By Dennis Crouch
The PACER entry is compelling:
JURY VERDICT For: Plaintiffs Against: Defendants In the Amount of: One Billion Dollars. (Entered: 08/02/2012)
In his August 6 order, Judge Webber confirmed the jury verdict that DuPont/Pioneer willfully infringe Monsanto's GMO roundup-ready seed patent. The jury rejected the defendants' claims that the asserted patent was invalid; that the patent had been finally obtained through inequitable conduct; and that the reissue patent improperly expanded the scope of the original claims. The judge also confirmed the jury's reasonable royalty damage award of "One Billion Dollars ($1,000,000,000)."
The asserted patent was Monsanto's reissue No. RE 39,247 and the accused product was DuPont's Optimum GAT soybean line that has never been released to the public. Rather, thus far DuPont's use of the patent has been for research purposes. No matter – the US has only a de minimis research defense that certainly does not apply here. See Madey v. Duke. Thus, unlicensed use of the Monsanto genetically modified soybean seed counts as infringement, even if that use was only for the development of a commercial product.
There is no question that this innovation was groundbreaking and has transformed the landscape of American agriculture. The genetic modification makes crops tolerant to the herbicide glyphosate. Although far from organic, glyphosate (RoundUp) has a much smaller negative environmental impact than other herbicides. In addition, the use of glyphosate has allowed for no-till farming that greatly reduces topsoil runoff and energy demands. In his press release, Monsanto's General Counsel David Snively wrote that the verdict "highlights that all companies that make early and substantial investments in developing cutting edge technology will have their intellectual property rights upheld and fairly valued." Snively's remarks are perhaps overstated, but at least have some kernels of truth.
The damages theory was interesting. Since the accused product was not yet on the market, Monsanto did not seek any lost profit. Rather, Monsanto demanded a reasonable royalty for the research-use made by the defendants. Monsanto argued that the use of Monsanto's invention in DuPont's labs and Pioneer's test fields gave those companies an "improper head start" in making the GM seeds. The judge and jury agreed – if those companies wanted to build upon the invention then they should have first obtained a license. In the pharmaceutical world, 35 U.S.C. § 271(e) offers a research exemption for this type of activity. However, that exception does not apply here because of the low level of regulation over genetically modified food-products. The patent is set to expire in 2014. The patentee's right-to-exclusive-research supported by this case means that the 2014 date offers a starting-date for follow-on competitive research. Any actual products building directly upon the patented invention will arrive on the market sometime later.
I sat-in on one day of the jury trial that was held in St. Louis, Missouri. The eight-member jury were largely attentive as they listened to DuPont's technical expert explain DNA and problems with the patent. I smiled at seeing the jury members walk in wearing t-shirts and carrying notepads. Their attitude and attire was a severe contrast to the room full of two-dozen attorneys and experts (each charging hourly). Although I'm sure that Judge Webber could have ably decided the case himself, the jury of individual citizens gave me a bit more confidence in our system and, in my mind, offers the ultimate reality check for this type of case. At least some of the jury members appear to be fans of Dr. Evil.
The level of damages, claim construction, and other issues will be the subject of an appeal the Court of Appeals for the Federal Circuit.
Bayer vs Housey…iceland happens
I get it. The North wins the war and abolishes slavery. So what does the South do? They invent Jim Crow.
So we have Benson. It declares programming a computer without producing a new and useful end is unpatentable. So how does the South respond to Benson. Change the form. Programmed computer are eligible regardless of end use they say. But isn’t this the same thing as Benson, the North responds. No, not at all, the South responds. Programmed computers are patent eligible because the Federal Circuit said so.
Listen, Basics, the Federal Circuit has its policy blinders on backwards. They constantly stretch the law only in the direction forbidden by the Supreme Court. Everybody sees this, and notes it.
Mr. Basics, we shall see. I know what the law is and I do not agree with it. I think the SC will have a lot to say about this case if it gets there.
I see, you don't like my analogies.
Well the Feds did authorize patents on information in Prometheus, and the planting of commodity seed the patentee had released into the public domain in a recent Monsanto case.
