The Supreme Court has handed down its much anticipated decision in Bowman v. Monsanto Co., holding that the defense of patent exhaustion does not apply to the practice of planting and harvesting patented seeds through planting and harvesting without the patent holder's permission.

The case centers on the Roundup Ready gene, which confers resistance to glyphosate herbicides such as Roundup. Monsanto owns U.S. Patent Nos. 5,352,605 and RE39,247E, which cover the Roundup Ready gene, as well as seeds incorporating the gene. The Roundup Ready gene stably integrated into the genomic material of soybeans sold by Monsanto, which means that once the seeds are planted, the plants that grow from those seeds and any seeds produced by that plant also have the Roundup Ready gene.

Monsanto markets both the Roundup Ready seeds and the Roundup herbicide to farmers. However, the seeds are sold subject to a licensing agreement that permits a grower to plant the purchased seed in only one growing season-the grower in prohibited from saving any of the harvested seed for replanting in a subsequent growing season. Growers are permitted under the agreement to consume the seeds or to sell the seeds as a commodity for eventual consumption. Due to the popularity of Roundup Ready seeds, a significant proportion of commodity seeds are Roundup Ready.

Vernon Bowman purchased Roundup Ready seeds from a licensed seller each year for his first planting of the growing season. Bowman also made a second planting each season, for which he used seed that was not purchased from a licensed seller. Instead, Bowman purchased commodity seed, planted the seed, treated the plants with glyphosphate herbicide, and harvested the seed from the surviving plants, which he then used for second plantings in subsequent growing seasons. Because these seeds survived the glyphosphate herbicide treatment, they necessarily possessed the Roundup Ready gene. Ultimately, Bowman harvested eight crops through this system of growing and replanting, effectively generating a homogenous Roundup Ready source of seed that was not purchased from Monsanto.

Monsanto sued Bowman in the U.S. District Court for the Southern District of Indiana, alleging that Bowman's harvesting and replanting of Roundup Ready seeds infringed its patents. In his defense, Bowman asserted that the doctrine of patent exhaustion prevented Monsanto from controlling his use of the seeds because they were the subject of a prior authorized sale. The trial court rejected Bowman's patent exhaustion defense, finding for Monsanto. On appeal, the Federal Circuit affirmed, concluding that the patent exhaustion defense was not available to Bowman because he had created newly infringing articles through the harvesting and replanting-Bowman had replicated Monsanto's patented technology by planting the seeds and thereby creating newly infringing plants and seeds.

The Supreme Court, like the district court and the Federal Circuit, concluded that Bowman could not rely on the doctrine of patent exhaustion. The Court held that while the patent exhaustion doctrine restricts a patentee's right to control what others can do with a particular article sold, it does not affect the patentee's ability to prevent a buyer from making new copies of a patented item. Thus, the Court determined that the patent exhaustion doctrine enabled Bowman to resell the patented commodity soybeans he purchased, or consume the beans, or feed them to his animals without interference from Monsanto, but it did not enable Bowman to make additional patented soybeans without Monsanto's permission.

The Court relied on its precedent in J.E.M. Ag. Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., where the Court explained that only a patent holder, and not the holder of a certificate issued under the Plant Variety Protection Act, could prohibit a farmer who legally purchases and plants a protected seed from saving harvested seed for replanting. The Court also dismissed Bowman's argument that patent exhaustion should apply in this case because soybeans naturally self-replicate, and therefore the seeds themselves-and not Bowman-were responsible for producing copies. Such a "blame-the-bean" defense was unpersuasive in light of the Bowman's active role in purchasing, planting, selecting, harvesting, and replanting the infringing seeds for eight successive crops.

The Court took care to limit its holding to the situation before it, stating that it is a closer question as to whether the patent exhaustion doctrine would apply where an article's self-replication occurs outside the purchaser's control, or is necessary by incidental step in using the item for another purpose.

Recently, the Federal Circuit issued its opinion in CW Zumbiel v. Kappos.  The Federal Circuit affirmed the Board of Patent Appeals and Interferences’ (“BPAI”) finding that multiple claims in U.S. Patent No. 6,715,639 (“the ’639 patent”) were obvious and therefore invalid.  The ’639 patent is directed to a “carton with an improved dispenser.”  The carton is for holding cans or bottles and the improved dispenser is a flap that permits dispensing of the cans or bottles without compromising the structure of the carton so that the remaining cans or bottles are secure within the container.  The ’639 patent issued to Graphic Packaging International, Inc. (“Graphic”).  Upon issuance CW Zumbiel Co., Inc. (“Zumbiel”) challenged the validity of the ’639 patent by instituting an inter partes reexamination.  During the inter partes reexamination, the Examiner rejected multiple claims for obviousness, while maintaining the patentability of other claims.  Graphic appealed the Examiner’s rejections to the BPAI, which subsequently affirmed the patentability of some claims and the rejection of the other claims based on obviousness over Ellis, U.S. Patent No. 3,178242, in view of German Gebrauchsmuster No. G85 14718.4.  Zumbiel appealed the BPAI’s finding that some claims were patentable and Graphic cross-appealed the finding that other claims were obvious.

