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The Federal Circuit upholds a ruling for Monsanto seed technologyAugust 24, 2006

Monsanto sued Mitchell Scruggs and other named defendants (‘Scruggs’) for infringement of its patents on ‘Roundup Ready’ seeds. Scruggs saved and replanted subsequent generations of the Monsanto seeds. Monsanto licenses its biotechnology and Roundup products to seed companies who are allowed to incorporate the biotechnology into its seed’s genetic material (i.e. germplasm) to produce Roundup Ready seeds. The seed companies are limited by an exclusivity provision, a no replant or research policy, and are required to pay a technology fee. Although Scruggs bought Monsanto soybean seeds from seed companies, he did not sign the license agreement. The district court denied Scruggs’ motion for declaratory judgment of patent invalidity and granted Monsanto’s motion for summary judgment of infringement and a permanent injunction. Scruggs appealed the ruling of the Northern District of Mississippi to the Federal Circuit. The court affirmed the trial court’s infringement decision. Scruggs argued he was allowed to replant seeds based on the doctrine of patent exhaustion, as he never signed the license agreement when he purchased his seeds. The doctrine of patent exhaustion permits a purchaser to use the patented technology in any manner once the patentee granted an unrestricted sale. Here, however, patent exhaustion did not apply because the rights to the second generation seeds were never sold, and thus Monsanto’s rights could not have been exhausted. Scruggs also argued that Monsanto’s patents failed the written description requirements and therefore were invalid. The court also rejected this argument, since Monsanto was not required to disclose particular gene sequences which are either deposited by reference or already known to those skilled in the art. Finally, Scruggs alleged that Monsanto violated antitrust laws through anticompetitive practices such as issuing limited use licensing of its seed technology and creating tying arrangements where the seed company was required to purchase Monsanto’s related Roundup products for use on the crops. The court ruled that all of Monsanto’s actions were acceptable practices within the patent laws, and thus could not give rise to antitrust liability. The court did vacate and remand the trial court’s decision to grant a permanent injunction against Scruggs in light of the recent eBay Inc. v. MercExchange decision from the Supreme Court, which altered the standard for permanent injunctions in patent cases. Due to the recent change in the traditional rule of granting injunctions, the court reminded the issue to the trial court for further review. To view the court’s entire decision log on to

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