Monsanto filed a lawsuit seeking damages and an injunction.

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Can the FCC Comply With the President’s Call for Legalization of Cell Phone Unlocking?

On March 4, 2013, the White House officially responded to an online petition calling for the legalization of cell phone unlocking. The process of unlocking a cell phone usually refers to installing software that allows a cell phone to be used on multiple wireless carriers. Cell phone unlocking had previously been legal under an exemption granted by the Copyright Office pursuant to its DMCA 1201 Rulemaking powers; however, in 2012 the Copyright Office declined to renew the exemption.

Following the end of the exemption, several consumers protested the end of legal cell phone unlocking. A petition to the president was created, and crossed the recently raised 100,000-signature threshold, guaranteeing a response from the Administration. The White House responded to the petition astonishingly fast—within a weekend—by voicing strong support for cell phone unlocking. One of the suggestions put forth by the White House was that the Federal Communications Commission should investigate whether it is within their power to address the legalization of cell phone unlocking. Notably, this suggestion has been well received by the FCC, as Chairman Genachowski has expressed enthusiasm for the FCC investigating the issue. The question remains, however, whether there are steps the FCC can actually take that fall within their agency powers to address the issue. This post explores that question.

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BTLJ Holiday Patent Reform Round Up

We are now in the tail end of the season where millions of America brave wintry weather, TSA pat downs, and slow airplane wifi to spend quality time with loved ones. If gingerbread cookies and holiday shopping get old, you simply need a short break from a Top Gear marathon, or you are sick in bed with a mall-induced flu, we’ve put together a little holiday patent reform round up. This post will focus on three recent developments aimed at reforming our patent system: (1) the USPTO’s efforts ad crowd-sourcing the search for prior art, (2) heavyweight technology industry players’ newfound interest in lobbying Congress to take action on software patent reform, and (3) a recent conference at a Silicon Valley law school seeking solutions to problems surrounding software patents.

After much hand wringing regarding the state of the patent system in America, the cogs of political, academic, and legal reform are slowly turning. Just last year, Congress passed the America Invents Act (“AIA”), the first major patent reform legislation in decades. Despite certain landmark changes, such as moving from a first to invent to a first to file system for patent grants, some wonder whether the AIA alone will have a substantial effect on the recent proliferation of patent troll lawsuits.

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Apple’s Dispute Over iTunes Data Collection May Have Implications for the Future of Mobile Payments

This post was co-authored by Marion Bergeret, Berkeley Law LL.M. Candidate 2013, and Babak Siavoshy, Teaching Fellow, Samuelson Law, Technology & Public Policy Clinic. 

Last month the California Supreme Court heard oral argument in Apple v. Superior Court (Krescent), a consumer class action filed against Apple to contest the company’s collection of consumer personal information. The plaintiffs’ immediate target is online services like iTunes and the App Store, which they would like to see subjected to the same privacy laws as brick-and-mortar retailers. But the case may also have an impact on the privacy rights of customers using mobile payments apps like Square and Google Wallet.

At issue is the Song-Beverly Credit Card Act, a California law that prohibits retailers from asking for any “personal identification information” that is “unnecessary to the credit card transaction” as a condition for accepting a customer’s credit card payment.  The Supreme Court must decide whether the 1971 Act, which was last updated in 2011, precludes “online” retailers from collecting customers’ personal information—including address and telephone number—when processing credit card transactions.

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Will the New USPTO Administrative Proceedings Solve the Software Patent Problem?

Amidst current discussions on the “problem” posed by software patents, David Kappos, Director of the United States Patent and Trademark Office (USPTO), recently delivered a speech defending the existence of such patents. Kappos argued that innovations in the software industry are no less worthy of patent protection compared to other inventions, and that the America Invents Act (AIA) has introduced administrative proceedings in the USPTO that will increase the quality of patents by weeding out overly broad ones that give monopolies to unworthy inventions.

The AIA introduced five administrative proceedings, giving authority to the newly established Patent Trial and Appeal Board (PTAB) in the USPTO to determine the validity of patents. These proceedings are: (1) post-grant review; (2) inter partes review; (3) transitional post-grant review for business method patents; (4) supplemental examination; and (5) derivation proceedings. Inter partes reviews replace the procedure of inter partes reexamination, while ex parte reexaminations are still in place and run parallel to these new proceedings. Among these, the first three types are of particular importance because they allow third parties to submit prior art. Accordingly to Director Kappos, for software patents, much of the prior art is “in the form of previously written software, which is difficult to find and more difficult to understand,” and “shifting terminology results in near-endless synonyms that frustrate even the most diligent searcher.” Thus, having such administrative proceedings allows those who have the incentive and resources––often competitors to the patent holder––to find and submit prior art. This blog post provides a basic overview of these three types of proceedings, examining whether they will contribute to solving the software patent problem.

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Statutory Damage Awards in High Profile Song-Sharing Cases

The individual defendants in two high profile peer to peer song sharing cases, Capitol v. Thomas-Rasset and Sony v. Tenenbaum, recently faced major defeats in challenges over high statutory damages awarded against them. This raises questions as to the roles of judges and juries in determining the fairness and proportionality of statutory damages in copyright infringement cases. These litigation sagas have been closely watched in copyright circles, and it is important to trace their development throughout the years to appreciate the importance of the current decisions.