Now Monsanto gets get a billion from Dupont for preparing to engage in lawful conduct after the patent has expired thereby extending the effective monopoly period of the patent.
Have any of you guys ever read Brullotte v. Thys? http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=379&invol=29
" any attempted reservation or continuation in the patentee or those claiming under him of the patent monopoly, after the patent expires, whatever the legal device employed, runs counter to the policy and purpose of the patent laws."
…
"In light of those considerations, [extending protection] … beyond the expiration date of the patent is unlawful per se. If that device were available to patentees, the free market visualized for the post-expiration period [379 U.S. 29, 33] would be subject to monopoly influences that have no proper place there.
If true, then you have nothing to worry about, do you?
“I see the Federal Circuit willful frustrating the intent and purpose of the patent laws.”
That’s a non-answer Ned. What you “see” is not material to the actual law (I recall your statement on opinions).
So again, what conflict is there with “you can prepare as long as you don’t use.”
Or are you saying that “use” really isn’t one of those things that is supposed tobe “exclusive?” If so, please cite some authority for that position.
I see the Federal Circuit willful frustrating the intent and purpose of the patent laws.
IS?
None.
Can you pick up the pieces of the sky after your coniptions?
You can prepare as long as you don’t use.
Why do you see a conflict here?
What part of “use” is exempt under R&D?
Les, you make an assumption that R&D is infringement everywhere. I would have a hard time believing that, because the doctrine makes no sense whatsoever.
Indeed, it has long been the expressed policy of the Supreme Court that the public be able to enjoy the patented invention immediately after the patent expires. Hoiding that preparations to produce a non infringing products immediately after expiration has the effect of extending the life of a patent for the amount of time necessary to get into production. I think it is high time that the Supreme Court took the issue on cert.
Just ask suckie!
Next time suckie goes fishing and catches the patented fish from the river, he just might owe Monsanto or its ilk damages for patent infringement.
A patented fly lands on the counter. Suckie swats it. How much does suckie Monsanto for his infringement?
Suckie mows his grass; and then suckie promptly receive a notice of infringement from Monsanto telling suckie that suckie's lawn has patented grass in it, and that Monsanto is the exclusive supplier of lawn services for patented-grass lawns. You owe $100/week, the notice intones, for Monsanto's expert patented-lawn care services.
And the beat goes on.
Under the Federal Circuit's expert guidance, everything we do will eventually be patented, even thinking patented thoughts.
Big Brother Rader is watching you.
And the good suckies think there is something wrong with Supreme Court oversight of this merry crew?
Les, under Federal Circuit law, they infringe. However, I have always thought that Federal Circuit law wrong. Perhaps an adverse award of $1billion will provide Dupont some incentive for the SC to take a peek to see if the Fed. Cir. got it right when they made R&D an infringement.
What would you say of the following? In the US, the competitor build 90% of the infringing device, then stops. He has the other 10% on order for delivery 1 day after the patent expires. Is he an infringer?
A US engineer trying to develop a manufacturing process for a patented product guides R&D in foreign land that does not consider R&S infringement. Is he an infringer?
Building factories for manufacturing the patented product?
The whole notion that R&D is infringing is to some degree illogical.
I’d love to, but I thought watching the show was a life. LOL. But seriously, it ruins the willing suspension of disbelief when one preceives (pun intended) that someone is wrong.
Live long and prosper. 🙂
It’s not in America’s interest. It’s in the patent owners interest. If DuPont starts moving research on patented products to countries where the product is not patented, patent owners will take note and start patenting the products in those countries. Don’t worry, Monsanto will play this game of wack-a-mole for you and America’s “interests” will be preserved.
The infringement is the activity that occurred while the patent was in force, even if the loss is not realized until after the patent expires. The head start that DuPont would get if this infringement is allowed severely reduces the value of Monsanto’s patent. DuPont is not entitled to this head start. Sorry.
