The Legal Infrastructure of Business

Apple Patents the Page Turn for E-Readers

Background

This week Apple was granted a design patent for: “Display screen or portion thereof with animated graphical user interface.”  Practically, Apple has now patented the page turn for electronic reading devices.  The patent (D670,713) allows Apple to control the interface of a page turn similar to an actual book, but on an e-reader.  Apple was also granted 37 other patents on various design features of its products. 

The Patent

Discussion

As we discussed with the Apple Tablet case in class, there is gray area when it comes to design patents.  While seemingly obvious, no other companies had thought to patent this particular design nor were other companies using this page turn interface.  If you look at the Kindle, the text of the next page just appears when a button is pushed without any sort of user interface simulating a real life book.  In comparison, this seems like a unique page turn.  

For most people, whether or not this is a seemingly ridiculous patent comes down to each person’s view on what is patentable and how good of a job the patent office is doing promoting IP to promote businesses to invest in R&D.  In this case (similar to the Samsung vs. Apple tablet case), Apple integrated a design feature that people feel is unique to Apple products and have begun to associate with the Apple iBook platform.  This seems no more ridiculous than Amazon being granted a patent on one-click purchasing or Apple being granted the patent on rounded corners for its table product. 

Apple’s products are based in simple, yet innovative design principles.  Protecting its unique designs from the competition is crucial to the future success of the company as design is a major product differentiator for the company.  Apple was not the first company to develop a tablet, smartphone or e-reader, but the company has shown that its design ability and skill with developing intuitive user interfaces has helped Apple succeed where others have failed. 

One other key factor in this situation is that Apple has shown a willingness to sue over perceived patent infringement and another very general patent on a common product (e-readers) could lead to additional lawsuits by Apple against its competitors.  It can be argued that Apple is patenting general design features in order to litigate its weaker competition out of the market.  Apple has also had success in obtaining licensing agreements from competitors perceived to have violated Apple’s patents as has happened with HTC on tablets.

If the patent office is going to continue to issue design patents on very general designs, then this fits the prior protocol.  However, many people feel that this design is too general to be patented and may generate calls for a change in the way the patent office approaches the issuance of patents. 

Does this seem reasonable or does the way patents are issued need to be reexamined?

Sources:

http://bits.blogs.nytimes.com/2012/11/16/apple-now-owns-the-page-turn/?smid=tw-nytimesbits&seid=auto

http://www.cnn.com/2012/11/16/tech/innovation/apple-page-turn-patent/index.html?hpt=hp_t3

http://www.ibtimes.com/apple-patents-page-turn-887134

http://www.phonedog.com/2012/11/17/apple-has-a-way-with-patents/

http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=0&f=S&l=50&TERM1=Apple&FIELD1=ASNM&co1=AND&TERM2=&FIELD2=&d=PTXT

Is the FTC focusing on the right issues? Response to FTC/Herz blog, follow-up on Google/EU

The FTC seems to be stepping on a lot of toes lately. As discussed at various points throughout this term, there has been a battle between Google and the FTC for quite a while concerning the FTC’s antitrust probe related to Google’s dominance over the search business. According to Reuters, 4/5 of the FTC’s commissioners feel that Google is using its search dominance to hurt rivals. With roughly 2/3 of the world’s search market share, Google is clearly in a very strong but sensitive situation. Adversaries claim that Google is using this power to direct more and more traffic to Google owned sites and products, which allegedly lessens the competition between Google and other sites that offer similar products that would normally show up in organic search results.

The FTC’s main concern is whether or not this behavior violates antitrust laws. While I understand the concern of Google’s competitors, I also understand the other side of the argument that points out that consumers of a choice on which search engine to use. If they want to use Bing, they can use Bing. The same goes for Yahoo! It seems strange that a company could be violating antitrust by being popular. Search results that are fast and accurate are able to be monetized in a variety of ways. Building the best search is not easy, but doing so shouldn’t suddenly limit Google’s ability to monetize the results. If I build a webpage that a lot of people go to, I should be able to put whatever ads or search results I want. No one is forcing anyone to go to my site much like no one is forcing consumers to use Google. There are viable alternatives. The question still remains, though, as to whether Google’s power and market decision means that Google should be held to a different and higher standard to help promote innovation and healthy competition.

