Monsanto Co. v. Scruggs

• Decision Date: 16 August 2006
• Docket Number: No. 04-1532, 05-1120, 04-1121.,04-1532, 05-1120, 04-1121.
• Citation: 459 F.3d 1328
• Parties: MONSANTO COMPANY, Plaintiff-Appellee, v. Mitchell SCRUGGS, Eddie Scruggs, Scruggs Farm & Supplies, LLC, Scruggs Farm Joint Venture, HES Farms, Inc., MES Farms, Inc., and MHS Farms, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

459 F.3d 1328

MONSANTO COMPANY, Plaintiff-Appellee, v. Mitchell SCRUGGS, Eddie Scruggs, Scruggs Farm & Supplies, LLC, Scruggs Farm Joint Venture, HES Farms, Inc., MES Farms, Inc., and MHS Farms, Inc., Defendants-Appellants.

No. 04-1532, 05-1120, 04-1121.

United States Court of Appeals, Federal Circuit.

August 16, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Seth P. Waxman, Wilmer Cutler Pickering Hale and Dorr LLP, of Washington, DC, argued for plaintiff-appellee. With him on the brief was Paul R.Q. Wolfson. Of counsel on the brief was Joseph C Orlet, Husch & Eppenberger, LLC, of St. Louis, Missouri.

James L. Robertson, Wise, Carter, Child & Caraway, P.A., of Jackson, Mississippi, argued for defendants-appellants. With him on the brief was Meredith B. Aden.

James L. Jones, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., of Jackson, Mississippi for amicus curiae Shea Leatherman d/b/a Riverfield Farms. With him on the brief was Bradley S. Clanton.

Christopher P. Murphy, Arent Fox PLLC, of Washington, DC, for amicus curiae The Biotechnology Industry Organization. With him on the brief was Amy E.L. Schoenhard.

E. Anthony Figg, Rothwell Figg Ernst & Manbeck P.C., of Washington, DC, for amicus curiae Delta and Pine Land Company. With him on the brief were Jeffrey L. Ihnen and Barbara Webb Walker. Of counsel on the brief was Jerome C. Hafter, Phelps Dunbar, of Jackson, Mississippi.

Gary Jay Kushner, Hogan & Hartson L.L.P., of Washington, DC, for amicus curiae American Seed Trade Association. With him on the brief were Lorane F. Hebert and Ryan D. Shadrick.

Sondra Simpson McLemore, Special Assistant Attorney General for the State of Mississippi, of Jackson, Mississippi, for amicus curiae State of Mississippi. With her on the brief was Jim Hood, Attorney General.

Joseph Mendelson III, Center for Food Safety, of Washington, DC, for amicus curiae Center for Food Safety.

Mark R. Patterson, Fordham University School of Law, of New York, New York, for amicus curiae American Antitrust Institute.

Before MAYER, BRYSON, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge MAYER.

Concurring in part and dissenting in part opinion filed by Circuit Judge DYK.

MAYER, Circuit Judge.

Mitchell Scruggs; Eddie Scruggs; Scruggs Farm & Supplies, LLC; Scruggs Farm Joint Venture; HES Farms, Inc.; MES Farms, Inc.; and MHS Farms, Inc. (collectively "Scruggs") appeal the judgment of the United States District Court for the Northern District of Mississippi granting Monsanto Company's ("Monsanto's") motions for summary judgment of patent invalidity and infringement, Monsanto Co. v. Scruggs, 342 F.Supp.2d 584 (N.D.Miss.2004) ("Summary Judgment I"); antitrust violations and patent misuse, Monsanto Co. v. Scruggs, 342 F.Supp.2d 568 (N.D.Miss.2004) ("Summary Judgment II"); and common law counterclaims of, inter alia, tortious interference, unfair competition, and invasion of privacy, Monsanto Co. v. Scruggs, 342 F.Supp.2d 602 (N.D.Miss.2004). Additionally, Scruggs appeals the trial court's order granting Monsanto a permanent injunction. Monsanto Co. v. Scruggs, No. 3:00CV161-P-D (N.D.Miss. Nov. 4, 2004) (order granting permanent injunction). We affirm, vacate, and remand.

Background

Monsanto owns U.S. Patent No. 5,352,605 ("the '605 patent"), which is directed toward insertion of a synthetic gene consisting of a 35S cauliflower mosaic virus ("CaMV") promoter, a protein sequence of interest, and a stop signal, into plant DNA to create herbicide resistance. Monsanto also owns U.S. Patent Nos. 5,164,316; 5,196,525; and 5,322,938 (collectively "the McPherson patents"), which are directed toward insect resistant traits. The McPherson patents expand upon the '605 patent in several ways, including disclosure of an enhanced CaMV 35S promoter.

Monsanto used the technology in the '605 patent to develop glyphosate herbicide resistant soybeans and cotton, sold as Roundup Ready (R) soybeans and cotton. One of the glyphosate herbicides to which the Roundup Ready (R) plants are resistant is Roundup, which is also sold by Monsanto. Monsanto used the '605 patent in combination with the McPherson patents to develop stacked trait cotton ("Bollgard/Roundup Ready (R) cotton"), which is resistant to glyphosate herbicide and certain insects.

