The Latest Example of our Broken Patent System

About 15 years ago, the St. Louis-based Monsanto corporation developed "Roundup Ready," genetically modified soybean seeds that are resistant to herbicides also produced by the company. In other words, Monsanto made herbicides to kill weeds, then made soy-bean plants that are resistant to the herbicide. Its competitor, Pioneer Seeds, a Des Moines company owned by DuPont and Company, licensed the Roundup Ready formula but also attempted to create genetically modified seeds that could compete with it. Pioneer developed a seed called "Optimum GAT" that combined the Roundup Ready trait with another trait. Mosanto sued DuPont for violating the licensing agreement and for patent infringement, while DuPont claimed that the patent should be considered unenforceable. On July 1, a jury sided with Monsanto, and although Pioneer said in a statement that it "has never sold a single Optimum GAT seed and has no plans to do so in the future" a jury awarded Monsanto a whopping award of $1 billion. Moreover, since the jury found that DuPont's patent violation was knowing and willful, the judge could actually increase the award.

The jury's verdict and award in this case may well be a correct application of current American patent law that will survive an appeal. But the case does illustrate some potentially troubling aspects of patent law in the United States.

Conservative warning about a litigation crisis have become common enough to have reached the point of self-parody. As the debate over the Affordable Care Act demonstrated, "tort reform" has become an all-purpose solution. Conservative complaints about litigation generally focus on individuals suing corporations (or in some cases more powerful individuals like doctors). Anecdotes about jury awards that seem large—even if they are a tiny fraction of the money awarded to Monsanto on Wednesday—are recycled for years, often in ways that are grossly distorted to support corporate interests.

But lawsuits filed by individuals against businesses are not the most common form of litigation. The most common form of litigation is business suing other businesses, like Monsanto suing DuPont. This kind of litigation attracts much less attention, but it is the best example of how broken the American patent system is.

As DuPont pointed out, the patent (which Monsanto first applied for in 1994 and was awarded in 1997) was still applicable in 2009 only because it had been extended on technical grounds that DuPont claimed were deceptive. While the allegation of deception may be unfounded, it remains true that Monsanto was ultimately granted a monopoly on a widely used product for much longer than would seem necessary to protect its interests in innovation. The massive size of the award is likely to further suppress competition as other companies become reluctant to develop products that might be ruled to infringe on a patent.

In unique language, Article I of the Constitution grants Congress the power to issue patents and copyrights only "to promote the progress of science and useful arts." That is, patents are supposed to serve the public interest, not the interests of the patent holder. Monsanto is far from the worst abuser of the patent process; unlike companies who exist to do little but file patents and leech off of companies that actually develop products, Monsanto at least did develop something useful, and perhaps should be given a window during which it is allowed to earn monopoly profits. But 17 years of monopoly products seems far more than is necessary to encourage scientific progress. Even in the absence or patent protection, after all, Monsanto would have strong incentives to be the first to enter the market with seeds that make its signature herbicide much easier to use.

The current patent system certainly benefits many corporations and their lawyers. Whether it benefits the public interest is less clear. The billion-dollar verdict against DuPont is likely to inhibit competition and innovation rather than foster it—as the Constitution requires. The money wasted on patent litigation represents a far more plausible example of a "litigation crisis" than rare jury awards to victims who have suffered actual tangible harm from corporate negligence.

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