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Unanimous x3: Monsanto's Magic Beans, Defalcation, and Towing

By William Peacock, Esq. on May 14, 2013 | Last updated on March 21, 2019

Our nation's greatest court, with nary a hint of dispute, dissention, or differing reason, released three unanimous opinions today. And while some (the tow yard) will likely have little-to-no impact in the real world, another (Monsanto's soybean patent case) may have a far greater impact, especially in the areas of genetically modified crops, vaccines, and any other self-replicating products.

Monsanto Roundup-Ready Soybeans

In many ways, Monsanto giveth, and Monsanto taketh away. They invented an herbicide that kills pests -- and plants. They also invented a plant that resists that herbicide -- the Roundup-Ready soybean. And while they'll give you the genetically altered soybeans to plant (for a fee, of course), they take away the right to replant those beans in subsequent years through patent enforcement and licensing agreements.

In this case, a too-clever farmer recognized the benefit of Roundup-Ready beans, yet didn't want to pay the high price for a risky late-season crop. His solution was to buy seeds from a grain elevator, meant for end-user consumption by humans or animals, and replant them. He then used Roundup to weed out the non-engineered plants. The secondhand seeds produced plants, which produced seeds, which produced more plants. His bootleg beans were self-replicating.

His too-clever legal argument was that the doctrine of patent exhaustion applied. This doctrine provides that once the first sale is made, the user can do what they like with the product. The patent-holder has already received the benefit of the patent. They cannot control the legal purchaser's subsequent use.

Justice Kagan, along with the rest of the court, was not convinced. While patent exhaustion does apply to the use of the beans for resale, consumption, or homemade maracas, it doesn't allow the user to make a copy of the original product. To hold otherwise would neuter the patent and limit the benefit of the patent to first sale of beans to a bootlegger.

He also tried the "blame-the-bean defense" of arguing self-replication. He didn't do it, the beans did it! Justice Kagan was not amused. While the plants do produce offspring, "[i]t was Bowman, and not the bean, who controlled the reproduction (unto the eighth generation) of Monsanto's patented invention."

Note that the court, recognizing the coming wave of self-replicating technologies (vaccines, computer software, etc.) limited its holding to these specific facts.

Defalcation, FAA and Tow Yards

No, not that. De-fal-cation, which according to the FindLaw dictionary, is the "failure to account for or pay over money that has been entrusted to one's care." And after today's unanimous SCOTUS decision, also requires a culpable state of mind.

We'll have more on defalcation, as well as the Supreme Court's discussion of the Federal Aviation Administration Authorization Act of 1994's preemption of state laws regulating the towing, storage, and disposal of a vehicle.

We promise. Neither topic is as boring as it sounds.

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