Monsanto v. Bowman
Transcript of BioCentury This Week TV Episode 127
Gary Baise, Principal Attorney, Olsson Frank Weeda Terman Matz PC, Washington, D.C.
Edgar Haug, Partner, Frommer Lawrence & Haug LLP
George Kimbrell, Senior Attorney, Center for Food Safety, Washington, D.C.
Hans Sauer, Associate General Counsel, Biotechnology Industry Organization (BIO), Washington, D.C.
PRODUCTS, COMPANIES, INSTITUTIONS AND PEOPLE MENTIONED
American Soybean Association, St. Louis, Mo.
Baise/Werries Farms, Chapin, Ill.
John Roberts Jr., Chief Justice of the U.S. Supreme Court
Monsanto Co. (NYSE:MON), St. Louis, Mo.
Roundup, The Scotts Miracle-Gro Company (NYSE:SMG), Marysville, Ohio
The Washington Post, Washington, D.C.
Vernon Hugh Bowman, Petitioner in Monsanto v. Bowman
Steve Usdin, Senior Editor
STEVE USDIN: What do soybeans and stem cells have in common? The U.S. Supreme Court may decide. I'm Steve Usdin, welcome to BioCentury This Week.
NARRATOR: Your trusted source for biotechnology information and analysis, BioCentury This Week.
NARRATOR: Last week, the Supreme Court heard arguments in a biotechnology case that could change America's agricultural landscape, and might have implications for manufactures of products like stem cells used in medicine, and for computer software. Supporters of Vernon Hugh Bowman, an Indiana soybean farmer, paint the case as a David versus Goliath struggle to preserve ancient farming practices.
Bowman plants two soybean crops every year. For one, he buys seeds that are genetically modified to survive exposure to Roundup, a powerful weed killer. The technology is patented by Monsanto, and Bowman signs a contract that bars saving or replanting these seeds. But Bowman also buys cheaper commodity seeds at a local grain elevator.
The seeds are usually fed to animals or turned into oil, but Bowman plants them. In Bowman's neighborhood, virtually every farmer uses genetically modified seeds, so the seeds he purchases are resistant to Roundup. Monsanto says Bowman is violating its patents, and two federal courts have agreed. Now the Supreme Court will decide.
STEVE USDIN: Today we'll examine how Bowman versus Monsanto might affect research on stem cells and other medical technology. First, we'll hear attorneys from both sides of the Supreme Court dispute. We're joined by George Kimbrell from the Center for Food Safety, which opposes the sale and use of genetically modified plants. The center filed a brief supporting Bowman.
Gary Baise represents the American Soybean Association. It filed a brief supporting Monsanto's position. Gary, I wanted to start with you. It seems counter-intuitive in a way that soybean farmers would support Monsanto in this case. Why is it that you're supporting Monsanto and not Mr. Bowman?
GARY BAISE: It's not counter-intuitive at all, Steve. In fact, what we have seen is enormous productivity brought on by GMO products, in this particular case with GMO soybeans we're talking about a soybean that is resistant to a weed killer. Weeds are the bane of existence of those of us who grow crops in this country. This was a technology that was introduced in 1996.
We had not had this kind of technology prior to that time, other than we could use fairly persistent and harmful mixtures of herbicides to kill the weeds. Or in my case as a young kid, I spent a lot of time cutting weeds out of soybeans. So farmers are very pleased to have this technology to allow them to be more productive.
In addition to being more productive, it allows us to go to what's called a no till farming operation. We have less water runoff. We use less fuel, therefore we're contributing less CO2 to the atmosphere. And so our crops, land, is being preserved to a greater extent than it ever was.
STEVE USDIN: And George, the first 10 pages of your brief are really an attack on the whole notion of agricultural biotechnology. Why is it that your organization wants to help farmers like Mr. Bowman to reproduce genetically modified crops more readily and less expensively?
GEORGE KIMBRELL: Well, Steve, I think the first 10 pages is what I would say is a factual summary of where we are right now with the technology on the ground. And that is that after 15, 17 years after its introduction, we're not feeding the world with it, we're not curing cancer with it, we're not helping climate change. All of those myths have failed to come true.
