Supreme Court to Review Patent Cases

The Supreme Court has agreed to hear appeals in two patent cases during the October 2012 term.

Bowman v. Monsanto Co.

This case concerns the doctrine of patent exhaustion where a patent owner is only entitled to compensation from the first sale of a patented invention and not from subsequent authorized sales. 

Monsanto has engineered genetically modified seeds that are resistant to herbicides.  When purchasing the seeds, Monsanto requires farmers to agree that they won’t use the seeds for the next year’s planting.  In this way, Monsanto seeks to ensure that farmers must buy the patented seeds from them each year.

Bowman purchased Monsanto’s patented seeds for the purpose of growing new plants and harvesting the seeds from those plants to use in the following year’s planting.  He argues that the original sale exhausted Monsanto’s patent rights.  Monsanto has rights in the first generation of seeds and not in subsequent generations. 

The Federal Circuit agreed with Monsanto that Bowman had created a newly infringing article.  The opinion seemed to rely in part on the conditional sale doctrine that allows patent owners to continue to assert rights in patented articles even after a sale.  Some argue that this is contrary to the Supreme Court’s 2008 decision in Quanta v. LG Electronics.

The Supreme Court often decides to hear cases based on a split between the lower courts of appeals on particular issues.  Given that all patent appeals are heard by the Federal Circuit, there aren’t really such splits.  Instead, the Court sometimes requests the views of the Administration on whether to hear a particular patent case.  Interestingly, the Court agreed to review this case against the advise of the Administration.

Question presented:

Patent exhaustion delimits rights of patent holders by eliminating the right to control or prohibit use of the invention after an authorized sale. In this case, the

Federal Circuit refused to find exhaustion where a farmer used seeds purchased in an authorized sale for their natural and foreseeable purpose-namely, for planting.

The question presented is:

Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?

Gunn v. Minton

The issue in this case is whether patent malpractice claims should be heard exclusively by Federal Courts and the Federal Circuit or whether they can be decided by state courts.

Attorneys are licensed on a state-by-state basis and malpractice cases against attorneys are generally filed in state court.  The Federal Circuit has held that patent law is an exception to this rule because the issues in such cases involve substantial questions related to patent law.  In particular, the court must decide whether the complainant would have won his infringement case or would have acquired a patent if not for the complained malpractice.

In this case, Minton sued his patent litigation counsel in Texas state court.  The trial court and court of appeals ruled for the attorneys based on lack of proof of the claims.  The Texas supreme court, however, dismissed the case because it lacked subject matter jurisdiction.  The court agreed with the Federal Circuit that the case should have been filed in Federal court.  The attorneys appealed to the Supreme Court.

In recent Federal Circuit cases on this issue, Judge O’Malley has been dissenting from the standard Federal Circuit view.  She has managed to get Judges Wallach and Mayer to join her.

The Supreme Court has finally agreed to determine this issue.  Question presented:

Did the Federal Circuit depart from the standard this Court articulated in Grable & Sons Metal Products, Inc. u. Darue Eng’g & Mfg., 545 U.S. 308 (2005 ), for “arising under” jurisdiction of the federal courts under 28 U.S.C. § 1338, when it held that state law legal malpractice claims against trial lawyers for their handling of underlying patent matters come within the exclusive jurisdiction of the federal courts? Because the Federal Circuit has exclusive jurisdiction over appeals involving patents, are state courts and federal courts strictly following the Federal Circuit’s mistaken standard, thereby magnifying its jurisdictional error and sweeping broad swaths of state law claims – which involve no actual patents and have no impact on actual patent rights – into the federal courts?

These cases will be briefed and argued in the coming months.  Decisions for each are expected by June.