When a printer is not like a molecule – sales of biologicals and a recent Supreme Court decisionJuly 5, 2017

A month ago, we reported to you that a US Supreme Court decision reversed prior law and said that once a patented item is sold, the patent holder can no longer sue the legitimate purchaser of the patented product. Up until that decision, the Federal Circuit had held a patent owner could sell some but not all rights of a patent. In Impression Product Inv. v. Lexmark International Inc., the Supreme Court said that is no longer true. It is possible to restrict use of a patented item through contract – but not by a patent infringement lawsuit after sale to the purported infringer.

But what if the product is a biological capable of reproducing itself? The issue in Impression Product involved refillable printer cartridges. Once sold, the Court said, it was proper for the purchaser to refill the cartridges unless the buyer had signed a contract to the contrary. The idea of patent exhaustion prohibited a suit for patent infringement, since the patent owner had “received his reward” for the product. The result may be different if the printer could reproduce itself the way a seed or biological can.

Just five years ago the Supreme Court decided Bowman v. Monsanto, and distinguished a reproducible product from a non-reproducing product, saying patent exhaustion did not apply to copying the patented item. There, a farmer had entered into a contract with Monsanto to grow herbicide resistant seeds once, but to not save any of the seeds. Later, he purchased seeds from a grain elevator, planted the seed, and sprayed the herbicide, with only herbicide resistant seed surviving. An argument he raised was patent exhaustion, saying he purchased the seed and had the right to use or resell. The Court said no, explaining that patent exhaustion extended to the “particular article” sold and did not allow making new copies of the patent item. Otherwise, Justice Kagan said, the patent would provide scant benefit, adding, “if simple copying were a protected use, a patent would plummet in value after the first sale of the first item.” In another take on the seeds-are-special argument, Bowman also said that because seeds self-replicate, it was the soybean not Bowman that made replicas of the patent invention. The court said, “we think the blame-the-bean defense tough to credit,” saying human action was necessarily involved.

Without question, this will be a debated point. Unless the Bowman decision is overturned by the Court, the two decisions would be interpreted in light of each other. With that in mind, it’s possible reproducible biologic may be outside the patent exhaustion limits. The Court did not impact contract restrictions, which may be the more reliable ground for controlling use of seed or reproducing biologic until a court specifically addresses the issue.

Patricia Sweeney is an Intellectual Property Attorney in the Biotechnology/Chemical Patent Practice Group at McKee, Voorhees & Sease, PLC. For additional information please visit www.ipmvs.com or contact Pat directly via email at patricia.sweeney @ipmvs.com.