Article

by Carey Gillam

Monsanto Co. (MON.N), the world's largest seed company, has prevailed in another lawsuit against a U.S. farmer, earning a ruling from a federal appeals court that protects Monsanto's interests even when its patented seeds are sold in a mix of undifferentiated "commodity" seeds.

The U.S. Court of Appeals for the Federal Circuit in Washington issued its ruling Wednesday, affirming the lower court decision that favored Monsanto.

The St. Louis, Mo.-based company sued Indiana soybean farmer Vernon Bowman in 2007 accusing Bowman of patent infringement for planting and saving seeds that contained Monsanto's genetically altered Roundup Ready technology even though Bowman said he bought those seeds as part of a mix of commodity seeds.

Commodity seeds come from farms that use Roundup Ready technology as well as those that do not without differentiation. No licensing agreements are required with the sale of such seeds.

Monsanto restricts grower use of its licensed Roundup Ready seed to a single commercial crop season. Roundup Ready seeds tolerate spray treatments of Monsanto's Roundup herbicide.

The court found that while the technology agreements Monsanto requires growers to adhere to forbids farmers from selling the progeny of Roundup Ready seeds, those agreements do not extend to second-generation seed.

In fact, Monsanto authorizes the growers to sell their second-generation seed to grain elevators as a commodity and does not require restrictions on grain elevators' subsequent sales of that seed, the court said.

But that still does not give growers a green light to replicate Monsanto's patented technology by planting it in the ground to create "newly infringing genetic material, seeds and plants," the court found.

"The attempt to limit the applicability of patent rights was again squarely rejected by the court," Monsanto said in a statement.

In Bowman's case, he planted Roundup Ready seeds as his first-crop in each growing season from 1999-2007 and did not save seed in compliance with licensing agreements. But he also purchased commodity seed from a local grain elevator for a late-season planting, or what is known as a "second-crop."

The farmer applied glyphosate to his second soybean crops and was able to identify herbicide-resistant plants, from which he then saved seed for subsequent years of second-crop planting, according to the court documents.

Bowman argued that Monsanto's patent rights were exhausted with respect to Roundup Ready soybean seeds that are present in grain elevators as undifferentiated commodity seed.

But the court still found that infringement of Monsanto's patent occurred and affirmed the award of damages to Monsanto, which a lower court set $84,456.

Mark Walters, a lawyer for Bowman, said he was disappointed in the court decision, which he said conflicts with "over a century of Supreme Court law on patent exhaustion." Bowman may make a further appeal, he said.

(Reporting by Carey Gillam; Editing by Bob Burgdorfer)