One limitation that was found obvious was the “finger-flap,” which opens across the top panel of the carton.  Graphic argued that the limitation would not be obvious over the combination of references because they open in different ways—Ellis is laid on its side and opens on the back while the German patent opens from the top.  The Federal Circuit affirmed the BPAI’s finding of obviousness quoting the BPAI, which stated, “‘providing the finger opening on the top wall of the carton would be a predictable variation that enhances user convenience, as evidenced by German ’718, and is within the skill of a person of ordinary skill in the art.’”

Another limitation that was found obvious was the “fold-line” limitation, which provides a fold-line so that the flap can be folded back to cover the opening.  Graphic argued that the German reference did not teach such a flap, but rather was directed to a container allowing simultaneous removal and replacement of bottles through an opening that could either be a perforated line or a fold line.  The Federal Circuit affirmed the BPAI’s finding that the fold-line limitation was obvious over the cited references as the combination teaches that a tear-line can be replaced by a fold-line, which would be obvious to one of skill in the art. 

Zumbiel disputed the BPAI’s determination that claim 2 was not obvious.  Claim 2 was directed to the placement of the finger-flap between the first and second cans.  Zumbiel argued that the placement would have been obvious in light of the combination of references.  The Federal Circuit, however, affirmed the BPAI’s finding that the prior art reference at issue—Palmer, U.S. Patent No. 2,718,301—only taught where to place a handle formed by the perforated tear-line on the container, not where to place perforation for an opening.  Moreover, the Federal Circuit noted that one of the references actually taught away from the placement of the tear-line in claim 2.  Therefore, the combination of references could not render claim 2 obvious.

Ultimately the Federal Circuit affirmed the BPAI’s findings in whole.  The opinion demonstrates examples teaching away, predictable variations in light of the knowledge of one skilled in the art of the invention, and a proper combination of references.

Dissent

Judge Prost dissented in part arguing that claim 2 should have been found obvious based in light of the KSR decision and the applicability of common sense in the obviousness determination.  The dissent, quite candidly, sets out the invention of the ’639 invention, its common sense understanding, and the teachings of the prior art that had existed for “almost fifty years.”  Judge Prost took issue with the finding that placement of the tear-line was unobvious:

The secret lies in the proper positioning of the tear line.  That is, according to the Board, ordinary box makers would not have put the tear line between the first two cans in the top row.  Where else could have they put it? There are just four other options: (1) above the first can, (2) above the second can, (3) in front of the first can, (4) behind the second can.  The first two alternatives are just offensive to common sense: With the cans right below, there would be no room to push the flap through (the flap is positioned at the center of the tear line). The third and fourth options are not quite as illogical, but even without expertise in box making, one may intuit that they make awkward designs (the third opens too little, the fourth too much).  More importantly, however, whether some of the alternatives would work just as well or not, the patentee’s choice of tear-line-placement involves no more than the exercise of common sense . . . .

As such, Judge Prost concludes that the invention of claim 2 would have been obvious, particularly when viewed in light of the prior art.

The full text of the Federal Circuit opinion is available here.  

In a recent decision, the Federal Circuit found that a district court's grant of a stay pending inter partes reexamination without considering the patentee's pending motion for a preliminary injunction was an abuse of discretion. The Federal Circuit held the grant of the stay effectively denied the preliminary injunction motion, thereby making the stay order appealable. The court then held the district court should have considered the preliminary injunction motion and, after considering the four preliminary injunction factors, made a determination regarding the injunction before staying the proceedings for the reexamination.

More detail on Procter & Gamble Co. v. Kraft Foods Global, Inc. after the jump.

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In an appeal from the Board of Patent Appeals and Interferences, the Federal Circuit affirmed the Board's rejection of the claims based upon obviousness-type double patenting over previously-granted related patents.  The technical aspects of the invention are complex, but are overshadowed by the procedural aspects of this reexamination.  The majority and dissenting opinions seem to discuss two different cases.  The majority holds the double patenting issue was available in the reexamination under the former § 303 (in part because the rejection at issue was made after the amendment), and the dissent holds the reexamination improper because the issue was previously considered.  The majority holds the expert declarations unpersuasive, but the dissent considers them unrebutted.  In the end, the rejections are affirmed, even though the patents covered an invention that resulted in a Nobel Prize to one of the inventors.

