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www.nature.com/naturebiotechnology • NOVEMBER 2002 • VOLUME 20 • nature biotechnology

In a 6–2 decision handed down in December2001, the US Supreme Court has confirmed

that plants are eligible subject matter for pro-tection under the utility patent regime,notwithstanding the existence of limitedforms of intellectual property protection forplants under the Plant Patent Act (PPA) andthe Plant Variety Protection Act (PVPA). Thecase, J.E.M. Ag Supply v. Pioneer Hi-Bred1,endorsed a longstanding practice of the USPatent and Trademark Office (PTO), underwhich the PTO has issued hundreds of utilitypatents on plants since 1985. Although somemay view the J.E.M. case as the denouementof the plant IP rights saga, much of the policydebate over optimizing IP rights for plantshas yet to unfold.

In this article, we analyze the J.E.M. deci-sion, identify issues that J.E.M. leaves unre-solved, and explain how those issues havebegun to manifest themselves in recent dis-putes over plant IP rights.

J.E.M. in the lower courtsThe J.E.M. case arose when Pioneer Hi-Bred,the world’s leading corn seed producer, suedan Iowa agricultural supply dealer (FarmAdvantage, doing business as J.E.M. AgSupply) for infringing several of Pioneer’sutility patents on hybrid and inbred cornlines. J.E.M. moved to have the case dismissedbefore trial, on the ground that Pioneer’spatents were invalid. According to J.E.M., theutility patent statute’s provision restrictingpatent-eligible subject matter should be inter-

preted to exclude plants because Congresshad created other IP regimes, including thePlant Variety Protection Act (PVPA), aimedspecifically at protecting plants. Thus, thePTO’s practice of granting utility patents onplants had been in error, and Pioneer’spatents—at least to the extent that theyclaimed plants—were invalid2.

J.E.M. lost on this argument in the trialcourt and lost again at the Court of Appealsfor the Federal Circuit, but persuaded theSupreme Court to grant review. In its 6-2decision (Justice O’Connor abstaining), theSupreme Court upheld the lower courts’ rul-ings. The case has now been returned to thetrial court and is proceeding towards eventualtrial or settlement.

J.E.M. in the Supreme CourtJustice Thomas’ opinion in J.E.M. offeredtwo principal rationales to support the con-clusion that the utility patent statute autho-rizes patent grants for plants. First, JusticeThomas noted that the language of the rele-vant statutory provision—§101 of Title 35of the US Code—was “extremely broad.”According to Justice Thomas, the SupremeCourt had already established the “broadscope and applicability” of §101 in itsfamous Chakrabarty decision3, rejecting theargument “that Congress must expresslyauthorize protection for new patentablesubject matter.”

Second, Justice Thomas concluded thatnothing in the plant-specific IP statutes (the1930 PPA and the 1970 PVPA) indicated aCongressional intent to preclude utilitypatent protection for plants. Certainly, noexpress language in either the PPA or PVPAprecluded utility patent protection forplants—no one seriously disputed that point.Justice Thomas also asserted that nothing inthe legislative history of the PPA or PVPAimplied that Congress intended either statuteto serve as the exclusive IP vehicle for plants.Statements in the 1930 PPA legislative historysuggested that Congress assumed at that timethat plants could not be described with suffi-cient particularity to satisfy the requirementsof utility patent law. But these statementscould not be read to foreclose the possibilityof utility patent protection when plants could

be described in accordance with utility patentrequirements, as was true by the 1980s. As tothe PVPA, nothing in its language or legisla-tive history supported the inference thatmerely by passing the PVPA, Congressintended to foreclose utility patent protectionfor seed-grown plants. Instead, the PVPA andutility patent regimes were complementaryforms of protection.

Justices Breyer and Stevens dissented, dis-agreeing with both of Justice Thomas’ ratio-nales. First, the dissent refused to giveChakrabarty the weight that Justice Thomasgave it, arguing that Chakrabarty did not dealsquarely with the question of plants. Second,the dissent argued that the legislative historyand language of both the PPA and PVPAimplied that Congress wished to make thoseregimes the exclusive federal IP regimes forplants. To the dissenters, the fact thatCongress had passed the two plant-specificstatutes implied that Congress wished towithdraw plants from the reach of the generalutility patent system. Thus, the dissent’s posi-tion was based upon its understanding of theproper approach to interpreting the relevantstatutes, not on any broad policy argumentthat PPA and PVPA protection are in somesense superior to utility patent protection forthe plant-breeding industry.