After billions of dollars of investment, what we have is crops that are resistant to herbicides. Massively increasing herbicides over our environment to its detriment, among other things. So I think farmers are adopting the technology first out of loss of choice of other conventional varieties because, we've got five companies now that have consolidated control of over 50% of our seeds globally.
And so they've shelved conventional varieties, bought up seed companies, and then made farmers essentially into serfs with these technology use agreement contracts, forcing them to buy the seed from them annually year after year. So we support Mr. Bowman in this matter, and many farmers like him. He's by far not alone, to the extent that he'd like to do his own thing with his seeds.
STEVE USDIN: So Gary, two things. First--
GARY BAISE: I disagree profoundly with what George has said.
STEVE USDIN: Are soybean farmers serfs? And more to the point, the practice that Mr. Bowman had of buying seeds from a grain elevator and planting them, is that a normal practice?
GARY BAISE: No, it's not a normal practice. But let me address a couple of George's points. Number one, farmers are not going into serfdom. Just look at yesterday's Washington Post article, which points out the wealth that's been generated in American agriculture -- one of the reasons that people want to take the subsidies away.
Farmland values, starting in the '90s when farmers realized how much more productive, and let's be specific on this. Since 1980, soybean productivity has risen, and we put this in the brief, 55% use less acres to grow these soybeans. And as I pointed out, you have all of these enormous environmental benefits coming from the use of no till operations.
When I was a child, you had to go over this land six, seven, eight times. Today, three to four times. So we're more productive. Are we going to feed the world? What we have seen, and particularly in a program we pointed out, the United States government used to provide free seeds to farmers. We didn't see any productivity gains. Since 1996, we have seen enormous productivity gains.
Now this is not all due to GMO characteristics. It's due to seed breeding, developing better trades going into our seeds. But the fact is this particular technology developed by Monsanto on killing off the weeds, which is one of the main problems in terms of growing crops, those weeds, of course, suck up our nutrients. They take up space, they cut down productivity. So Monsanto has made an enormous contribution to farmers.
STEVE USDIN: So getting back to this case, we've got about a minute now, and we'll take a break and then come back. Or 30 seconds now. What is -- this case really hinges on this notion of exhaustion. Can you explain that in a way that people who aren't attorneys can understand it?
GEORGE KIMBRELL: The patent rights end once you have an unauthorized sale. It's a venerable patent law doctrine that goes back 200 years, essentially. And if you have an authorized sale of a patented good, that should exhaust the patent rights in it. So farmers should be free, then, if the seed is the patented good, to do what they wish with it. But again, Monsanto has kept them from replanting it, among other things.
STEVE USDIN: So basically, Mr. Bowman bought seeds from somebody else, that somebody else had purchased from Monsanto. And then, as far as you're concerned, Monsanto's rights were over. We're going to talk about that in just a moment. We'll hear what our guests think of this question that Chief Justice John Roberts asked only a few seconds after Mr. Bowman's attorney began his argument.
NARRATOR: You're watching BioCentury This Week.
STEVE USDIN: Still to come, how the high court soybean case could affect biomedical research. Right now, we're talking about agricultural biotech with George Kimbrell of the Center for Food Safety and Gary Baise who represents the American Soybean Association. George just made a point about exhaustion. What's your view of exhaustion and how does it relate to this case?
GARY BAISE: It does relate to this case to a very narrow extent. George is correct with regard to saying when you generally buy your car or we farmers buy combines and tractors, there's patent exhaustion. The difference here is that the soybean is a closed pollinating plant and it is reproducing an exact copy of itself many times over.
And so what you have here is the Monsanto technology being replicated or reproduced. When we plant that seed into the ground, that stock will create 80, or 90, or 100 soy beans, and that set of soybeans will be identical to the one that went into the ground. So where George is incorrect and his brief is incorrect is the fact that the soybean is remaking.
It is producing exactly what Monsanto produced. So what you have if you adopt George's position is farmers out there which start going into competition with Monsanto and producing seeds, then if that's the case, why does Monsanto want to spend any money on research if as soon as they sell their product, or sell their car, or sell their combine--
STEVE USDIN: That's exactly what Justice Roberts asked.