More detail of In re Basell Poliolefine Italia S.P.A. after the jump.

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In a decision this week, the Federal Circuit decided a case involving both obviousness and the Appointments Clause relating to allegedly unconstitutional appointment of members of the Board of Patent Appeals and Interferences.  The court determined that appellants failed to timely raise the issue of the constitutionality of the Appointments Clause by not presenting it to the Board, and therefore waived the issue on appeal.  

On the merits, the court agreed there was a substantial new question of patentability and therefore reexamination was properly granted.  The court also agreed with the Board that the evidence of commercial success did not rebut the prima facie case of obviousness, as there was no evidence that the commercial success was the "driving force" behind the sales of the patented product.  Accordingly, the court affirmed the rejection of the claims.

More on In re DBC after the jump.

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The Federal Circuit recently construed the scope of the revised reexamination statute, 35 U.S.C. § 303, specifically what is required for a "substantial new question of patentability."  In this case, the relevant reference was cited during the initial examination of the application that led to the patent under reexamination, but as a supporting reference.  The reference was also the subject of invalidity claims in an infringement litigation.  In that case, the district court and Federal Circuit concluded the accused infringer had not met its burden to show invalidity by clear and convincing evidence.  

The losing party in the litigation then sought reexamination of the patent.  The USPTO granted reexamination, and subsequently held the relevant claims unpatentable based on the same prior art asserted in the infringement case and used as a supporting reference during the original prosecution.  The patentee appealed, arguing the reference could not pose a new question of patentability, given its previous consideration by both the USPTO and the Federal Circuit.

The Federal Circuit affirmed.  Noting the differing burdens of proof in litigation and reexamination, the court found the two outcomes were not necessarily contradictory.  Further, given the amendment to § 303 in 2002, the court held that a substantial new question of patentability could be found even if the prior art was considered by the USPTO during the original prosecution.  Under the revised statute, "a reference may present a substantial new question even if the examiner considered or cited a reference for one purpose in earlier proceedings."  The relevant question is "whether the particular question of patentability presented by the reference in reexamination was previously evaluated by the PTO. . . . Section 303(a) as amended . . . requires a more context-specific approach that is based on an analysis of what the PTO actually did."  This determination "will generally require an analysis of the record of the prior proceedings to determine if and how the examiner used the reference in making his initial decisions."  This is a question of fact that will be reviewed for substantial evidence, but the ultimate question of whether a substantial new question of patentability exists is a question of law.

Here, because the reference was "not evaluated as a primary reference that taught or made obvious the specific analytical method claimed," there was a substantial new question of patentability, and the grant of reexamination was proper.

More detail of In re Swanson after the jump.

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In a decision Tuesday, the Federal Circuit affirmed a district court's holding that the USPTO's interpretation of the inter partes reexamination procedure was correct, and therefore that all patent applications (other than reissue applications) filed after November 29, 1999 are eligible for inter partes reexamination, even if priority is claimed to an application filed before that date.  

While the district court did not address the issue of the level of deference due to the USPTO's interpretation of the statute at issue, the Federal Circuit determined the USPTO was entitled to Chevron deference.  Because the USPTO's interpretation of the statute was reasonable, the court affirmed inter partes reexamination was available for the patent at issue that claimed priority to an application filed before November 29, 1999, but issued from a continuation application filed after that date.

Interestingly, the court spent several pages of its decision laying out the method for determining whether and what level of deference is appropriate to the USPTO in this case.  It seems probable that the court was laying out the relevant issues in preparation for hearing the appeal in the Tafas case regarding the USPTO's enjoined claim and continuation rules.

More detail of Cooper Techs. Co. v. Dudas after the jump.

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In a decision this week, the Federal Circuit affirmed findings of infringement of two patents by two defendants.  The court also reversed an invalidity ruling of one of one claim that had been the subject of reexamination, but remanded the case to the district court for a determination of the obviousness of one claim based on a revised claim construction and for a determination of damages.

While the case went to the jury pre-KSR, the court held that the district court's jury instructions on obviousness, which focused on the teaching-suggestion-motivation test, including that a motivation to combine references may be found in the nature of the problem to be solved, did not warrant reversal.  This indicates that the effect of KSR on the obviousness analysis may not be as dramatic as some have predicted, at least outside the USPTO.

In addition, the court held that the requirements in 35 U.S.C. § 305 regarding new claims in reexamination proceedings need not be specifically noted by the applicant when adding new claims.  Instead, the court confirmed that the limit on new and amended claims in reexamination is that they may not enlarge the scope of the original claims.

More detail of Cordis Corp. v. Medtronic AVE, Inc. after the jump.

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