Living with Monsanto

Posted by Social Science Research Network

Living with Monsanto Daryl Lim (The John Marshall Law School)

Abstract: Bowman v. Monsanto Co. signaled the end of an era of seed saving. Farmers must buy new seed for replanting or risk patent infringement. The familiar rhetoric of oppressed farmers belies the fact that Monsanto’s success rests in part on farmers prizing its innovations. Current trends indicate that this reliance on Monsanto will continue. The Supreme Court correctly found for Monsanto. However, future cases must iron out the kinks in the Bowman decision. Despite the Court’s best intentions, inadvertence cannot shield farmers from patent infringement. The Court must also make it clear that patentees cannot use licensing restrictions to claw back rights that patent exhaustion has extinguished.

Beyond patent exhaustion, the Supreme Court in Federal Trade Commission v. Actavis recently held that the exercise patent rights, even if validly obtained and infringed, are subject to scrutiny under the rule of reason. The “scope of the patent” approach that shielded Monsanto from scrutiny under antitrust law and patent misuse in the past should be reexamined. The effects-focused approach under Actavis will help yield outcomes that better track policy goals. That approach should contain three features. First, it should be based on a coherent theory of harm. Second, that theory should be supported by evidence that the harm can be effected. Third, the approach should contain heuristics to make it administrable, such as harm to competition and innovation and a shifting of the burden of production in appropriate cases, informed by judicial experience and economic learning.