My main concern, however, is the FTC’s inability to focus on situations that are truly hurting business in an illegal fashion. Here is the FTC’s mission per their website:

“To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.”

A quick review of antitrust laws reveals details driving the ongoing debate. The issue has become quite the hot button topic in Congress, even spurring one Congressman to write a letter to the FTC offering his opinion of the situation:

"'Competition is only a click away, and there are no barriers to competition; if I created a better search algorithm I could set up a server in my garage and compete globally with Google," he wrote. "To even discuss applying antitrust in this kind of hyper-competitive environment defines all logic and the very underpinnings of antitrust law itself… I believe that application of antitrust against Google would be a woefully misguided step that would threaten the very integrity of our antitrust system, and could ultimately lead to congressional action resulting in a reduction in the ability of the FTC to enforce critical antitrust protections in industries where markets are being distorted in monopolies or oligopolies,' Polis wrote."

We talked about the specifics of the Google case in relation to the EU probe, but I am more concerned with the FTC’s activities as of late. Should the FTC be focusing on Google, Hertz and other companies that are involved in activities that do not totally align with the FTC’s vision? Is the organization being mismanaged? Does it need to rebooted (i.e., is it suffering from legacy practices that do not apply to a hyper-connected/mobile/hypercompetitive world similar to the patents system)? It appears that they are more focused on making political (or politically driven) statements than executing against their vision and values.

http://news.cnet.com/8301-13578_3-57532791-38/congressman-to-ftc-dont-mess-with-google/

http://news.cnet.com/8301-1023_3-57531619-93/google-might-face-ftc-search-crackdown/

http://news.cnet.com/8301-13578_3-57532791-38/congressman-to-ftc-dont-mess-with-google/

http://news.cnet.com/8301-1023_3-20109654-93/schmidt-to-senators-google-is-no-microsoft/

http://www.ftc.gov/ftc/about.shtm

Dispute on Clock Design for iOS 6 App

On September 19, Apple released iOS 6, the latest mobile operating system for the iPhone 4S, iPhone 4, iPhone 3GS, new iPad, iPad 2 and fourth generation iPod touch. The iOS 6 added about 200 updates to the former operating system, and one of them has received remarkable attention from all over the world, especially from Switzerland. The hot feature is not the Maps app, but the Clock app.

 

The picture is from a CNET's article (http://asset0.cbsistatic.com/cnwk.1d/i/tim/2012/09/20/Screen_Shot_2012-09-20_at_12.38.57_PM.png).

Look at the two images. What do you think of them? Are they similar or different?

The left image is the new alarm clock of the iOS 6, and the right image is a station clock of Swiss Federal Railways (Schweizerische Bundesbahnen, or SBB in Germany). SBB has the copyright and trademark rights to the clock, which was designed by a Swiss designer and engineer, Hans Hilfiker, in 1944 and utilized as a symbol of innovation and reliability of SBB and Switzerland.

You may think that those images look quite similar and even almost the same. The designs of the clock faces, black minute hands and hour hands are nearly indistinguishable. In addition, it seems impossible that the Clock app can have the striking red second hand without inspiration or influence from the Swiss clock. Strictly speaking, however, there are some slight differences: the shape of the long and short hands (while the Apple’s ones are rectangle-shaped, the SBB’s ones are a bit rounded rectangular); the width and length of the bars on the clock faces; the logo of Mondaine Group, which has the trademark license on clocks and wristwatches from SBB, on the Swiss railway clock.

