You may have heard about a company called Monsanto – for many years, environmentalists have been trying to draw attention to the company’s genetically modified crops in an effort to steer Americans away from foods that they consider to be harmful.

Monsanto is making new headlines this week, as the U.S. Supreme Court issued a ruling in favor of the GMO giant in a case against an Indiana farmer who grew and sold soybeans that the company had invented through genetic modification.  The soybeans are resistant to a weed killer that Monsanto also produces, making them an easy and profitable crop for farmers.  Typically, farmers purchase such soybeans directly from Monsanto at prices well above average.  Instead of propagating their own seeds from that initial crop, a Monsanto policy requires farmers to purchase new seeds every year.  In fact, Monsanto requires that purchasers sign a contract agreeing not to save seeds from one year’s crops for planting in the next year.

In this case, however, the Indiana farmer purchased the soybeans off of a grain elevator – the beans were intended for such uses as animal feed and food processing – for prices well below Monsanto’s rate.  The farmer planted the soybeans, saved the resultant seeds, replanted them the following season, and continued to repeat this process for eight years.  In his defense, the farmer primarily asserted that he did not violate the patent because of the doctrine of “patent exhaustion,” allowing him to do what he wanted with the seeds he legally purchased.

In an opinion by Justice Kagan, the Court unanimously rejected the farmer’s argument and held that even the grain elevator soybeans were covered by Monsanto’s patent and that he was required to purchase new seeds each year.  “The exhaustion doctrine is limited to the ‘particular item’ sold to avoid just such a mismatch between invention and reward.”  In other words, while the farmer could use the purchased seeds for various direct purposes (such as resale or consumption), he was not permitted to grow new seeds from the original seeds, thus circumventing the patent.  While Justice Kagan specified that the ruling is narrow ("Our holding today is limited–addressing the situation before us, rather than every one involving a self-replicating product"), many in the biotech industries read this week's case as laying the groundwork for strong patent control in the future.

The full text of the opinion is available on the Supreme Court’s website here. [REG]