What J.E.M. left unaddressedAs fundamental as the J.E.M. decision may be,the Supreme Court confronted only one rela-tively narrow issue of patent acquisition inJ.E.M. It will now fall to the lower courts towork out how numerous other issues of patentlaw doctrine apply to plants, and to Congressto consider broader policy issues concerningthe relationship among IP regimes for plants.We identify and explore a few of the unre-solved questions in this section.

Non-obvious plants? The J.E.M. case confirms that plant-relatedinnovation is eligible for utility patent protec-tion. But eligibility is merely a threshold con-dition; there are additional prerequisites forpatent protection. Two—non-obviousnessand enabling disclosure—are likely to be thefocus of PTO and court decisions as the law ofutility patents for plants continues to devel-

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Intellectual property protection for plant innovation:Unresolved issues after J.E.M. v. PioneerAlthough the US Supreme Court upheld the patent eligibility of plants, issues remain concerning the decision’s implementation and other forms of plant IP protection.

Mark D. Janis and Jay P. Kesan

Mark D. Janis is professor of law and H. Blair& Joan V. White Intellectual Property LawScholar at the University of Iowa College ofLaw (mark-janis@uiowa.edu). Jay P. Kesan isassociate professor of law at the University ofIllinois at Urbana, Champaign, College of Lawand the Institute of Government and PublicAffairs (kesan@law.uiuc.edu). The researchpresented here was conducted under theauspices of the Intellectual Property for PlantInnovation (IPPI) project, which is supportedby grants from the US Department ofAgriculture (Illinois-Missouri BiotechnologyAlliance) and the University of Iowa FacultyScholar Program.

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op4. These doctrines already attract consider-able attention in biotechnology patents out-side the area of plant biotech.

As yet, there is very little law explaininghow these prerequisites should be applied topatents that claim conventionally bred plants.For example, a number of patents claim spe-cific new crop lines, developed by way of well-known breeding techniques. The reach of thenon-obviousness doctrine may well be testedin connection with claims of this type.

Patent infringement via pollen drift? The J.E.M. case concerned an issue of patentacquisition, and so the Court had no occasionto comment on issues of patent scope andenforcement of patents on plant-relatedinnovation. One such issue is whether patentinfringement can occur as a consequence ofpollen drift5.

It is sometimes mistakenly assumed thatpatent infringement occurs only when aninfringer undertakes some affirmative, inten-tional bad act. In fact, infringment is a broad-er concept, encompassing any unauthorizedmaking, using, or selling of a patented inven-tion, regardless of whether the infringerintended to “copy” the patented invention orwas even aware of the existence of thepatent6. There are good reasons for this long-standing rule. Intent is difficult to prove incourt and costly to adjudicate. The SupremeCourt has recently recognized that in manycases it is extremely difficult to distinguishbetween intentional efforts to design arounda patented invention—an activity that maybe socially desirable—and efforts to mimic apatented invention while incorporating triv-ial differences7. These principles are likely tobe tested in the area of patents on geneticallymodified plants.

In a widely publicized Canadian case,Monsanto Canada sued Percy Schmeiser, afarmer in Saskatchewan, asserting thatSchmeiser was infringing a Canadian patentthat covered Monsanto’s Roundup Readycanola. According to Schmeiser’s testimony inthe case, in 1997, Schmeiser was sprayingRoundup herbicide in ditches bordering hiscanola fields, when he noticed that some vol-unteer canola plants growing in the ditchessurvived the spraying. He then sprayed por-tions of his canola fields, and some 60% of thesprayed crop survived. Eventually, Schmeiserharvested seed from the fields and from theditches, saved some of the harvested seed, andreplanted it in 1998. According to grow-outtests conducted on Schmeiser’s 1998 crops byMonsanto’s expert, those crops contained ahigh proportion of Roundup Ready canola.

Because Schmeiser had never purchasedRoundup Ready canola from any autho-rized sources, Monsanto sued, asserting thatthe 1998 crop infringed Monsanto’s patent.