As soon as Apple released its new Clock app, SBB accused Apple of the unauthorized use of its clock’s design. SBB claimed that Apple never asked for permission although it is proud that Apple picked up the design of the Swiss railway clock. According to the comment of Christopher Carani, an attorney with McAndrews, Held & Malloy on a Corporate Counsel article, SBB “could go after Apple for infringement on trade dress, claiming the technology company’s use of its clock face dilutes the uniqueness of its mark.” After negotiation between the parties, SBB announced in a press release on October 12 that SBB and Apple reached a licensing agreement on the trademark use for the iOS 6. The trademark license fee and other terms are not revealed.

It is ironic for Apple that the licensing dispute occurred one month after Apple’s legal victory in the design infringing case with Samsung. The jury confirmed that Samsung willfully infringed the Apple’s utility patents and design patents. One of the design patents was the fundamental design of the iPhone, its rectangular shape and rounded corners.

Apple, whether intentionally or not, ignored and infringed other's copyright and trademark rights, although it has shown high sensitivity to legal protection of its design in the Samsung case. Even after the quick settlement of the dispute, the double standard might continue to cause Apple's suffering from a deteriorating reputation.

 

Sources:

http://www.forbes.com/sites/timworstall/2012/09/22/apple-and-that-swiss-train-watch/

http://www.washingtonpost.com/business/technology/swiss-railway-company-says-apple-copied-its-clock-design-for-ipad-app/2012/09/21/db3c8426-0414-11e2-91e7-2962c74e7738_story.html

http://www.law.com/corporatecounsel/PubArticleCC.jsp?id=1202572284303&Swiss_Railway_Says_Apple_Copied_Clock_Design_for_iOS_6_App&slreturn=20120919110028

http://www.reuters.com/article/2012/09/21/us-apple-iphone-clock-idUSBRE88K0MK20120921

http://www.reuters.com/article/2012/10/12/us-apple-iphone-swissclock-idUSBRE89B0SV20121012

http://www.nbcnews.com/technology/technolog/apple-pays-swiss-railway-clock-design-it-took-without-permission-1C6422756

http://www.sbb.ch/sbb-konzern/medien/medienmitteilungen.newsdetail.2012-10-1210_1.html

http://www.bloomberg.com/news/2012-10-12/apple-licenses-68-year-old-swiss-clock-design-from-sbb-railway.html

http://www.usnews.com/news/technology/articles/2012/10/12/swiss-rail-licenses-use-of-iconic-clocks-to-apple

http://abcnews.go.com/International/wireStory/swiss-rail-licenses-iconic-clocks-apple-17463228#.UIGgNsUe6uI

http://news.cnet.com/8301-13579_3-57531232-37/apple-licenses-swiss-rail-clock-design/

FTC, EU, Japanese and Korean Trade Commissions put Antitrust allegations on Intel

In 2010, the U.S. Federal Trade Commission accused Intel of illegally using its dominant market position for a decade "to stifle competition and strengthen its monopoly." According to the FTC, Intel tried to block "superior" products by rivals and deprived consumers of choice and innovation for 10 years. The complaint was filed in the U.S. District Court in Delaware in June 2005. The court date, originally scheduled for April 2009, was pushed back to February 2010. One delay was due to the Korea Fair Trade Commission issuing Intel a fine of US$25.4 million.

Intel competes with AMD (Advanced Micro Devices) in designing and manufacturing x86 microprocessors.  Intel controls more than 80 percent of the global market for x86 microprocessors, dwarfing AMD. Intel had contended with antitrust probes dating back more than a decade. According to FTC, Intel used “threats and rewards” aimed to computer manufacturers including Round Rock, DELL, Hewlett-Packard (HP) and International Business Machines (IBM). AMD expressed satisfaction at the FTC’s decision to pursue anti-trust allegations against Intel, a fact that they had been trying to bring to light since 2004. A few months ago, the EU and Japan had filed similar anti-trust claims about Intel’s illegal behavior in their local markets. In EU, Intel was fined 1.45 Biliion Euros for its antitrust violations.