Well, if the competing product were to be sold only after Monsanto’s patent expired, Monsanto could not claim a loss because Monsanto would have no rights to infringe. As a result, premarket research during the term of Monsanto’s patent, in support of a product to be marketed after patent expiry, cannot be a loss to Monsanto. To hold otherwise is to grant Monsanto a de facto patent term extension that is neither deserved nor allowed under the law. This is the exact reason 35 USC 271(e)(1) was enacted (even if it does not apply here).
I’d just like to say… get a life, will you people? I mean, for crying out loud, it’s just a TV show!
I send you a “free gift” in the mail. A note says, if you don’t return the free gift in two days, you owe me a million dollars. Can I collect?
Do you have patent on methods of opening mail, wherein the mail comprises a free gift and a note setting a deadline for returning the gift, and wherein the note is read after the mail is opened?
If so, you can sue for patent infringement. Just ask suckie.
In a recent episode of Perception on TNT, they had a corn scenario but they kept saying it was copyright infringement? Made me scratch my head. Any idea what the basis for that was or if the consultant is just ahem, over paid? thanks.
I work for one of the largest corporations in the world. We have a fairly good sized research facility or two here in the U.S., a couple/three in developed and developing countries, and we are opening some more in developed/developing countries. They ain’t cheap. The costs involved in “offshoring otherwise infringing work” involves a little more than “some.” Is it a$1B? IDK, but it ain’t cheap.
de minimus? How about de minimis!
Ned –
Are you saying that in this case DuPont did not make or use the claimed invention during their process of “preparing” to make or use the invention?
If so, how exactly were they preparing? Making brochures?
…and yet they didn’t…
“Although farm from organic, glyphosate (RoundUp) is has much smaller negative environmental impact than other herbicides. ”
Interesting slip given the subject matter.
The study about Patent Litigation CA also provided useful information about the outcomes of litigation for patents.
Yes, it’s infringement because patent law is territorial. That doesn’t necessarily mean that the fact you can move overseas shouldn’t be considered when calculating damages. Is that not a non-infringing alternative? Is there case law on this.
Obviously, if the infringement is selling the patented product in the U.S., the extraterritorial defense doesn’t work. (Your customers typically don’t want to travel overseas to purchase — and then infringe when they import). Here, it does seem to work per Ned’s suggestion.
Ned may be assuming moving the R&D overseas is simpler than it really is, but even if expensive and difficult, does it cost $1 billion?
Andy, the consequence of the never ending expansion of patentable subject matter and infringement liability beyond its traditional scope is now destabilizing civilization itself. These guys are way out of control and have to be stopped. I think the Supreme Court has seen enough, but Congress should consider getting involved. Getting rid of the Federal Circuit is one possible solution. Another might be getting rid of some of the judges who just do not get it.
Mr. DC, you are also assuming that R&D is uniformly infringing everywhere in the world. I think that assumes way too much. China for example could simply declare that R&D was non infringing in an effort to get US companies to relocate their R&D to China. In fact, that sounds like a plan.
DC, just right. In fact, what they are doing is notorious. They spread their patented plants everywhere and then demand royalties for doing what one has always done. That cannot be right.
I own an apartment. Someone builds a drivein movie next door. Can they charge me the price of a ticket if I sit in my apartment and watch the movie?
I send you a "free gift" in the mail. A note says, if you don't return the free gift in two days, you owe me a million dollars. Can I collect?
HBO broadcasts its programming into the public domain. You watch it on your TV. Can they collect a fee?
A patented dog with cute fur escapes. I find the a puppy in the wild that has cute fur. I breed the dog, and sell its puppies. It turns out, the puppy has the patented genes. Am I an infringer?
A hunter with dogs pursues a fox. Another man kills its and takes the fox home. Does the second man owe the first damages?
There are fundamental principles at stake here. The Federal Circuit seems to have lost sight of common sense.
Mr. Concept, making using and selling in the US is an infringement. Preparing to make use and sell in the US can be done anywhere. Do you understand that? Why should that be an infringement in the US?
The Federal Circuit made a big mistake way back when they held preparation to sell after a patent had expired to be infringement.