The Canadian trial court found infringe-ment, and the Federal Court of Appeal hasrecently affirmed8.

Schmeiser raised two new arguments thatUS courts will be likely to confront. First,Schmeiser challenged the principle that unin-tentional, “innocent” infringement is stillinfringement, arguing that infringementshould be excused where it comes aboutbecause of the unintentional appearance ofvolunteer plants within a farmer’s crop.

The Canadian appellate court avoided theissue, concluding that Schmeiser’s infringe-ment was not innocent, because he knew orshould have known that the seeds saved fromthe 1997 crop exhibited Roundup tolerance.However, the court’s comments leave openthe possibility that an innocent-infringe-ment defense may survive in a future case.After acknowledging the general principlethat innocence does not excuse infringe-ment, the court suggested that patentedplants might present a special case: “[Thepatented Monsanto gene] is a patentedinvention found within a living plant thatmay, without human intervention, produceprogeny containing the same invention. It isundisputed that a plant containing theMonsanto gene may come fortuitously ontothe property of a person who has no reasonto be aware of the presence of the character-istic created by the patented gene. . . In myview, it is an open question whetherMonsanto could, in such circumstances,obtain a remedy for infringement. . .”9

Second, Schmeiser argued that Monsantohad “waived” its patent rights by failing totake adequate steps to prevent pollen driftcontamination, or, perhaps, by releasingRoundup Ready canola into the environ-ment knowing or suspecting that pollendrift would result. The Canadian appellatecourt expressed considerable skepticismabout this argument, concluding thatMonsanto’s efforts to control pollen drifthad been adequate and that Schmeiser knewor should have known that his 1998 crop wasRoundup tolerant in any event. The courtdid, however, mention in passing that theinevitability of pollen drift “may causeMonsanto some difficulty in defending itspatent rights in certain situations,” even if itcould not “be taken as a waiver by Monsantoof its patent rights.”

We favor an approach to this problem thatvaries slightly from that of the Canadiancourt. We would advise courts (and legisla-tures) against crafting a special infringementregime for patented plants. Instead, theyshould apply traditional principles, underwhich “unintentional” infringement bypollen drift is still infringement. We are com-fortable with this result because we are con-vinced that, in these cases, infringers will

have a separate remedy against the neighborfrom whom the pollen contamination origi-nated, or perhaps against the producer of theneighbor’s seed. Indeed, we expect GMpollen contamination to be the source of sig-nificant state lawmaking in the comingmonths and years, quite apart from the ques-tion of patents.

We also have serious reservations about thewaiver argument. First, courts should under-stand that the waiver argument has drasticconsequences for patentees. Whereas theinnocent-infringement defense excuses theinfringement but leaves the patent intact, thewaiver argument seems to operate to render apatent unenforceable in any future action.Second, there is currently no clear authorityfor a general “waiver” doctrine in US patentlaw. A court would have to operate under itsgeneral discretion to fashion equitable relief(that is, relief based on general considerationsof fairness) to recognize a waiver of patentrights. Existing US patent law does arguablycontain some loose analogs, doctrines such as“inequitable conduct” (holding that a patentis unenforceable where a patentee intention-ally deceived the PTO during patent prosecu-tion on an issue that is material to patentabil-ity) or “prosecution laches” (holding that apatent is unenforceable where a patentee hasintentionally delayed patent prosecution).However, these doctrines operate only inextreme situations where the evidencedemonstrates deliberate wrongs on the partof the patent owner. In our view, they fall farshort of justifying any general principle ofwaiver that would operate against any patenton a plant whose pollen drifts.

Reportedly, Monsanto has filed a few casesin the United States presenting facts looselysimilar to those in the Schmeiser case.However, none has yet resulted in a reportedjudicial opinion analyzing the question ofpollen drift. No doubt anticipating suchsuits, the North Dakota state legislaturepassed House Bill No. 1442 in the spring of2001. The bill sets out procedures that patentowners must follow in obtaining samples ofallegedly infringing crops. In addition, thebill purports to require the patent owner todesignate an “independent laboratory”which “shall conduct all tests to determinewhether patent infringement has occurred.”To the extent that this means that the labora-tory’s determination on infringement isdeemed to be binding on a court, this part ofthe bill could not withstand challenge. Apatent is a federally created right enforceablein federal court. A state legislature lacksauthority to limit a patent owner in theforms by which patent infringement may beproven, and certainly lacks authority to binda federal court to a laboratory’s determina-tion of “infringement.”