Later that year, both companies agreed on a settlement whereby AMD would drop nearly all its charges and regulatory complaints throughout the world. In return Intel would pay AMD an amount of $1.25 billion in cash and allow AMD to spin off its ailing manufacturing division into a separate entity, Global Foundries. AMD is a licensee of Intel’s x86 architecture which earlier put restrictions on AMD from sharing its x86 license or associating with external manufacturing firms.  Intel would also refrain from the following practices:

• Offering inducements to customers in exchange for their agreement to buy all of their microprocessor needs from Intel, whether on a geographic, market segment, or any other basis
• Offering inducements to customers in exchange for their agreement to limit or delay their purchase of microprocessors from AMD, whether on a geographic, market segment, or any other basis
• Offering inducements to customers in exchange for their agreement to limit their engagement with AMD or their promotion or distribution of products containing AMD microprocessors, whether on a geographic, channel, market segment, or any other basis
• Offering inducements to customers in exchange for their agreement to abstain from or delay their participation in AMD product launches, announcements, advertising, or other promotional activities
• Offering inducements to customers or others to delay or forebear in the development or release of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis
• Offering inducements to retailers or distributors to limit or delay their purchase or distribution of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis
• Withholding any benefit or threatening retaliation against anyone for their refusal to enter into a prohibited arrangement such as the ones listed above.

In addition to the above and a renewed patent cross-license agreement, AMD is now exempt from paying any x86 royalties.

Does this in any way highlight Intel’s guilt? This settlement does not change the FTC’s stand on antitrust issues with Intel. So why did Intel agree to give AMD the above concessions? Wouldn’t these in turn weaken Intel’s stand against the FTC? Intel could have continued to pursue litigation to the point where AMD would have been financially drained from legal expenses. Or is that Intel prefers to have a smaller, weaker player in AMD in the market to avoid antitrust issues in the future? Did it then try and extend a helping hand to AMD so that the smaller chip maker could survive, in turn making Intel’s monopolistic stand less obvious in the eyes of the authoritative bodies?

Did the EU, Korean and Japanese actions help strengthen the case against Intel in the U.S? What sort of activities and regulations need to be put in place by the FTC to keep a check on Intel’s market activities. 

 

Resources:

Intel faces Antitrust lawsuit

Intel pays AMD $1.25B for settlement

EU finds Intel guilty

AMD vs Intel

 

 

Are Google’s Anti-Trust Woes Grounded in Privacy?

Recent news suggests that both the European Union and the Federal Trade Union (FTC) are set to launch an investigation into Google and its alleged anti-trust business practices.

 While some may view this as yet another government move to interrupt perfectly legitimate business practices (especially since search engines like Google exist aplenty, have low user switching costs and are free to use), others disagree.

Over the past few years, there has been rapidly growing news literature on the company’s alleged misuse of intellectual property and copyrighted data. For instance, Google’s misappropriation of Yelp and Trip Advisor content and its decision to launch Google Books by scanning millions of books, some even without the copywriter’s permission, are just few of the hotly debated topics today.

However, I believe Google’s antitrust issues are not just limited to these transgressions and are actually grounded in privacy. The changes in privacy regulation few years ago required internet users to provide explicit opt-in consent to search-engines on first use. Google was able to successfully use its seniority in the search engine space to gain maximum user consent and hence, privacy regulation at the time unintentionally resulted in favoring the incumbent and impeding the growth of start-ups. Over the next few years Google furthered its market lead through collection, storage and use of the individual’s personal data.

Specifically, Google was able to use this data to its advantage through two key ways. Firstly, it was able to generate targeted ads based on the user’s browsing history and use these targeted ads as a revenue source by encouraging firms to advertise with Google. The rationale was that advertising with Google would improve the click-through rates of the firm’s website, eventually making the website a “popular result” and hence improving its visibility (users use popular result as a way of assessing the usefulness of a given website during searches).

Secondly (more topical) Google was able to yielded quasi-personalized search results based on the users’ profiles. It is questionable whether the Google search engine could have enjoyed such unprecedented success (and a virtual monopoly) over its rivals without compromising user privacy.

