June 17, 2013

The Fed Circuit is applying Bowman Already?

By Gregory S. DeLassus, Associate

Case-or-Controversy in light of Already LLC v. Nike and Bowman v. Monsanto

 

Although the ink on the Supreme Court’s decisions in Already LLC v. Nike and Bowman v. Monsanto is barely dry, on 10 June 2013, the Federal Circuit Court of Appeals began applying both of these recent cases. The Federal Circuit affirmed the Federal District Court for the Southern District of New York, which had dismissed the Organic Seed Growers & Trade Association’s (OSGTA) declaratory judgment action against Monsanto for lack of Article III jurisdiction.

The OSGTA brought suit seeking a declaratory judgment of invalidity for twenty-three of Monsanto’s patents relating to its Roundup Ready® technology. While the OSGTA made clear that they “do not want to use or sell transgenic seed” (slip op. at 6), and opposed the use of glyphosate on crops, they averred that they were concerned that they might be liable to suit under one or more of the twenty-three contested patents if their crops were to become inadvertently contaminated with Monsanto’s Roundup Ready® trait. Indeed, one of the plaintiffs went so far as to claim that he had stopped growing corn or soybeans for fear of suit if his conventional crops were to become contaminated with glyphosate-resistance genes, and that he planned to resume growing corn and soy as soon as this fear was allayed (slip op. at 7).

Although the OSGTA conceded that Monsanto had never specifically threatened any of the plaintiffs, they cited Monsanto’s history of vigorous patent enforcement as the basis for their fear, noting that Monsanto had filed suit against 144 farmers and settled with another 700 over Monsanto’s various patented glyphosate-resistance technologies. For its part, Monsanto pointed out that it has a statement on its website noting that it was not, and will never be, Monsanto’s policy “to exercise its patent rights where trace amounts of… patented seeds or traits are present in farmers’ fields as a result of inadvertent means” (slip op. at 8). When the OSGTA demanded that Monsanto give them a covenant not to sue, Monsanto refused, but sent them a letter assuring them that “Monsanto does not assert and has no intention of asserting patent-infringement claims against any of your clients,” and that “any fear of suit or other action is unreasonable, and any decision not to grow certain crops unjustified.” Slip op. at 8.

The court of appeals began by noting that the recent decision in Bowman v. Monsanto, 133 S. Ct. 1761 (2013) leaves open the possibility that it would not be infringement merely to let patented seeds grow in one’s land if they had been introduced there inadvertently, indicating that the Federal Circuit is taking care not to read the Bowman case too broadly (slip op. at 11).

Even as the court was giving Bowman a narrow reading, however, it took a rather broad view of another recent Supreme Court case, Already LLC v. Nike, 133 S. Ct. 721 (2013). In Already, Nike had sued Already for trademark infringement. Already counter-sued, challenging the validity of Nike’s trademark. Already, 133 S. Ct. at 723. Nike subsequently voluntarily dismissed its own suit and gave Already a covenant not to sue. Nike moved to have the case dismissed as moot, in light of the covenant not to sue. The Court invoked the “voluntary cessation doctrine” to conclude that Nike’s capacious covenant rendered the case moot, because Already could not reasonably fear further lawsuits, and thus there was no further relief that the Court could grant Already. Id. at 732.

The Already Court was at pains to stress that the party seeking to have a case declared moot in view of the voluntary cessation doctrine has a “formidable burden” to show that it is absolutely clear that it is not likely to litigate. Id. at 727. Not just any covenant would suffice, but the very broad nature of Nike’s covenant was enough. Id. at 728.

In the instant case, Monsanto had rather pointedly refused to give the OSGTA any covenant not to sue, broad or otherwise. One might imagine that this would clear the way for the Federal Circuit to distinguish this case from Already, and thus to find an Article III case or controversy. Instead, the Federal Circuit held that there is nothing particularly special about a covenant not to sue. Rather, the statement on Monsanto’s website and the letter that Monsanto’s lawyer sent to the OSGTA was enough to defeat Article III standing. Significantly, the court noted (and Monsanto agreed) that because the case was decided on this fact, the decision created a judicial estoppel that prevents Monsanto from ever bringing suit against the members of the OSGTA based on a finding that “trace amounts” (defined by the court as “up to 1%”) of the seeds in a given field are Roundup Ready® seeds. Because Monsanto was careful throughout the proceedings not to indicate an unwillingness to sue farmers whose produce shows more than 1% Roundup Ready® seeds, Monsanto is not estopped from bringing suit against such farmers.

This represents a very broad interpretation of Already’s approach to the voluntary cessation doctrine. It appears that a patent holder need not draft a capacious covenant not to sue in order to come within the Already umbrella. Rather, it appears that as little as a statement on a company’s website will suffice, combined with a letter from a company’s attorney.

The above article was written by Greg DeLassus, an associate in the St. Louis, MO office of Harness Dickey.  Greg can be reached at 314.446.7687 or gdelassus@hdp.com.