Let’s first start with Capitol v. Thomas. Jammie Thomas-Rasset, a single mom of four children from Minnesota, downloaded and shared 24 songs through the now-defunct Kazaa. In 2006, six major recording companies filed a complaint against Thomas alleging copyright infringement. In 2007, a jury found Thomas guilty of willful infringement, and awarded $222,000 in damages ($9,250 per song). Thomas then filed for and was granted a new trial. After a second trial in 2009, a jury again found Thomas guilty of willful infringement and awarded statutory damages of $1,920,000 ($80,000 per song).

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John Wiley and Sons v. Kirtsaeng: Textbooks, Copyright, and Universal Exhaustion

On the eve of the arrival of Superstorm Sandy, the Supreme Court of the United States heard oral arguments in John Wiley and Sons v. Kirtsaeng, a case involving the international reach of the First Sale Doctrine.  The impending storm provided a fittingly overwrought metaphor for the Court’s attempt to interpret the Copyright Act as it pertains to so-called “gray-market” works published outside the U.S. and imported for sale.  Though similar issues were tackled in the 2010 Omega S.A. v. Costco Wholesale Corp. case, the Court’s 4-4 decision left the gray market in an unsatisfying state of suspended jurisprudence.  With all nine justices weighing in on Kirtsaeng, the Court has an opportunity to establish precedent in a case that is sure to affect many U.S. retailers and their customers.

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The Long Road to a Supranational Patent System in the European Union

On June 29, 2012, Mr. Herman Van Rompuy, the President of the European Council, announced that twenty-five of the twenty-seven Member States of the European Union (EU) finally reached an agreement concerning the creation of a unitary patent system. Anticipated for more than thirty years, the announcement legitimately raised enthusiasm on the part of European authorities, inventors and entrepreneurs. Unfortunately, hope did not last. The day before the European Parliament was to debate and vote on the proposed regulations, the European Council removed three key articles from the draft agreement. In protest, the Parliament cancelled the debating and voting sessions. Today questions remain whether the agreement will be reviewed and adopted any time soon, or if national egos, political pressures, the interests of lobby groups and procedural complexities will keep impeding EU competitiveness.

The EU has no unified patent system. In order to secure EU-wide protection, an inventor must obtain a patent from the European Patent Office (EPO). Then, he must seek validation of his patent in each Member State. Most Member States require the patent to be translated in their official language(s). This generates large translation costs which increase the cost of patenting.  According to the Danish Prime Minister, it can cost up to €20,000 to obtain coverage in just thirteen Member States. Approximately €14,000 of that total comes from translation costs alone. The absence of a unified patent system generates administrative complexities but also legal uncertainties, because the courts of each Member State can rule differently on the same issue within the same patent. This situation does not only impede the competitiveness of individual European companies (especially small- and medium-sized enterprises), but it also hampers EU competitiveness and economic growth in general.

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The Curious Case of Design Patents

Design patents have not received much press until recently. However, the smartphone industry and fashion houses are increasingly turning to patent law to protect their designs. Recent disputes between Apple and Samsung as well as Lululemon and Calvin Klein illustrate an increased reliance on design patents for market domination. Will this become a trend, encouraging design patent applications and enforcement? How could design patent protection help or harm innovation in the future, both for large and small companies?

35 U.S.C. § 171 provides that “whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefor, subject to the conditions and requirements of this title.” Ornamentality is determined by the aesthetic, eye-pleasing features of the article not dictated by functional considerations. See Trimble Products, Inc. v. W. T. Grant Co. The purpose behind design patent protection is to advance the decorative arts. See Forestek Plating & Mfg. Co. v. Knapp-Monarch Co. Utility patents afford protection to useful processes and products, but design patents are mainly concerned with the visual characteristics of an article. Holders of utility patents enjoy a 20-year monopoly, whereas design patent holders only have a 14-year monopoly.

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The Uncertain Future of Divided Patent Infringement

The law of patent infringement is governed by 35 U.S.C. § 271. In particular, § 271(a) describes what constitutes infringement:

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. § 271(a).

On the other hand, § 271(b) governs liability when an entity induces another to infringe a patent:

Whoever actively induces infringement of a patent shall be liable as an infringer. § 271(b).

According to the current joint infringement rule under BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), courts construe the term “whoever” in § 271(a) as encompassing multiple entities, but only when one of them exerts “direction or control” over the others, so they can be viewed as one collective single entity. This is the so-called “single-entity rule.”

However, this rule poses a problem for innovative technologies, such as cloud computing and personalized medicine, which necessarily require collaborative effort by multiple parties for their implementation. For example, a personalized diagnostic technique may require a biotech company that performs the analysis, a pharmaceutical company that manufactures the drug, and a physician that collects data and provides treatment. Under such circumstances, it is often necessary to include all these steps performed by multiple parties in a patent claim to make it patentable. However, under the single-entity rule, a patent holder may be left remediless when multiple entities collusively perform all the steps in a claim, but no single entity performs all of the steps or exerts direction or control over the other entities.

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