Google’s stance on the issue is that privacy and anti-trust are two separate concerns and are not linked. However with Google’s continually and perhaps even rapidly evolving business model geared towards greater and greater interconnectedness and sharing of information between its products (e.g. Google now scans content from it’s products including GMail and YouTube accounts to collect information to facilitate tailored online searches – without explicit user approval or transparency) has not only worried the privacy pundits further, but has also become a grave concern for anti-trust watchdogs. This new business model is seen as furthering the massive advantage that Google already enjoys in the online advertising space. It is but obvious that this advantage will create an imbalance of power on the supply side by repressing the available substitutes and competition for advertisers, thus, raising the ad prices.

It is therefore not surprising at all that the regulators are closely watching Google and are amassing evidence to launch action against the company. France has already asked the company to demonstrate how the new model of informing searches through YouTube, GMail and other data is not infringing on user-privacy. Germany meanwhile, is investigating whether data was pilfered from wifi connections when the company’s high tech cars were collecting pictures for Google Map’s street view. Additionally, analysts believe that Google may face massive lawsuits soon if it is unable to demonstrate that it does not favor its products during search results.

I feel Google can take some tangible and immediate steps to placate the regulators. Firstly, it could provide greater transparency to users by showing exactly what information is being stored and shared. Secondly, it could provide users greater autonomy by allowing them to keep some information private and control what content can be used to generate the targeted ads and online searches. With lower information control, it is possible Google may wield reduced market power and give its rivals a better shot at competing.

Although the user consensus on whether target searches and ads are more useful or not is unclear, it is obvious that Google has been able to amass a massive fortune and a strong position in its market sector through infringement of user privacy. Going forward, anti-trust regulators need to keep the privacy angle in mind when moving closer to taking Google to the courtroom!

 

References

 http://www.governing.com/blogs/view/gov-texas-leads-antitrust-fight-against-google.html

 http://www.digitopoly.org/2012/04/02/is-privacy-an-antitrust-problem/

 http://www.informationweek.com/security/privacy/google-privacy-audit-leaves-lingering-qu/240008622

 http://thehill.com/blogs/congress-blog/technology/260581-ftc-action-against-google-would-be-unwise

 http://www.nytimes.com/2010/01/19/technology/19antitrust.html

 http://allthingsd.com/20101214/french-watchdog-warns-google/

Applications of the Grokster Decision, and Where Does the Burden of Copyright Protection Lie?

Deadline Hollywood wrote a quick discussion the other day regarding the legal battles of LimeWire, a P2P program for file sharing. Paramount, 20^th Century Fox, Viacom, Disney, Comedy Partners and Warner Brothers are now suing LimeWire for copyright infringement. In the case of LimeWire, the studios seem to have an even more obvious precedent to stand on than MGM had against Grokster, since LimeWire has already lost a similar legal battle with record labels in Arista Records LLC v. Lime Group LLC. 

The contentions below were some of the accusations leveled by Arista Records and the studios; I’m interested in discussing the application of the Metro-Goldwyn- Mayer Studios, Inc. v. Grokster decision in both cases. Specifically, I'm curious about how evidence of inducement was discovered and how broadly this will be applied in the future- in LimeWire and Grokster evidence of inducement and encouragement of illegal activities was a clear sign of liability for infringement, but then so was, to some degree, the fact that the defendant did not actively protect existing copywrights.

Should the burden of protection lie with the copyright holder? Or, much like in the world of patents in which the economically viable model of patent trolls manages to provide enforcement, should copyright enforcement be protected by those with economic interest in that right? If LimeWire was not actively encouraging infringement in its advertising and communications to users, would it still be liable because it did not build filters and actively enforce rights?

