Bowman v. Monsanto: The US Supreme Court Rules on Patent Exhaustion

Three days ago, the United States Supreme Court delivered the much awaited judgment in Bowman v. Monsanto Co. The court held that the patent-exhaustion doctrine which limits the extent to which patent holders can control an individual article of a patented product after an authorized sale, does not extend to permitting a farmer to reproduce seeds protected by a patent, without the patentee’s permission.

The Supreme Court, upholding the decision of the Federal Circuit, ruled in favour of Monsanto by rejecting Bowman’s argument that the exhaustion doctrine and the “self-replicating” nature of seeds makes such reproduction through planting and harvesting legal.

Limiting its scope, the court held that the doctrine only restricts the patentee’s rights with respect to the “particular article sold” and does not affect the patentee’s right to prevent a buyer from making new copies of the patented seeds. This reasoning effectively nullifies the fact that Bowman’s initial purchase of the patented seeds from a grain elevator was an authorised one, making Bowman guilty of infringement for having engaged in the practice of planting, watering and harvesting the Roundup Ready seeds.

If the court were to hold otherwise, it would only be going against its own judgment in the J. E. M. Ag Supply Inc. v Pioneer Hi-Bred Int’l Inc. case. In this case, the court looked at the Plant Variety Protection Act together with the Patents Act and held that the two statutes establish different but non-conflicting schemes and since the requirements under the latter are more stringent, protections under it are bound to be greater.  

In my opinion, the judgment upholds the true spirit of the doctrine as in this situation, the patentee has received a reward only for the particular article sold and not for its subsequent recreations. If a farmer is indeed allowed to buy seeds and replicate them in his farm, it would lead to what in the court’s view is “a mismatch between invention and reward”.  Through this interpretation of the first sale doctrine, one the one hand, farmers benefit through the consumption of the product by planting and harvesting the seed while on the other, the patentee benefits by solely holding the right of reproduction, through which his innovation stands to be rewarded.

Drawing a parallel with the first sale doctrine in the case of books as recently decided by the US Supreme Court and discussed here, the first sale doctrine only allows you to sell the books that have already been published and sold. It does not allow you to make copies of the book and sell them, which if done would be a clear case of infringement.

The court’s act of balancing invention and reward is a welcome one which perhaps ought to be done more frequently by Indian courts as well and not just in patent cases. The same needs to be examined in any case involving intellectual property. When the balance tilts excessively in favour of either, the option is to either increase the amount of protection given or contain abuse of monopoly. In this sense, too, I feel the judgment is a welcome one.

Full Bench Opinion of the Delhi High Court on Designs and Passing Off

On May 15, 2013, the Full Bench of the Delhi High Court delivered its 47-page majority opinion and 94-page minority opinion on three questions referred to it concerning the Designs Act, 2000 and passing off. Following were the questions referred to the full Bench:

(1) Whether the suit for infringement of registered design is maintainable against the another registered proprietor of the design under the Designs Act, 2000;

(2) Whether there can be availability of remedy of passing off in the absence of express saving or preservation of common law of Designs Act, 2000 and more so when the rights and remedies under the Act are statutory in nature; and

(3) Whether the conception of passing off as available under the trademarks can be joined with the action under the Designs Act when the same are mutually inconsistent with that of remedy under the Designs Act.

Following are the conclusions of the majority opinion delivered by Justice Rajiv Shakdher in Paras 34 and 35 

34. On various issues raised we may crystallize our opinion as follows:

(i) A plaintiff could institute a suit for infringement of a design against a defendant, who was also a holder of a registered design. The expression "any person" found in Section 22 of the Designs Act would not exclude a subsequent registrant as, according to us, no such words of limitation are found in said Section.

(ii) The plaintiff would be entitled to institute an action of passing off in respect of a design used by him as a trade mark provided the action contains the necessary ingredients to maintain such a proceeding. The argument that such a suit could be instituted only after the expiry of the statutory period provided under Section 11 of the Designs Act, does not find favour with us. This is for the reason that in a given fact situation the plaintiff may have commenced the use of the design as a trademark after its registration. While Section 2(d) of the Designs Act excludes from the definition of a design, any trademark which is defined as such in clause (v) of sub-Section (1) of Section 2 of the 1958 Act or property mark, as defined in Section 479 of the IPC, or any artistic work as defined in clause (c) of Section 2 of the Copyright Act -the use of the design as a trademark post its registration, is not stipulated as a ground for cancellation under Section 19 of the Designs Act.

(ii) (a) In this context we must note the argument of Ms Singh, learned amicus, that passing off action may perhaps be maintainable provided the mark has attained secondary meaning. In our opinion, the issue before us is limited to whether a remedy by way of passing off action would be available qua a registered design used as a trademark by the plaintiff - we are not inclined to comment on the quality of evidence which may be required, if at all, to be produced by the plaintiff to prove whether the mark has acquired the necessary secondary distinctive meaning, for him to secure success, in the action instituted in that behalf.

(iii) We are also of the view that a composite suit for infringement of a registered design and a passing off action would not lie. The Court could, however, try the suits together, if the two suits are filed in close proximity and/or it is of the view that there are aspects which are common to the two suits. The discretion of the court in this matter would necessarily be paramount.

