Court decision threatens Monsanto's control over seed saving
Farmers have been sued for seed-saving, a time-honored agricultural practice, and one was sentenced to eight months in prison in a dispute related to the practice.
NOTE: This case relates to the extent to which a patent owner can exert control over a patented product once it has been sold, in particular the extent to which a patent owner can limit or control the use or resale of patented products once they're in the hands of their purchasers.
Up till now a GM crop firm like Monsanto has asserted - via a technology agreement with the farmer at point of sale - extreme control over the future use of the GM seeds purchased, allowing their use only for a single commercial crop and denying the farmer any right to harvest seed from that crop for future use or sale.
It seems the LG Electronics decision by limiting the rights that patent owners/licensees can assert over their patented products once sold may have severely undermined Monsanto's ability to impose this single commercial crop use condition in its technology agreements.
This in turn would seem to undermine Monsanto's ability to harrass and sue farmers, but it would be naive to think Monsanto won't be fighting tooth and nail to maintain control over its patented seeds. So the lawyers will doubtless be working overtime.
US court rules in Quanta's favor in LG patent caseReuters, By Diane Bartz
Reuters, June 9 2008
WASHINGTON - The U.S. Supreme Court on Monday ruled in favor of Taiwan's Quanta Computer Inc , rejecting LG Electronics Inc's argument that its license to a patent automatically passed to whoever purchased the goods.
The unanimous decision overturned a federal appeals court ruling.
South Korea's LG Electronics had accused Quanta of infringing its patent for the "systems and methods" of using components to make a functioning computer, not the components themselves.
LG Electronics, which holds the patents on the products, had an agreement with Intel Corp that allowed it to make computer chips and chip sets but explicitly forbade mixing the components with parts from other manufacturers.
Quanta argued that LG Electronics had licensed its technology to Intel, which in turn made microprocessor chips that it sold to Quanta. Quanta used the chips to make computers under contract for Dell Inc, Hewlett-Packard Co and Gateway Inc.
"LGE argues that there was no authorized sale here because the license agreement does not permit Intel to sell its products for use in combination with non-Intel products to practice the LGE Patents," the high court said.
"LGE overlooks important aspects of the structure of the Intel-LGE transaction. Nothing in the license agreement restricts Intel's right to sell its microprocessors and chip-sets to purchasers who intend to combine them with non-Intel parts."
Ray Van Dyke, a patent lawyer with Winston and Strawn, said companies could raise royalty rates because of the new ruling. "The patentee has to get all their value on the first sale," he said.
Van Dyke also said that the ruling could be good news for farmers who want to use genetically modified seed from the plants that they grow, rather than buying seed every year from Monsanto Co and other seed companies. Farmers have been sued for seed-saving, a time-honored agricultural practice, and one was sentenced to eight months in prison in a dispute related to the practice.
George Best, a patent expert with the law firm Foley and Lardner, said he had expected the court would rule for Quanta.
"I think everybody expected this result," he said, adding that it was unlikely to reduce litigation over patents, which high-tech companies have long complained about.
A federal district court in California initially decided Quanta and the others did not infringe the patents. But a U.S. appeals court overturned the decision and ruled in favor of LG Electronics. (Additional reporting by James Vicini) (Reporting by Diane Bartz; Editing by Gerald E. McCormick and Lisa Von Ahn)