The relevant claim from the motion filed by the studios on 10/08/2012 relating to LimeWire's responsibility to actively protect copyrights- 

1. That LimeWire developed a hash-content based filter that would have prevented downloading infringing files, but amusingly made it optional for users to turn it on
2. That LimeWire considered a filter that used "acoustic fingerprinting" to identify copyrighted files, but never implemented it
3. That LimeWire was aware of other filtering mechanisms and chose not to use them
4. That the only time LimeWire did adopt a filter was to limit infringing of recordings purchased from the LimeWire store- i.e. to protect their own rights
5. That although LimeWire made users check a box to say they did not intend to use LimeWire unlawfully, this did not constitute a meaningful effort

Generally, from the Arista decision- the defendants never "implemented in a meaningful way any of the technological barriers and design choices that were available to diminish infringement through file sharing programs."  

Should LimeWire have been responsible for those filters and protections? What amount of effort on their part would have been enough / "meaningful"?

Sources:

http://www-deadline-com.vimg.net/wp-content/uploads/2012/10/LimeWire_Hollywood_Studios_Motion_For_Summary_Judgment__121009231322.pdf

http://www.skadden.com/insights/iarista-records-v-lime-groupi-summary

http://www.deadline.com/tag/limewire/

Facebook Continues Attempt to Settle Intellectual Property Case

 

Last week, Facebook revised a settlement offer for a suit brought against it in March 2011 for infringing on users’ Intellectual Property rights. 

Facebook contains a section when users log in that shows Ads and Sponsored Stories You May Like.  The Sponsored Storiescontain information on pages or brands that users have liked, applications they have used, locations they have checked into, games they have played, etc.  In 2011, a class-action suit was brought against Facebook by several plaintiffs in California who alleged that Facebook breached their Right of Publicity IP right by posting this type of information about them, as it used their names and likenesses to promote products without their express consent, without any compensation, and with no choice to opt out from this type of advertising.

Facebook provided a settlement offer earlier this year, which included a ~$10M ‘cy pres’ payment to charity (basically, Facebook would contribute to an Internet Privacy charity on behalf of the plaintiffs to help serve their interests…but it would not make any direct payments to the plaintiffs.  I’ve learned that this is sometimes used in cases where it is not economically feasible to award every single potential plaintiff due to sheer volume).  However, that settlement offer was rejected by US District Judge Richard Seeborg since no damages would have been awarded directly to the plaintiffs.  Apparently, the civil code in California which was referenced in the lawsuit states each plaintiff could potentially receive up to $750 for each violation.  Judge Seeborg seemed to think this should be addressed in the settlement somehow, which I agree with.

The latest settlement offer from Facebook would be for $20M, which would equate to up to $10 for each user in the possible complainant pool (but could amount to far less given the potential size of this group).  Any remaining cash would be donated to charity and possibly used for plaintiff legal fees and expenses.  In addition, Facebook would provide new disclosures related to how the Sponsored Storiesfeature works and how it controls this advertising service (since the lawsuit was originally filed, Facebook now allows users to opt out of the Sponsored Storiessection so their data is not featured).  If the settlement is approved, class members may opt out within 60 days of its announcement.  Now we wait until October 25 to see what Judge Seeborg thinks of this new settlement offer.

As a user of Facebook, I definitely have concerns with what seem to be ever-changing privacy updates which contain too much legalese for the common person to understand.  I logged into my account a few minutes ago to see what the latest privacy options were, and there were more available than I remember there being the last time I checked.  Which is a good thing…except that I probably couldn’t tell you which option does what in terms of how my account is used.  To be safe, I turned everything ‘off’ or to the most conservative extent I could.  It would behoove Zuckerberg and the rest of the cast and crew behind Facebook to focus on additional clarity behind how user data is used and what the population should do to ensure their information is not being used in ways with which they do not approve.  This might help mitigate potential lawsuits or other problems in the future.

But I still plan on using Facebook. 

 

Facebook IPO’ed on 5/18/12 with an offering price of $38.  As of market close on 10/12/12, shares were trading at $19.52.