GEORGE KIMBRELL: So I think the idea, first of all, that farmers would be able to compete with Monsanto is a ludicrous one, so I think we can set that aside. But the idea that farmers make seed also doesn't make sense. Seeds make seeds. They're called self-reproducing technologies in patent jargon, but that's what it means. I mean, you throw a seed on the ground, it's going to grow.
It might not grow as well if a farmer doesn't nurture it, but it's going to grow. So it's a misattribution of agency for any court to say that a farmer is responsible for seeds doing what they do. And so that's why farmers should be free here to save their seeds, as they have, by the way, for 10,000 years up until very recently, which I think is important to step back and recognize that paradigm as opposed to the current one.
GARY BAISE: So, let's look at the last 10,000 years. We have had very little innovation in improving these seeds. What Monsanto has done is improve the product so that we can produce more, and what I guess I don't understand from George's position, when he talks about more herbicide use, he is correct on a number of pounds that have been used.
Where he is incorrect is that we're replacing more harmful and more persistent herbicides that we had to use, or a cocktail of herbicides, to kill the weeds. So there are enormous environmental benefits flowing from the use of GMO technology. What I don't understand about the environmental community is why they're not applauding this rather than opposing this.
GEORGE KIMBRELL: Any potential benefits are, I think, completely illusory. What we have right now is over 60 million acres of weeds that are resistant to herbicides. It's an epidemic on the scale of the boll weevil that is attacking American agriculture to the tune of billions of dollars because of the overuse of herbicides because of the adoption of Roundup ready varieties.
GARY BAISE: George, that is just incorrect. First off, we only grow 77 million acres of soybeans, and if you rotate the way we do at Baise/Werries Farms in the Midwest, you do not have this problem. What you're talking about is where you grow corn after corn, there are developing glyphosate-resistant weeds. But we only grow about 90 million acres of corn and 77 million acres of soybeans. To say there are 60 million acres being overtaken by wild weeds or noxious weeds is just incorrect.
GEORGE KIMBRELL: Those are not my numbers. Those are Dow's numbers, so the audience can look it up.
STEVE USDIN: OK, well, I think we're going to have to leave it there. It looks like we're not going to get the two of you to agree on that. I want to thank you both Gary Baise and George Kimbrell. We'll be joined in a moment by an attorney from the Biotech Industry Organization and by one of Mr. Bowman's own attorneys. First, here's another quote from Chief Justice Roberts that gets to the heart of the rest of this week's show.
NARRATOR: Now, back to BioCentury This Week.
STEVE USDIN: To discuss patent rights on inventions that reproduce themselves, we're joined by Hans Sauer, an intellectual property attorney at the Biotechnology Industry Organization. BIO is one of the sponsors of BioCentury This Week. And by Ed Haug, one of Vernon Hugh Bowman's attorneys. I want to start with you, Hans, on this issue of exhaustion and use, which seems to be what this case is all about. What is that about? And what's the difference between whether a farmer is making something or using something in terms of the patent rights?
HANS SAUER: So patent exhaustion is a principle -- I think, everybody can understand -- if you buy something free and clear, like a widget, you buy it free and clear, paid for it, it's yours. Normally you're free to do with it whatever you want. You can resell it on eBay when you're done with it. You can use it any which way. You can use it up or consume it. It's been a longstanding principle of patent law. Whether or not that's at stake in this case, I'm not even completely sure because sometimes you buy things not free and clear.
You buy them under certain conditions. You may buy something, for example, for single use only or for research use only, those kinds of things. The seeds that have been sold, in this case, are sold under conditions like that, they say on the back. And they have an agreement that comes with them when they are bought that they are for a single planting only. That's what they're used for. You buy seed. You use it up for planting. And if you want some more seed, you're going to go buy some more.
STEVE USDIN: So, Ed, what's your response to that?
EDGAR HAUG: Well, first off, Monsanto sold the seeds, free and clear, to the farmers, the first farmers. They did have a side contract, told them what they could or couldn't do with those seeds. But they sold the seeds. They didn't lease the seeds. They sold them. When that happens, patent exhaustion applies. The farmer, the purchaser of those seeds, can use them for whatever they wish. In this case, those first purchasers were allowed by Monsanto to send or sell those seeds to grain elevators.