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Similar legislation has been proposed inseveral other states over the past year. Withthe continued heavy press coverage of theSchmeiser case, these state legislative pro-posals seem likely to resurface in the comingmonths.

Patent infringement by plant breeding research?Another unresolved issue after J.E.M. is theextent to which plant breeding research activi-ties trigger patent-infringement liability. TheUS patent statute imposes liability for allunauthorized “uses” even if those uses are notdirectly linked to any sales. On its face, then,the statute would impose liability even for usesof a patented invention carried out for experi-mental or research purposes. For example, aplant breeder who uses a patented soybeanvariety without the patent owner’s authoriza-tion would be liable for patent infringementunder the strict terms of the statute even if thebreeder is a university researcher who is usingthe patented variety in a breeding program todevelop a new variety.

In a tiny handful of cases, US courts havecrafted a narrow exception to this rule, underwhich truly non-commercial experimentaluses are shielded from patent-infringementliability. However, few modern researchactivities are truly non-commercial in thesense of having no connection whatsoeverwith commercial gain, even in a universitysetting. Accordingly, even though US courtshave long acknowledged the existence of anexperimental-use defense, they have virtuallynever sustained it10.

What we have discussed thus far about theexperimental-use doctrine would be equallytrue across the range of patent-eligible tech-nologies. What arguably makes plant breed-ing experimentation different is the existenceof the PVPA. Specifically, in contrast to thenarrow, judicially created research exemptionunder US patent law, the PVPA contains anexpress statutory provision exempting frominfringement “[t]he use and reproduction ofa protected variety for plant breeding orother bona fide research experimentation.”11

Some argue that plant breeding activities thatwould have been shielded from liabilityunder the PVPA research exemption shouldbe deemed to be shielded from liability underthe utility patent laws.

On the basis of existing law, courts shoulddecline to engraft the PVPA research exemp-tion onto the utility patent regime. There isno evidence that Congress intended toexempt plant breeding research from thereach of the utility patent regime—or anyother federal IP regime—when it chose toexempt plant breeding research from liabilityunder the PVPA regime. More broadly,Congress certainly must be free to exempt

specific activities from liability under individ-ual IP regimes without elevating those activi-ties to privileged, “bulletproof” status vis-à-vis all other federal IP regimes.

We do not mean to suggest that we havedemonstrated that the relatively narrowexperimental-use doctrine of utility patentlaw will be optimal from a policy perspectivewhen applied in the plant breeding andbiotechnology arena. The policy discussion isone worth having. We have made a start atsuch a discussion in other writings12.

Patent infringement by seed saving? Seed saving raises issues that are similar ana-lytically to those surrounding experimentaluse. Whereas the utility patent statuteincludes no express exemption from infringe-ment for patented seed that a farmer savesand re-uses, the PVPA does include a narrowsaved-seed exemption. The exemption allowsfarmers who grow protected varieties(obtained through authorized sources) tosave the resulting seed for the production of asubsequent crop “for use on the farm.”13

The argument that the PVPA saved-seedexemption should simply be engrafted ontothe utility patent statute should be rejected forthe same reasons that we have already dis-cussed in connection with the experimental-use exemption. In a recent case, the FederalCircuit appears to have followed an approachconsistent with ours. The court noted thatutility patent protection and PVPA protectionare “complementary” and concluded that “theright to save seed of plants registered underthe PVPA does not impart the right to saveseed of plants patented under the PatentAct.”14 We read this as recognition that the“saved-seed” provision is simply an exceptionfrom liability under the PVPA, and that theexemption does not (and cannot) create anyaffirmative “right” to save seed.

The practice of seed saving raises another,more difficult issue in the domain of utilitypatent law. When a purchaser buys a patenteditem from an authorized seller, the purchaseris deemed to receive a license under the rele-vant patent unless the seller and purchasermake an agreement to the contrary. In theusual context, this “implied” license would beconstrued to allow the purchaser to use andresell the patented item, but not to make anew patented item. It is sometimes said thatthe patent owner’s rights are “exhausted” inthe sold item.