 

Sources:

http://statesmansentinel.com/2012/10/09/facebook

http://www.courthousenews.com/2012/10/11/51169.htm

http://www.webpronews.com/facebooks-sponsored-stories-lawsuit-gets-new-settlement-2012-10

A Question of Intent

In March of 2011, a group of organic family farmers and other farming and seed organizations filed a class action lawsuit against Monsanto. Their purpose was to gain some form of legal protection against Monsanto, the agricultural giant with a reputation for suing small farmers when its patented, GMO seeds are found growing on small farms. In other words, the farmers sued Monsanto for fear of being sued. The case, known as Organic Seed Growers and Trade Association (OSGATA) et al. vs. Monsanto, was dismissed by a federal court judge in February 2012.

From 1997-2010, Monsanto filed 144 lawsuits against American family farmers, with hundreds of additional cases being settled out of court (2). A 2007 report from the Center for Food Safety declares that Monsanto actively investigates 500 farms each year for possible use of patented seeds (3). In general, this kind of active monitoring makes sense – many farms can benefit and profit from using Monsanto GMOs.  When a farmer’s fields get contaminated with GMOs (which happens regularly, through pollen drift), one can see how it might be tempting for that farmer to take advantage of the free goods. To intentionally store and use Monsanto seeds that have not been paid for is a clear patent violation.

What’s interesting about OSGATA et al. vs. Monsanto is the plaintiffs were organic farmers. These farmers cannot use GMOs and remain organic. Contamination of their fields is harmful to their business, not profitable. Their buyers test for GMO strains, which, if detected, can render their crops worthless in the marketplace (5). Yet, if Monsanto’s seeds blow onto their fields, Monsanto can sue them for patent infringement. While this has not often happened (there was one notable case in Canada), the farmers are concerned enough to seek legal protection. Doug Gurian-Sherman, from the Food & Environment Program at the Union of Concerned Scientists, said in an interview, “The burden is currently on non-GMO farmers to protect themselves from crops they never asked to be exposed to in the first place” (3). Organic farmer and OSGATA plaintiff Bryce Stephens reports that his neighbors’ use of genetically modified soybeans has essentially barred him from farming soybeans organically. To do so would mean risking contamination, and this could lead to an unsellable harvest and possible legal action from Monsanto (5).

While the federal court judge decided to throw out the farmers’ case against Monsanto (reason being, not one of the plaintiffs had themselves been threatened by Monsanto – being concerned about the possibility of legal action was not enough to justify the lawsuit, in the judge’s mind), I wonder if there is a need for clarity around what constitutes patent infringement in this context. Surely, if an organic farmer 1) does not want Monsanto’s patented seeds on his land, and 2) seeks to avoid such contamination however possible, it seems highly unfair to leave him open to a possible infringement lawsuit. As in our case readings this week (regarding the rulings in MGM vs. Grokster and Sony Corp. vs. Universal City Studios) I think the matter boils down to a question of intent. Organic farmers do not intend to infringe on Monsanto’s patents.  In fact, many of them would rather Monsanto’s GMO’s did not exist. In my mind, Monsanto should have a right to sue only farmers who clearly intend to infringe on the company’s patents, by engaging in storing, saving, protecting or planting patented seeds they have not paid for.

Sources:
1. http://www.npr.org/blogs/thesalt/2012/02/27/147506542/judge-dismisses-organic-farmers-case-against-monsanto
2. http://naturalsociety.com/judge-throws-out-organic-farmers-recent-case-against-monsanto/
3. http://www.rodale.com/research-feed/organic-farmers-lose-right-protect-crops
4. http://www.huffingtonpost.com/2012/03/28/monsanto-lawsuit-organic-farmers-appeal_n_1385693.html
5. http://www.dailytech.com/Monsanto+Defeats+Small+Farmers+in+Critical+Bioethics+Class+Action+Suit/article24118.htm

Upcoming Patent Dispute Case - Self-replicating Technology

The Supreme Court is slated to hear arguments on a case that addresses the question of whether patent rights extend to technology that naturally ‘reproduces itself.'

This case relates to our readings and upcoming class discussion on patent rights.