36. Accordingly, our answers to the three issues are as follows:

ISSUE No.I: A holder of a registered design could institute a suit against a defendant who is also in possession of a registered design

ISSUE No.II: A holder of a registered design can institute an action for passing off.

ISSUE No.III: The two actions cannot be combined in one suit

Following are the conclusions of Justice Manmohan Singh in Para 134 of his minority opinion:

a) A suit by the registered proprietor of Design for infringement of the registered design is not maintainable against another registered proprietor under the Designs Act, 2000 in so far as the registration covers the same features of the shape and configuration of the same article under the Design.

b) The remedy of passing off in so far as it relates to claim of protection for shape of articles is not available for the purposes of enforcement of rights and remedies under the Design Act. The said remedy is clearly absent under the Designs Act considering the avowed objective of the Act of 2000 which is to provide limited protection with no unnecessary extension.

c) The remedy of passing off in so far as it relates to claim of protection for shape of articles cannot be joined with the suit for infringement of the registered Design. The said remedy of passing off is available in alternative to the statutory protection conferred by the Design Right. For the purposes of the same, the suitor has to elect between the two inconsistent rights and remedies having distinct objects and policies.

Following were the additional opinions expressed by Justice Singh:

a) Notwithstanding the above said conclusion in (b) and (c), the remedy of passing off would continue to be available along with the infringement of registered designs and can be joined with the same in order to prevent consumer confusion which may be caused by the use of trade mark, get up, trade dress or in any other manner excepting the shape of the goods which is or was forming the subject matter of the registration of the Design.

b) The remedy of the passing off in so far as the shape of the article is concerned shall also be available even during currency of the design monopoly or even after the expiry of same to the extent that the claim of the feature of the shape is not covered within the novelty claim under the Design monopoly rights and the said claim of the protection qualifies all the necessary ingredients of the Trade Mark.

c) A remedy of passing off in so far as the shape of the article is concerned shall not be available even after the expiry of the Design to the extent the said feature of the shape of the article is covered within the novelty claim as made under the Design Right as after expiration of the Design, the novel shape claimed under the Design Act goes in public domain.

We will shortly undertake an analysis of the opinion. I thank Ms.Sneha Jain for sharing the decision with me.

Need for a Strategic and Comprehensive Approach to Healthcare

On the 13^th of last month, a timely day-long panel discussion was conducted by NLU Delhi on the Novartis decision of the Supreme Court. Among the participants, the ones whose presentations I found particularly insightful were that of Adarsh Ramanujan of Lakshmikumaran and Sridharan, Dr.K.M.Gopakumar of Third World Network, Mr.Mark Heywood, Founder of Treatment Action Campaign (South Africa), Dr.Gopakumar G.Nair of Gopakumar Nair and Associates, and Mr.P.H.Kurian, former Controller General of Patents, Designs and Trademarks.

In the post-lunch session chaired by Mr.C.H.Unni, Deputy Chief of Bureau, Mint, I had the opportunity to present some of my views which went beyond the decision. This post captures some of those views.

With pharma patent litigation having taken centre stage, the one thing that we need to be wary of is the temptation to expect the patent system to solve all our healthcare challenges, including that of affordable access to medicines. This temptation becomes a necessity all the more in the absence of a clear-cut healthcare strategy, since the Government would want to be seen as doing something, and patent busting is probably the most public way that the government can probably think of to achieve that object, given the (un)popular perception of patents and innovator drug companies.

Patents are without a doubt relevant to the debate, and patents which add no value must definitely be weeded out. But the question is, apart from pitting innovator drug companies against generics and deriving a vicarious pleasure out of this slugfest, have we truly explored all plausible and available options under and outside the Patents Act, 1970?

For instance, if the Government is truly keen on weeding out frivolous patent applications or patents, it ought to have actively explored the pre and post-grant opposition mechanisms, besides revocation by filing oppositions and revocations. After all, the definition of “person” under the Act includes the government, so what has stopped the Ministry of Health from filing oppositions to frivolous patent applications?

Also, what has the stopped the Government from stocking adequate quantities of patented drugs in hospitals and dispensaries owned by the Government, thereby giving effect to Section 47(4) of the Act? Wouldn’t this help increase affordable access to drugs?

Apart from patent-related issues, one of the issues central to the discourse is elevating the quality of research undertaken by Indian pharma companies and providing impetus to the growth of home-grown entities in related areas such as clinical trials. Instead of investing efforts in this direction, the Government has in fact contributed to the potential decline of Indian clinical trial industry by implementing feckless provisions such as the new Rule 122DAB of the Drugs and Cosmetics Rules, 1945, which states that failure of an investigational product to provide the intended therapeutic effect shall be considered as having caused a clinical trial-related injury or death!

As argued in an earlier post, if the very purpose of the trial is to evaluate the drug, what sense does it make to hold the sponsor of a trial or the Clinical Trial Organization responsible for failure of the drug to provide the intended therapeutic effect?

Unfortunately, instead of addressing issues like these, the discourse seems to be focussing entirely on the system of patents. It would help to first formulate our healthcare goals in specific terms, and then explore options under multiple legislations, instead of putting all our eggs in the patent basket.