The specter of Chinese beans massing on the border is frightening.
But I don’t see any ethical or legal issue. If Monsanto wanted a patent in China, for two grand they could have gotten a patent in China. They chose not to. It is like drug companies complaining about generics in countries where they chose not to file: they make a decision not to file a patent in markets they do not value, they have no basis for complaint.
I suppose, if a US Patent had some method of manufacture claims, there might be some 271(g) issues. Nope: the importation has to happen during the term of the patent.
That is quite parallel to what Monsanto does. According to some defendants, Monsanto regularly trespasses on farms, sample the crop, and sues for infringement. The defendants in some cases claim that any infringing crop is the result of contamination from nearby crops. Cite?
I thought Mexico and the US both have a lot of PhD’s sitting around looking for work. And many of our PhD’s are sent home after earning their degrees. Certainly, offshoring otherwise infringing work has some costs, but I would think DuPont already has facilities in numerous countries where beans and PhD’s grow. And San Diego, a major PhD producer, is just across the border from Tijuana, where businessmen cross the border regularly.
Public databases. The reexam corresponds to US Patent 5633435. Espace (link to worldwide.espacenet.com) shows all the corresponding foreigns.
There may be holes in the database, and the Canadian patent might have been granted (the C code indicates a granted patent? For a billion dollars I would pay a Canadian to answer that question). Also, any granted Canadian patent may have issued with narrower claims, easier to avoid infringement
Mexican patents show up in this database, if they have been filed claiming priority to the US patent. Also, the corresponding PCT is WO9204449, which does not designate Mexico. This forecloses the PCT route to Mexico.
There is some chance that Monsanto filed in Mexico without a priority claim, which would not make sense. The databases are not perfect, but Mexico does publish applications at 18 months after the priority date. Generally, nobody files national stage/Paris convention applications/regular applications in every country in the world, so DuPont could have found a jurisdiction with no patent coverage.
It would be nice if GM seeds were actually under regulation seeing as how agricultural biotech is accelerating at such a fast pace. You can’t just patent food like that…
Interesting question – not sure it has any impact with a different case, but it would be nice to see the arguments that were defeated.
For comment:
Now that the Fed. Cir. has authorized the patenting of animals, if I invent the improved tuna and toss a few into the ocean where they spread to replace old tuna, the improved tuna being easy to identify, can a patent owner sue commercial fishermen who sell into the US market tuna fish captured from the sea, the tuna fish being of the patented variety?
Les, trust me, this billion dollar decision will be trashed if Posner's ideas are right.
But realistically, Dupont could have avoided all infringement by simply locating its R&D outside the US. Executives are not blithering Id…ts. They will, in the future, do just that. Now how is that in America's interest? How?
Setting up research facilities overseas is not exactly a zero cost operation. You need to have people in those countries who can actually do the research. Mexico probably doesn’t have a whole bunch of PhD’s capable of doing this type of research just sitting around looking for work. So your other option is to try to get the researchers you have in the US to move to Mexico to conduct the research. Good luck with that.
Let’s see DuPont set up a research facility, staff and supply it in Mongolia.
Now you are talking. And, while we are at it, let the PTO defend patent validity in court or in oppositions.
Les, OK. Let's see Monsanto sue in Mongolia.
anon, you might want to read this, then. After you have, let's talk.
link to scribd.com
I suggest the USA makes it a requirement for all Patents to have Foreign Insurance coverage! That should fix the problem! And make more doutgh for the USPTO!
“We are not talking about making, using or selling to the public. Just R&D.”
If the R&D does not involve making or using, then there is no infringement and no need to send jobs overseas.
If the R&D does involve infringement, it is likely that patents were granted in many countries so the options for off shoring are limited.
Ned,
Sorry but I cannot make sense of your response.
You seem to be implying that patents are not territorial in nature. The movement into Canada while having the effect of avoiding infringement for doing something perfectly legal overseas does not negate the fact that such activity is not legal in the states. I don’t think even Posner would snub his nose at the law as you suggest.
