In Organic Seed Growers & Trade Ass'n v. Monsanto Co., No. 12-1298 (Fed. Cir. June 10, 2013), the Federal Circuit held that statements from Monsanto Co. and Monsanto Technology, LLC (collectively "Monsanto") indicating the company would not sue farmers for inadvertent trace usage of its products eliminated the plaintiffs' standing for DJ. Determining there was no remaining case or controversy beyond the scope of Monsanto's assurances, the Court affirmed the district court's dismissal for lack of subject matter jurisdiction.
The Organic Seed Growers and Trade Association, joined by a coalition of farmers, seed sellers, and agricultural organizations (collectively "Plaintiffs"), sued Monsanto, seeking DJ of noninfringement, unenforceability, and invalidity with respect to twenty-three of Monsanto's patents ("the patents-in-suit"). The patents-in-suit relate to technologies for genetically modifying seeds. The patents-in-suit include methods of incorporating traits such as glyphosate resistance into plants, thereby allowing crops to survive the application of glyphosate-based herbicides like Monsanto's Roundup product.
The Plaintiffs argued that they faced a significant risk of infringing Monsanto's patents-in-suit, despite their expressed intent to avoid using any Monsanto-developed seeds. Through self-replication, the wind frequently blew glyphosate-resistant seeds from farms to nearby lands. The Plaintiffs cited Monsanto's aggressive litigation strategy in maintaining that lawsuits were likely to follow such forms of inadvertent contamination.
Prior to filing this suit, the Plaintiffs asked Monsanto to sign a covenant not to sue for small amounts of seed contamination. Monsanto refused, explaining through a series of statements that the company will not exercise patent rights where "trace amounts of our patented seeds or traits are present in [a] farmer's fields as a result of inadvertent means," and that "any fear of suit or other action is unreasonable, and any decision not to grow certain crops unjustified." Slip op. at 8 (citations omitted). Monsanto contended that these statements were sufficient to remove any reasonable fear of legal action, so the Plaintiffs lacked standing for a DJ action without the need for Monsanto to issue a signed covenant.
The district court sided with Monsanto, dismissing the suit for lack of subject matter jurisdiction, since the court found no substantial controversy or injury traceable to Monsanto. While the district court concluded it is likely inevitable that trace amounts of windblown seeds from genetically modified plants would travel to the Plaintiffs' farms, it ruled that Monsanto's statements removed the threat of resulting litigation. The district court further found that Monsanto would be legally bound to follow its representations regarding permissible trace contamination.
"[I]t is 'incumbent on [the declaratory judgment plaintiff] to indicate that it engages in or has sufficiently concrete plans to engage in activities not covered' by a defendant's covenant not to sue." Slip op. at 19-20 (second alteration in original) (quoting Already, LLC v. Nike, Inc., 133 S. Ct. 721, 728 (2013)).
The Federal Circuit affirmed, noting that a DJ plaintiff bears the burden of showing the existence of an actual controversy or threat of harm. The Court held that DJ plaintiffs must have demonstrated a "'substantial' risk that the harm will occur, which may prompt [them] to reasonably incur costs to mitigate or avoid that harm." Id. at 10 (alteration in original) (quoting Clapper v. Amnesty Int'l USA, 133 S. Ct. 1138, 1150 n.5 (2013)). The Court further observed that "a covenant not to sue a declaratory judgment plaintiff can moot a controversy between the parties." Id. at 14-15.
The Federal Circuit also agreed with the district court that Monsanto's public statements were legally binding. As the Court reasoned, "[t]aken together, Monsanto's representations unequivocally disclaim any intent to sue appellant growers, seed sellers, or organizations for inadvertently using or selling 'trace amounts' of genetically modified seeds." Id. at 16. The Court defined "trace amounts" as less than one percent of the seeds used or sold by a farm. The Court went on to hold that, "[w]hile Monsanto's representations are not a covenant not to sue, they have a similar effect." Id. at 17. As a result, the Court held that Monsanto's statements mooted the controversy within the scope of its representations.
The Federal Circuit observed that, while Monsanto's statements only offered that the company would not sue farmers inadvertently using trace amounts of its seeds, none of the Plaintiffs alleged that they were acting beyond the scope of Monsanto's disclaimer. Because none of the Plaintiffs could demonstrate their actions exceeded the conduct permitted by Monsanto, the Court reasoned that "[i]t follows that there is no case or controversy here." Id. at 20. The Federal Circuit also noted that, because Monsanto's statements were used to defeat DJ, "those representations are binding as a matter of judicial estoppel." Id. at 17.
Judges: Dyk (author), Bryson, Moore
[Appealed from S.D.N.Y., Judge Buchwald]
This article previously appeared in Last Month at the Federal Circuit, July, 2013.
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