The grain elevators bought those seeds. The grain elevator had no contracts whatsoever with Monsanto. And as Mr. Bowman bought those commodity seeds from the grain elevator, he, too, had no contract with Monsanto, no contract with the grain elevator. He paid good, fair consideration for those seeds. And Monsanto is saying that even though the seeds, that were in the custody or the possession of the grain elevator, were never bought from Monsanto. They could not be sold to Vernon Bowman here for replanting.
STEVE USDIN: So actually, not that--
EDGAR HAUG: That's what he did.
STEVE USDIN: --it can be sold, but that he couldn't plant them. And I want to try to widen this out because this case, apparently, it isn't just about Mr. Bowman and it isn't just about seeds. So, Hans, how could this case have implications outside of the farm?
HANS SAUER: Outside of the farm, it has implications for other technologies that are equally difficult to create. But once they're created, they're relatively easy to reproduce. So it's a bit like seed. And I kind of disagree that this case is really about seed. It's about chicken feed. That's what farmer Bowman bought, commodity soybeans that he could have used for any purpose whatsoever that soybeans are normally used for -- feeding poultry, feeding cattle, making tofu, doing all kinds of things. But growing new generation stuff was the problem in this case.
For the biotech industry, most of which actually isn't in the seed business, this case is important for two reasons. One is this question that we talked about earlier, the conditions that companies can put on sales. A lot of biotech products are sold under conditions a little bit like those that Monsanto put on the sale of its soybeans, like for research use only. And they're sold at a better price if they're used for that purpose. So if these uses aren't good the paper they're written on at the time a product is sold, I think that's going to be very disruptive to a lot of companies' business models. The other aspect is the self-replicating technology, which isn't really self-replicating, but which can be replicated because seeds -- just like recombinant DNA products, like live vaccines, like cell lines, stem cells, these kinds of things -- can be reproduced about as easily as seed can be reproduced if you know how.
STEVE USDIN: So, Ed, I want to ask you about that. "Self-replicating," that term came up in the arguments in many of the briefs. Are seeds really self-replicating? And doesn't the farmer do something? And in any case, why does that make a difference? Is that distinction important?
EDGAR HAUG: I think it is an important distinction. Yes, I do think these seeds self-replicate. And I believe that's the reason the Supreme Court took this case in the first place. When you go back through 150 years of Supreme Court jurisprudence, there is nothing there about self-replicating technology, whether they are seeds or anything else. That was problem number one for this case and for the justices, I believe. The second thing is if you look at the patent statute, which came into being in 1952 and then was revised as recently as 2011, there's nothing in there, in that patent statute, about self-replicating technology.
STEVE USDIN: Maybe one way to think about this is, what could be the range of impacts of what the Supreme Court does here six months from now if it goes one way or the other? Is life going to be really different for farmers and for other biotech innovators as a result of this case?
EDGAR HAUG: Of course, you can't really read the tea leaves of the Supreme Court, depends what they decide. But I think they have a range of ways to go here. If, for example, the Supreme Court says something like, self-replicating technology is patentable, period. That would have far-ranging effects throughout the industry, not just on seed and farmers.
Similarly, they could not go that far and just simply say that what farmer Bowman did here was a making of the invention; therefore, he infringes, and not touch the self-replicating aspect of the case. I hope they don't stop short of that because I think that's the fundamental question that they really do need to deal with. And however the Supreme Court decides this issue, it's not going to be over, neither from future cases nor, I think, from a legislative standpoint.
STEVE USDIN: So lawyers are going to have plenty of work, going forward. Hans, what do you think? Six months from now, we're going to look back at this and say, this was a really important turning point for biotechnology or are we going to say, well, what was that all about?
HANS SAUER: Again, like with Ed, it depends on what the Supreme Court decides. They have been known to both write very nuanced, focused decisions. And sometimes, they have written very broad, not very nuanced decisions. The impact either way, I think, has to be thought of on who you are looking at. There are large companies that are well-established and robust like Monsanto, like other businesses, who are, I think, by and large, more easily able to adapt to changes in patent law if the Supreme Court really goes that way.