Not seize. Eat.
As another noted, this case is bizarro in one sense. It will only force R&D out of the US when that is all it takes to avoid damages. We are not talking about making, using or selling to the public. Just R&D. That can take place anywhere.
How one can justify damages in this case and deny them in Apple v. Motorola is going to be tough to reconcile. All Dupont would have had to do is move their farms into Canada, or a location that did not have a Monsanto patent, and they would have avoided all damages. With damages so easily avoided, Posner would have said there were none or very little.
If Posner had this case, the would have laughed at the damage expert:
Posner: “You mean to say that damages are one billion, when all Dupont had to do was move their farms 100yards North into Canada and there would have been no damages?”
“Dummkopf,” the learned judge would have solemnly intoned. “Case dismised. Non suit.”
Maybe they would be tested. Found out to be knockoffs and seize them.
John, I’m not so sure about that.
If Dupont amassed 100tons of the patented seed in China before the patent expired, and then imported those seeds into the US after, what then?
I haven’t yet checked the statutes, but in one view, this would be wrong ethically if not legally.
What makes you so sure Monsanto doesn’t have patents in Canada or Mexico or any other country?
Yes, if you build an example of a in-force patent and you are not the owner of the patent, you infringe.
If you let an examiner build an example of a patent, that implies that you are the owner of the patent, so, no, you are not infringing your own patent and neither is the examiner, since you gave him permission.
Yes, and yes. Fortunately for you, patent infringement is not a criminal offense, and it is certainly not the crime against humanity that some on this board seem to think it is. So, the only interesting question is the extent of your potential liability. My guess is that it is pretty close to zero for the examples you give, so I don’t think I would sweat it.
If you build and example of an in-force patent to demonstrate it to a judge and illustrate all the claimed elements, do you infringe? If you let an examiner build the example of the in-force patent to illustrate your great new invention, do you infringe? I think I have done both. Don’t tell anybody.
The elephant in the room is ongoing lab/benchtop research in R&D facilities as a whole. For example, if you reproduce an example in an in-force patent for comparison to your new invention, do you infringe? If so, to what level of damages? Dare you even publish the testing in a new patent application for fear of admitting infringement?
Arm’s length negotiations are not the standard used in calculating patent damages based on reasonable royalty…it is a black art.
“There is no loss to Monsanto. None!”
If there is no loss to Monsanto, then why did DuPont do the “research”?
Was it not, do you think, so they could start selling a competing product earlier than they otherwise could?
If it was so they could start selling a competing product earlier than they otherwise could, wouldn’t that represent a loss to Monsanto?
I guess there was a loss to Monsanto. Was!
Are you referring to John and me, or the Supreme Court in ELI LILLY & CO. v. MEDTRONIC?
No, I see a great deal of specificity. What do you see as ambiguous?
It will be more interesting and far more relevant to see what the Fed. Cir. does with this D.C. decision on appeal. As to the damages test applied, the appropriate amount of damages, and on what seems to be differing views between Fed. Cir. judges as to whether, or to what extent, patents can or should inhibit research, or not? I would think this might stir up some amicus briefs?
“Well, if DuPont didn’t infringe the patent, why did the jury decide that they have to pay 1,000,000,000.00?”
See the part about tee-shirts and notepads.
Nothing like the SC writing its own patent laws…
“I don’t think Corn is either a drug nor a veterinary biological product. Do you?”
No I don’t. But let’s be crazy and let’s have a look on 271(e)(1):
“a patented invention”
“a Federal law which regulates the manufacture, use or sale of drugs or veterinary biological products”
Would I be so irreverent to ask you if you don’t see some ambiguity here?
Les:
You read the statute correctly, but the Supreme Court disagrees with you. 271(e) applies to a lot more than it says it applies to: Medical devices are not mentioned, or even hinted at in 271(e), but ELI LILLY & CO. v. MEDTRONIC decided that it covers medical devices.
Hence, if the CAFC or Supreme Court would like to apply 271(e) to any regulated activity, and if GMO is in any way regulated by the FDA, the courts could find a way to extend 271(e) to GMO patents, or any regulated activity.