The implied-license doctrine is not easy toapply to biological subject matter, such aspatented seed. When the patented seed growsand produces new seed, is the new seed a new“making” of the patented seed, and henceoutside of the implied license? Or is it simplyan aspect of the original “using,” and hencewithin the scope of the implied license?

Courts have not resolved the question, andare not likely to do so in the immediate futurebecause sellers can limit the scope of animplied license by employing express licenserestrictions as a condition on the sale of thepatented item. Seed companies ordinarilyprohibit growers from saving patented seedthrough express agreements entered into inconnection with the seed sale. Whether theseagreements can be enforced has recently beenthe subject of litigation, as discussed in thefollowing section.

Are “seed-wrap” licenses enforceable? In the distribution of software, it hasbecome customary for distributors torequire purchasers to agree to express writ-ten license restrictions either printed on thesoftware’s packaging or embedded in itsinstallation programming (and thereforecalled “shrink-wrap” or “click-wrap” licens-es). The seed industry has followed suit.Major seed producers typically includeexpress license restrictions on seed bags(called “bag tag” or “seed-wrap” licenses),or require growers to sign a “technologyagreement” when purchasing seed. A repre-sentative Pioneer bag tag license, for exam-ple, provides, in relevant part, that “if thetag indicates this product or the parentallines used in producing this product areprotected under one or more US patents,Purchaser agrees that it is granted a limitedlicense thereunder only to produce forage,or grain for feeding or processing. Resale ofthis seed or supply of saved seed to anyone,including Purchaser, for planting is strictlyprohibited under this license.”

Similarly, a Monsanto technology agree-ment appearing on 50-lb. bags of RoundupReady soybeans in the late 1990s requiredpayment of a $6.50 per bag license fee andrestricted use of the seed, expressly providingthat seeds must be used “for planting a com-mercial crop only in a single season” anddirecting farmers not to “save any crop pro-duced from this seed for replanting, or supplysaved seeds to anyone for replanting.”

In an important recent decision, the Courtof Appeals for the Federal Circuit upheldMonsanto’s Roundup Ready technologyagreement against a challenge mounted by aMississippi farmer, Homan McFarling14,15.McFarling had purchased Roundup Readysoybeans from Monsanto and had signed thetechnology agreement. Notwithstanding therestrictions in the agreement, McFarlingsaved 1,500 bushels of Roundup Ready soy-beans from one harvest and replanted themduring the next season. He then repeated thepractice, and indicated that he intended tocontinue despite conceding that his actionsviolated the technology agreement. Accordingto McFarling, the provision in the agreement

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that prohibited the saving of seed should notbe enforced for a variety of reasons, includingthat it contravened the notion of “exhaus-tion” of patent rights.

The Federal Circuit disposed of this argu-ment with only brief analysis. The courtrecited the rules for “exhaustion” of thepatent right, but concluded that “the doc-trine of exhaustion of the patent right is notimplicated, as the new seeds grown from theoriginal batch had never been sold.” Thecourt might alternatively have simply point-ed out that the patent owner’s express licenseconditions restricting the saving of seed mustgovern, limiting the scope of any impliedlicense that the grower received upon pur-chasing the seed.

McFarling also contended that the saved-seed restriction in the contract was void inview of the saved-seed exemption in thePVPA. Essentially, this is an argument thatthe PVPA saved-seed exemption must beincorporated into the utility patent law. Thecourt correctly rejected the argument, asnoted previously.

The McFarling case and others like it arelikely to spur state legislatures into passinglegislation that will seek to regulate contract-ing practices in seed producer–grower trans-actions. Within the past year, seed-contractlegislation has been proposed in numerousstates in the Farm Belt16. Some legislativeproposals purport to outlaw contract provi-sions that prohibit seed saving. Some prohib-it contract provisions that specify where thegrower will be subject to suit for patentinfringement.

Proposals of this type may well provecontroversial. Although states have authori-ty to regulate contracts (including IP con-tracts) affecting their citizens, states lackauthority to enact regulations that conflictwith federal IP regime. Concerning the fed-eral patent regime, it is exceedingly difficultto delineate precisely where the linebetween state and federal authority lies.Courts may well be called upon to draw theline in future cases involving seed-wraplicense agreements that arguably conflictwith aggressive state regulations.