Not every company is big and robust and easily able to adapt to change in patent law. We see that over and over again, especially with small companies that are at their inception stage. Those companies face so much business uncertainty already so that a change in patent law that comes from a not very nuanced Supreme Court decision really becomes very highly leveraged.
And it drives business decisions of especially smaller companies that have to find a way forward for a product that's not going to come to market for another 10 years. And that's going to quite possibly require an investment of several hundred million dollars and a huge commitment. I think it's these smaller companies that we have to keep in mind, who project far into the future and who today must have the confidence that 10 or 15 years from now, they're going to get a reward for their investment.
STEVE USDIN: Well, we're going to have some more final thoughts from both of you in just a moment.
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STEVE USDIN: We're back to some final thoughts from Ed Haug, who represents Vernon Hugh Bowman and Hans Sauer of BIO. Hans, you wanted to make a point there.
HANS SAUER: Yes, about self-replicating soybeans. It always perplexes me, I think, to think of soybeans as self-replicating, because at least for the practically minded -- Look at what's going on. A farmer comes, he buys 10 bags of outbound grain at a grain elevator. And a couple of months later, he comes back with calluses on his hands, and 500 bags of soybeans on his truck.
And I don't think it's the tooth fairy that dropped those off. The farmer clearly worked. The farmer clearly produced these soybeans. Everybody will tell you that growing soybeans is hard work.
And so in that sense too, soybeans aren't very different from genetically modified cells that you may buy out of a research product catalog for research users only. Just like soybeans that need to be planted and tended and fertilized, and weedkiller applied, and harvested, cells can be grown in a laboratory just in the same way. And you can expand them indefinitely.
So I think the real question in this case then really becomes can a manufacturer, a developer, an inventor, who invested a lot of money and effort into creating these innovative products, have some kind of control over the further disposition of these products once the first vile of cells is sold, once the first seed is sold, just like what Chief Justice Roberts asked.
STEVE USDIN: It is that what it really comes down to?
EDGAR HAUG: I think it does, in part. It's how much control can the patentee, in this case Monsanto, really have over a seed after it is sold. Monsanto's view is they have 100% complete control of what happens to that seed downstream.
People who have no privity, they have no relationship directly with Monsanto, they want to control what the grain elevators can do. They want to control what farmer Bowman can do when he buys commodity seed from a grain elevator, not even knowing what's in that seed. They want to control a farmer who has soybeans that come on his property through a windstorm. That's what they want to control in this case.
STEVE USDIN: And what Hans brought up about implications outside of the farm? Do you think if Mr. Bowman prevails in this case, is it really true that stem cells, that cell lines, that other kinds of medical biotech conventions would be at risk? That companies wouldn't be able to realize their investments on them?
EDGAR HAUG: I think they're at risk. I think they will have to change their business model. They'll have to change their approach to how they protect their technology. They will file patents in different ways, perhaps. They will file for other protection, which is available.
After all, look at the software industry. There's a lot of software that is created today that is not patented. And those companies are very, very successful, highly profitable companies. They find other ways to come together with their business plan. And I'm sure Monsanto would do that, if they were forced to do it, because of the ruling in this case or any other case like this.
STEVE USDIN: Hans?
HANS SAUER: So who's to say that these other business models would be better or more efficient than what we have today? In our country, to what you're saying, Monsanto actually has absolutely no interest and is not controlling the way soybeans are used for feed store, for tofu making, for paint, for soy meal, for all the things that soybeans are used for. The only thing Monsanto wants, and other companies like it, is that they can continue to produce and provide new seed products to farmers without losing all their investment the time the first bag is sold.
EDGAR HAUG: I think the legal issue here is not what Monsanto is OK w It's not Monsanto saying, we're OK with the grain elevator storing this commodity seed and even selling it to a farmer. But we're not OK with the farmer buying it and planting it. That's the whole point of this case. Who has the right to control commerce in this way?
STEVE USDIN: And I think that's all the time that we've got for this week's show. Thanks and remember, you can join the conversation about this week's show on Twitter. Share your thoughts with the hashtag #BioCenturyTV.
I'd like to thank our guests, Gary Baise, George Kimbrell, Hans Sauer, and Ed Haug. And I thank you for watching. I'm Steve Usdin, and I'll see you next week.