Farmers Urge IP System Changes as USDA Preps Competition Report

When Jason Myers-Benner started breeding a new variety of corn, he was careful to note that the plant didn’t carry any genes subject to patents. The trouble now, potentially, is his neighbor’s genetically modified corn across the street.

If Myers-Benner wanted to amplify his variety—which is drought tolerant and quickly reaches maturity—he has to be careful that none of the patented genes in his neighbor’s pollen are blown into his crop. Selling corn with a company’s patented gene could draw Myers-Benner into a lawsuit, a possibility that has left many other farmers, independent seed companies, and plant breeders frozen in fear.

“What it ends up feeling like, is that it shuts ordinary people out of the process,” said Myers-Benner, who runs his farm in Keezletown, Va., “and I feel like that’s not just dangerous, but unfair.”

Bayer AG, Syngenta AG, and DuPont dominate the seed market with broad patents covering modified genes in corn and soybeans. Farmers say the combination of that market consolidation and patent rights have constrained the practice of seed saving and stifled innovation to address region- and climate-specific challenges. For the companies, patents are an essential incentive to engineer new plants and protect their investments.

The problems for farmers and plant breeders have drawn attention from the US Department of Agriculture, which is preparing a report on the lack of competition in the seed industry and the changes to the intellectual property system that might address it. The report follows the Biden administration’s 2021 executive order that directed the USDA to look into where market consolidation “is making it hard for small family farms to survive.”

“The USDA and others had heard from farmers for a long time,” said Andy Green, a senior adviser at the department. “There’s a sense that more has to be done. We have to do things differently.”

Growing Concerns

In 2007, Monsanto Co. sued Vernon Bowman, a farmer in Indiana, for planting transgenic soybean seeds he bought from a local grain elevator. The farmers who had provided the seed originally bought them from Monsanto under a limited use license, which prevents farmers from replanting the seed again—ensuring Monsanto’s customers would return year after year for the same seed.

Bowman bought the seeds in 1999 to plant soybean crops that were resistant to certain herbicides, so he could use a spray that kills weeds but doesn’t harm the soybeans. The seeds were sold to Bowman as commodities, not for planting, though he planted the seeds and replanted for a second season, while also informing Monsanto of his activities.

After years of appeals, first to the US Court of Appeals for the Federal Circuit and later to the US Supreme Court, Bowman lost. The justices ruled that he needed Monsanto’s permission to use the later-generation seeds.

Until around a decade ago, Monsanto had filed roughly 140 lawsuits against farmers for alleged violations of its technology agreement or infringement of its seed patents, according to a report from the Center for Food Safety. The report found that Monsanto won at least $3 million from just one verdict and estimated the agricultural giant may have received tens of millions of dollars in settlements.

“I talked to a number of farmers who were in desperate straits, just terrified of facing Monsanto in court,” said Bill Freese, science director at the Center for Food Safety. “I don’t think that it’s such an issue now because there just aren’t that many non-patented seeds available anymore.”

Bayer, which merged with Monsanto in 2018, told Bloomberg Law that it hasn’t brought any lawsuits against individual farmers for patent infringement since 2012. Taking legal action is a last resort, Susan Luke, a Bayer spokesperson said in an email.

“The decline in litigation of this type is not due to any change in strategy on the part of the company. Bayer is just as committed today than Monsanto was in years past to defending our intellectual property,” Luke wrote. “However, we have found that several variables, including IP-related caselaw, and greater understanding regarding plant biotechnology, may have impacted the number of growers who violate patent agreements.”

Nevertheless, the fear of costly litigation remains for farmers and plant breeders.

Irwin Goldman, a professor at the University of Wisconsin’s Department of Horticulture who breeds vegetable varieties like beets and carrots, said patents can have a “chilling effect on the breeding community.’

“Plant breeders don’t want to infringe on someone’s patent so they might shy away from working in the space,” Goldman said. “The IP protection would mean that I could be sued or I could be infringing or otherwise interfering with somebody’s business. I can’t afford to do that.”

Others received letters in 2020 from the German multinational chemical company BASF accusing them of using BASF’s patented seeds without permission. Mike Levine of Nature and Nurture Seeds, an independent seed company in Michigan, received one of the letters.

It was confusing, Levine said, considering his company doesn’t sell any hybrid seeds, so there’s no possibility of any patent infringement.

“We know we’re not doing anything wrong but it’s intimidating,” Levine said. “ It’s annoying. Why should I be kept up at night for not doing something they’re accusing us of doing?”

A Case for Strong IP

Before 1980, the law allowed certain aspects of crops to be patented without preventing farmers from saving seeds or breeders from using the varieties to create new crosses.

Then the Supreme Court in Diamond v. Chakrabarty ruled that living organisms can be patented, and seed and biotechnology companies started imposing restrictions on crops engineered to offer herbicide resistance and other useful traits for farmers.

IP protection is needed so companies have incentives to engineer traits that meet changing climate and consumer demands, Audrey Charles, a patent agent in Chicago, said during a USDA listening session. She added that it’s difficult for small- or medium-sized entities to bring biotechnology traits into the market, and there must be a chance for breeders and product developers to see a return on their investment.

The costs of research make “strong IP policies absolutely essential to encouraging continued investments and seed innovation, which benefit our planet, our health, and our food,” said Charles, who is also a member of the American Seed Trade Associations’ intellectual property rights working group.

Erick Lutt, senior director of federal government relations at the Biotechnology Innovation Organization, told the USDA that the BIO was concerned that weakening IP protection on seeds would hamper agricultural innovation.

“Intellectual property is the lifeblood of the biotech industry,” Lutt said in the listening session. “Strong patents, and an efficient and predictable, objective patent system, are critical to ensuring a steady stream of capital to biotechnology companies developing innovative medicines, alternative energy sources, insect- and drought-resistant crops, and a wide range of other innovative biotechnologies that are helping to feed, fuel, and heal our planet.”

Bayer told Bloomberg Law that its Crop Science division spends about $2 billion annually on general research and development. Bayer offers more than 1,500 corn and soybean hybrids. A “healthy” IP system plays a vital role in maintaining that research, the company said in its comments. It added that it broadly licenses its technologies to allow farmers to use traits and germplasm of their choice, increasing competition in the seed market.

When farmers choose to purchase patented seeds from Bayer, they agree through a contract not to save the seeds from that year, Luke, the Bayer spokesperson, said.

“It’s a matter of choice. Farmers can decide for themselves where they get their seeds from, whether they use their own seed or purchase from local suppliers who produce seeds specifically bred to thrive in local conditions,” she wrote in an email. “They are not forced to buy seed covered by variety or patent protection and can change seed and use unlicensed seed whenever they choose.”

Looking Forward

Biden’s executive order on competition set out several mandates for the USDA to address in terms of seeds and intellectual property. The agency is preparing a report analyzing market consolidation of seed patents, and how the intellectual property system “should incentivize innovation and not reduce competition in seed.”

For Myers-Benner, a solution should acknowledge the different scales at which people need to be able to work in the industry, he said.

The regulations, he said, should be different for someone sustaining a small family farm versus a large multinational corporation, adding, “One set of companies may have a different set of expectations than individuals working at the ground level.”

Once the department releases recommendations, the executive branch or Congress may then take action to solve the issues for farmers from a variety of angles, Green, the USDA adviser, said.

The USDA must look at ways to enhance competition while still granting appropriate protections to stimulate research and innovation, Green said.

“It’s hard to do all those things,” Green said, but he’s optimistic.

“This is a new era of competition, and I’m confident we have to do things in a different way. That fresh approach may help us unlock some challenges that have bedeviled this industry.”