I always find it refreshing when people ignore actual law for beautiful blue sky policy.
What were those crazy lawmakers thinking when they wrote this stuff? What were the voters thinking when they elected (and re-elected as the case may be) those crazy lawkmakers?
Better side? Sure, the blue sky is always the better side. Just like the grass on that side: alwasy greener.
John has the better side of this issue. DuPont could have easily done its research in some country where Monsanto had no patent (Mexico or Canada (corn grows in both, and both are an easy drive). But why drive research jobs overseas?
John also has a point re the research exemption. It could be modified to cover DuPont here. Best to do it by statute, I suppose, but the judicial extension of 271(e) to cover medical devices was no more radical.
As a policy matter, why should Monsanto get better protection for its patent vis-a-vis pharmaceutical and medical device companies. The policy has already been set: we like it when generic products are ready for market upon expiration of the patent, and if it takes years to get a generic ready to go, we like rules that allow that activity prior to expiration of the patent. If we like that policy in relation to drugs and medical devices, why would we dislike it relation to beans?
I’m not a lawyer and I’m based somewhere outside your country. By the way, you should read “nettles” not “horties”. I repent for that.
I was thinking the same thing myself – in the future why take the risk when you can conduct the research in someplace with a bigger research exemption, or no IP law/enforcement?
No idea how one calculates a “reasonable” royalty of $1B for research, but that the kind of money one might spend to develop a drug (think Roche’s version of EPO). Does Monsanto make $1B annually from Roundup Ready seeds, and even if so, once the patent expires, will the total market value for such seed remain at that level? Even if we ignore competition, seems to me that once the patent expires, farmers will be able to save existing seed from year to year, which should significantly erode the market. I can’t believe anyone negotiating an arm’s-length license would have agreed to pay $1B.
John,
If you are an attorney, you would grasp the fact that what “should be” and what “is” makes a world of difference.
If you don’t like what is, move to change it. But open your eyes to the reality of what you face, and don’t rail uselessly about the insanity of it all (and yet do nothing effectively about it).
The world has more than enough of people like that.
No comment on the case, but LOVE the pic 😉
Is “sales” the only thing protected under the term of exclusivity?
Would I agree that “damages” may yet still occur even for non-sales infringement? (yes). Would you?
You are not a lawyer, are you obladi?
“The 271(e) language applies to any regulated activity.”
It quite clearly applies to products which are 1)primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques)
2) solely for uses reasonably related to the development and submission of information under a Federal law which
3)regulates the manufacture, use, or sale of drugs or veterinary biological products.
So…you know…
Well, if DuPont didn’t infringe the patent, why did the jury decide that they have to pay 1,000,000,000.00?
Patents prevent others from doing more than just selling. They give the owner the right to exclude others from making, using, offering to sell, selling, and importing the claimed invention.
I’m guessing that at a minimum DuPont used the claimed invention in their research.
I implore your pardon and I whip myself with horties if you find my comment artless but don’t you think that with a $1b risk it is worth trying a line of arguments around 271(e) ?
I remember that I read somewhere that the question of wether or not the patent is available for patent term restoration is not necessarily relevant for 271(e)1.
I see there being 2 issues in the 271(e) inquiry: (i) do seeds fall under “regulated” activity; note that the 271(e) language does not apply only to drugs and devices under FDA law. The 271(e) language applies to any regulated activity. So i see that it could also apply to anything where an agency can control marketing and distribution, like drugs devices pesticides fungicides and seeds. But hey, as I say, it’s not improper to focus on teh plain language of the statute when the legislative history is ambiguous. (ii) 271(e) is concerned about the nature of the activity done (the infringing activity), not the quantum of activity. So if the research was done, and if normally immune, it should not matter under the plain language the quantum of activity.
Now, as we know that patent infringement is solely CAFC panel dependent, I can see at least 2 judges that will affirm under the “patent-must-have-value and it can only have value if there is an infringer, so we have to always try to find infringement” theory.