Whither the PVPA?Turning away from patent law doctrinetowards broader policy concerns, one majorpolicy question after J.E.M. is whether thereremains a meaningful long-term role forplant variety protection under the PVPA.Our study of this question leads us to a fewpreliminary answers17. For a variety of rea-sons, including international considerations,we do not expect the PVPA to vanish alto-gether. PVPA protection is cheaper to obtainthan is utility patent protection, and mayfacilitate branding. In addition, PVPA pro-

tection may be superior to trade secret pro-tection in that trade secret protection doesnot preclude reverse engineering. We do,however, expect it to diminish in importancerelative to utility patent protection in at leastsome sectors of the plant breeding industry.For example, with respect to large-scalecommercial crops, we expect that majorplayers in the seed industry will focus evenmore heavily on protecting their innova-tions by way of utility patent protection,using plant variety protection—if at all—strictly as a safety net or as a parking groundfor marginal innovation. Whether smallerplayers, or those involved in specialty crops,will turn predominantly to utility patentprotection is more difficult to predict. Ineither event, we expect that utility patentprotection will quickly emerge as the domi-nant form of IP protection for the domesticseed industry. Whether this arrangement isoptimal will be an important future ques-tion for IP policymakers.

1. J.E.M. Ag Supply v. Pioneer Hi-Bred Int’l., Inc., 122S. Ct. 593 (2001), rehearing denied, 122 S. Ct. 1600(2002).

2. Janis, M.D. & Kesan, J.P. Designing an optimal intel-lectual property system for plants: a US SupremeCourt debate. Nat. Biotechnol. 19, 981 (2001).

3. Diamond v. Chakrabarty, 447 US 303 (1980).4. For the non-obviousness requirement, see 35 USC

§103. For the enablement requirement, see 35 USC§112, ¶1. Before J.E.M., the PTO and the lowercourts had already begun the process of determin-ing how to apply these traditional utility patent pre-requisites to plant breeding and plant biotechnologyinnovations. See, e.g., Enzo Biochem, Inc. v.Calgene, Inc., 188 F.3d 1362 (Fed. Cir. 1999).

5. Smyth, S. et al. Liabilities and economics of trans-genic crops. Nat. Biotechnol. 20, 537 (2002).

6. 35 USC §271(a).7. Warner-Jenkinson Co., Inc. v. Hilton Davis Chem.

Co., 520 US 17 (1997).8. Schmeiser v. Monsanto Canada, Inc., 2002 FCA

309 (Court of Appeal, Sept. 4, 2002) [Schmeiser II].For the trial court’s decision, see MonsantoCanada, Inc. v. Schmeiser, 12 CPR (4th) 204(2001).

9. Schmeiser II, slip op. at ¶57.10. Moreover, one prominent Federal Circuit judge has

criticized the existence of even the narrow excep-tion. See Embrex, Inc. v. Service Engineering Corp.,216 F.3d 1343, 1352–53 (Fed. Cir. 2000) (Rader, J.,concurring).

11. See 7 USC §2544 (1994).The PVPA also includes aseparate provision shielding from infringement “anyact done privately and for noncommercial purpos-es.” 7 USC §2541(e).

12. Janis, M.D. Sustainable agriculture, patent rights,and plant innovation. Ind. J. Global Leg. Stud. 9,105–117 (2001).

13. 7 USC §2543. The saved-seed exemption alsoallows farmers to engage in “bona fide” sales ofsaved seed “for other than reproductive purposes.”Id. See also 7 USC §2401(b)(1)–(2) (defining theconcept of “bona fide” sales for “nonreproductivepurposes”).

14. Monsanto Co. v. McFarling, No. 01-1390 (Fed. Cir.Aug. 23, 2002).

15. See also Monsanto Co. v. Trantham, 156 F.Supp.2d855 (W.D. Tenn. 2001) (discussing similar issues attrial-court level).

16. See, e.g., Indiana House Bill No. 1119 (Jan. 30,2002).

17. For a more detailed historical and empirical analysisof the PVPA, see Janis, M.D. & Kesan, J.P. Plantvariety protection: Sound and fury. . .? Houston L.Rev. (in press).

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