The products at issue are "Roundup Ready Seeds," which are manufactured by Monsanto, a leading agricultural product provider valued at $49 billion as of the October 7 market close. These seeds are resistant to substances that farmers use to kill off weeds (herbicide), and thus allow farmers to blanket fields with herbicide that will kill unwanted weeds without hurting desired crops.

The benefits that Roundup Ready Seeds provide are the result of genetic engineering. Monsanto requires farmers who buy these seeds to use them for only one planting, in order to protect the value of the company's intellectual property. If farmers could plant last season’s Roundup Ready Seeds, the re-planted seeds will eventually develop resistance to herbicide, effectively circumventing the need for Monsanto as a seed provider. Therefore, by contract, farmers cannot store excess supply of seeds and must continue purchasing seeds from Monsanto every season.

A special property of these seeds is that they effectively contain 'self-replicating' technology - over time, if planted and re-planted, the plants they grow into will develop resistance to herbicide and allow farmers to benefit from this property. The self-replicating quality of the seeds presents difficulties for Monsanto in enforcing its patent rights. The company has attempted to use contracts with farmers to achieve this goal, but as this case demonstrates, the contracts have not provided complete protection.

Vernon Bowman, 74, who is an Indiana farmer, purchased these seeds from Monsanto starting in 1999. He has also purchased cheaper seeds from a local grain producer, however, and planted those ‘second-hand’ seeds in the hope of harvesting a second crop of soybeans during the 1999 planting season. 'Second-hand' seeds purchased from grain producers are sometimes called 'commodity' seeds because they contain a mix of various seeds from different strains. Within the mix of seeds Bowman has bought 'second-hand' were Roundup Ready Seeds. Bowman, believing he was not bound by his Monsanto contract, re-planted the ‘second-hand’ seeds. Over the years 2000-2007, these second-hand seeds developed resistance to herbicide. They became effectively equivalent to the original Roundup Ready Seeds, which are protected as part of Monsanto's intellectual property. Bowman stored the excesses of these second-hand seeds each year and was able to use them to grow new soybean crops that were resistant to herbicide. Of course, Bowman did not pay Monsanto for the new strains of seeds he had accidentally created and intentionally used.

Bowman claims to have honored his contract with Monsanto for seeds he has purchased directly from the company. This point does not seem to be in dispute in this case. Regarding the seeds he has purchased from local grain producers, Bowman claims that they were not part of his contract with Monsanto. He further claims that barring him from storing and re-using these second-hand seeds constitutes an unprecedented level of patent protection for Monsanto.

Monsanto claims that allowing farmers to purchase seeds containing their technology from a third party and re-planting them would effectively destroy their patent rights.

In a string of cases starting from 2008, lower courts found in favor of the company and have fined Bowman. The Indiana farmer repeatedly appealed, and the Supreme has announced last week that it will hear the case. 

The last appeal was heard by the Federal Court of Appeals. This court reasoned that even if Monsanto did not have patent rights to 'second-hand' commodity seeds, once these commodity seeds develop into herbicide-resistant seeds over the years they then come to contain the technology that Monsanto had developed and that is protected by patent rights. These seeds are then no longer 'commodity' seeds because they are used to extract the specific benefit that Monsanto's technology sought to bring to the marketplace.

In reading various news articles on this case, many news services pointed out that the administration (i.e. the Federal government) opposed the Supreme Court's decision to hear this case. The administration apparently believes that the Supreme Court can create far-reaching precedents that might negatively impact patent rights protections in the future. I could not deduce what those precedents could be.

 

Links:

Previous cases:

http://www2.bloomberglaw.com/public/document/Monsanto_Co_v_Bowman_657_F3d_1341_100_USPQ2d_1224_Fed_Cir_2011_Co

 

WSJ article:

http://blogs.wsj.com/law/2012/10/05/supreme-court-takes-up-dispute-over-weed-resistent-seeds/

 

There are many more articles on this case, so I will avoid listing them all here.