Monsanto began licensing its biotechnology to seed companies ("seed sellers"); it licensed Roundup Ready (R) technology starting in 1996 and Bollgard/Roundup Ready (R) cotton technology starting in 1998. The licenses allow seed growers to incorporate the Monsanto biotechnology into their germplasm to produce Roundup Ready (R) and Bollgard/Roundup Ready (R) seeds. The licenses also impose certain restrictions on seed sellers, including that seed companies may not sell seed containing Monsanto's technology to growers unless the grower signs one of Monsanto's license agreements; and that seed so sold may be used by growers to grow only a single commercial crop. Monsanto's restrictions on seed growers include: (1) requiring growers to use only seed containing Monsanto's biotechnology for planting a single crop ("exclusivity provision"); (2) prohibiting transfer or re-use of seed containing the biotechnology for replanting ("no replant policy"); (3) prohibiting research or experimentation ("no research policy"); and (4) requiring payment of a "technology fee."

Scruggs purchased both Roundup Ready (R) soybean seeds and Bollgard/Roundup Ready (R) cotton seeds from seed companies, but never signed a licensing agreement. It planted the purchased seeds, and after harvesting the soybeans and cotton, retained the new generation of seeds. Its subsequent crops were planted with those retained seeds, as well as with seeds obtained from subsequent generations of crops.

Monsanto investigated Scruggs' activities and filed suit for infringement of the '605 and McPherson patents. The trial court issued a preliminary injunction, prohibiting Scruggs from further sale and use of seeds containing Monsanto's patented biotechnology. Scruggs answered with federal and state antitrust claims and patent misuse affirmative defenses. Specifically, it asserted that Monsanto violated the Sherman Act, 15 U.S.C. §§ 1-2, by tying the purchase of seed to the purchase of Roundup through grower license agreements, grower incentive agreements, and seed partner license agreements, as well as by tying the Roundup and Bollgard traits in cotton seeds. It also asserted Monsanto violated section 2 of the Sherman Act by unlawfully monopolizing or attempting to monopolize a relevant market. Additionally, Scruggs asserted common law counterclaims of invasion of privacy, trespass, tortious interference with contract and/or business relations, abuse of process, conversion, nuisance, strict liability in tort, negligence, and unfair competition.

Scruggs denied infringement and sought a declaration of invalidity of the '605 and McPherson patents. Monsanto moved for summary judgment on infringement, the antitrust and patent misuse defenses, and the common law counterclaims. Scruggs moved to vacate the preliminary injunction, and cross-moved for summary judgment. Monsanto's motions for summary judgment were granted, and Scruggs' motion to vacate the preliminary injunction was denied. The trial court then issued a permanent injunction and a final judgment. Proceedings on damages were stayed pending this appeal. We have jurisdiction pursuant to 28 U.S.C. § 1295(a).

Discussion

We review the trial court's grant of summary judgment de novo. See Caterpillar Inc. v. Sturman Indus., 387 F.3d 1358, 1373 (Fed.Cir.2004). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "With regard to `materiality,' only those disputes over facts that might affect the outcome of the lawsuit under the governing substantive law will preclude summary judgment." Phillips Oil Co. v. OKC Corp., 812 F.2d 265, 272 (5th Cir.1987).

I. Infringement

Infringement occurs when a properly construed claim reads on the accused product. Atlas Powder Co. v. E.I. du Pont & De Nemours & Co., 750 F.2d 1569, 1579 (Fed.Cir.1984). In this case, Monsanto must show that its Roundup Ready (R) and Bollgard/Roundup Ready (R) seeds are covered by the '605 and/or McPherson patents and that Scruggs used those seeds in a way that violated Monsanto's patent rights. Affirmative defenses to infringement include noninfringement, unenforceability, invalidity (e.g., failing to satisfy the written description or enablement requirements), see 35 U.S.C. § 282, patent misuse, see Senza-Gel Corp. v. Seiffhart, 803 F.2d 661 (Fed.Cir.1986), and the existence of an implied license, see Carborundum Co. v. Molten Metal Equip. Innovations, 72 F.3d 872, 878 (Fed.Cir.1995).

In granting Monsanto's motion for summary judgment of infringement, the trial court relied on Scruggs' admissions with respect to: (1) its purchasing of the Roundup Ready (R) soybeans and Bollgard/Roundup Ready (R) cotton; (2) its failing to obtain a license from Monsanto; and (3) its saving of soybean and cotton seed for future planting. Summary Judgment I, 342 F.Supp. at 593-94. Additionally, the court pointed to Monsanto's scientific tests showing that Scruggs' soybean and cotton crops contained Monsanto's patented technology. Id. at 594.

Scruggs argued that: (1) neither Monsanto's biotechnology (Roundup Ready (R) soybeans and Bollgard/Roundup Ready (R) cotton) nor the plants in Scruggs' fields were covered by the patents-in-suit; (2) the promoter sequences in Monsanto's biotechnology did not match the sequences claimed in the '605 patent; and (3) Monsanto's test results should be disregarded for not complying with accepted scientific standards. The trial court rejected those...