PATENTS

http://biotech.nature.com • OCTOBER 2001 • VOLUME 19 • nature biotechnology

Historically, intellectual property systemshave facilitated the commercialization

of plant innovation by offering specializedprotection regimes for specialized circum-stances. In 1930, the US Congress created a“plant patent” regime designed specificallyto provide rights against unauthorized asex-ual propagation, a serious problem in thenursery industry. In 1970, Congress created a“plant variety protection” (PVP) regime thatis tailored to provide limited rights againstduplication of protected varieties via seeds, amatter of obvious importance in the com-mercialization of crop plants. At the time, noone perceived any conflict between the spe-cialized regimes and the general “utility”patent system. Today, however, the emer-gence of plant biotechnology and continuedadvances in plant breeding techniques haveprompted new questions about the reach ofthe utility patent regime and its compatibili-ty with plant-specific regimes. This month,the US Supreme Court will hear argumentsin J.E.M. Ag Supply v. Pioneer Hi-Bred, inwhich the Court will consider whether plantinnovation can be protected—like all otherinnovation—under the general “utility”patent system, or whether plant innovationis to be consigned exclusively to specializedregimes. The Court’s decision is likely tohave major ramifications for the futureapplication of intellectual property regimesto plant research.

The decision is likely to have significantpractical implications as well. Since 1985, theUS Patent and Trademark Office (PTO) hasgranted hundreds of utility patents on allaspects of innovation relating to plant sci-ence: plants themselves, seeds, breedingmethods, and plant biotechnology. TheCourt’s J.E.M. decision could impact thevalidity of many of these existing utilitypatents on plants.

Here we explain the issues that the Courtwill be asked to consider, assess the Court’s

options in resolving the case, and propose aresolution that best balances private rightsand public access to the results of plantresearch. Our proposal calls for the Court topreserve the current state of the law, inwhich plants fall among the categories ofsubject matter that are eligible for utilitypatent protection. The Court should declinethe invitation to rework the nation’s intellec-tual property policy as applied to plants,leaving the job of comprehensive policyreformulation—if it is needed at all—toCongress1.

Origins of the disputeThe complex intellectual property disputethat is now before the Supreme Court hasorigins in rural Iowa. Pioneer Hi-Bred sellsseed corn to farmers in Iowa and elsewherethrough authorized dealers. A Pioneer seedcorn bag includes a “label license”—that is, apatent license printed on the bag, authoriz-ing the use of the seed only for crop produc-tion, analogous to the “click-wrap” intellec-tual property license that one mightencounter when installing new software on acomputer.

Pioneer owns numerous patents directedto its inbred and hybrid corn lines. Forexample, at least three patents cover variousaspects of Pioneer’s 3394 hybrid seed cornproduct: one patent claims the hybrid itself,along with its seed and tissue culture2, andtwo others claim relevant inbred corn linesas well as hybrid corn plants produced fromthose inbreds3.

The dispute arose when Farm Advantage,an agricultural supply dealer in north-centralIowa, allegedly sold bags of Pioneer’s 3394hybrid, and several other Pioneer products,without Pioneer’s authorization. In early1998, Pioneer sued Farm Advantage inFederal District Court in the NorthernDistrict of Iowa, alleging unauthorized salesof 10 hybrid seed corn lines and assertingthat the sales infringed some 20 of Pioneer’spatents—seemingly a routine patent dispute.

Farm Advantage set forth a broad defenseseeking a reexamination of the entire arrayof intellectual property protection for seed-grown plants. In essence, Farm Advantageargued that Pioneer was double-dipping by

acquiring patent rights to the hybrids whenit had already acquired rights for the samehybrids through the plant variety protection(PVP) regime4. According to FarmAdvantage, because of the existence of thePVP regime, the PTO has no authorityunder the patent statute to grant utilitypatents on plants; its decision to begin grant-ing such patents (announced formally in a1985 administrative ruling5) was legallyerroneous; and, therefore, all utility patentson plants are invalid.

The District Court rejected this argument,but permitted Farm Advantage to seekimmediate appeal to the Court of Appeals forthe Federal Circuit, which has jurisdictionover all appeals in federal court cases arisingunder the patent laws. Recognizing that thecase involved an important issue of law, theFederal Circuit agreed to hear the appeal,and, like the district court, rejected FarmAdvantage’s argument, expressly confirmingthat seeds and seed-grown plants constitutepatent-eligible subject matter. FarmAdvantage persisted, petitioning theSupreme Court to review the case. Althoughthe Supreme Court rarely grants review inpatent cases, in early 2001, the SupremeCourt granted Farm Advantage’s petition,agreeing to consider the following question:“Are patents issued under 35 USC §101granting the right to exclude others from sex-ually reproducing plants or plant varieties, orfrom selling or using plants or plant varietiesreproduced by means of sexual reproduction(by seed), invalid because the [PVPA] and thePlant Patent Act ... are the exclusive means ofobtaining a federal statutory right to excludeothers from reproducing, selling, or usingplants or plant varieties?”

The Court scheduled argument forOctober 3, 2001.6

Utility patent protection v. plant varietyprotectionOnce previously, the Supreme Court hasconfronted a question about whether the1930 Plant Patent Act (PPA) and the 1970Plant Variety Protection Act (PVPA) limitedthe type of subject matter that could be eligi-ble for protection under the utility patentregime. In Diamond v. Chakrabarty, decided

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Designing an optimal intellectual property system for plants: a US Supreme Court debateIn J.E.M. Ag Supply v. Pioneer Hi-Bred, the Supreme Court’s decision could radically alter the agbiotech landscape.

Mark D. Janis and Jay P. Kesan

Mark D. Janis is a professor at the University ofIowa College of Law (mark-janis@uiowa.edu)and Jay P. Kesan is an assistant professor at the University of Illinois College of Law(kesan@law.uiuc.edu).

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in 1980, the Court ushered in the age ofbiotechnology patenting, holding thatgenetically modified bacteria fell within thescope of patent-eligible subject matter7. TheCourt considered, but narrowly rejected, theargument that Congress’ passage of thePVPA, and the PPA before it, implied anintent to exclude all biological subject matterfrom the utility patent system.

Now, the Supreme Court has the opportu-nity to revisit Chakrabarty. According toFarm Advantage, Congress’ passage of thePVPA implies at least Congress’ intent toexclude plants from the utility patent system,even if it does not imply that Congressintended to exclude all biological subjectmatter.

Neither the PVPA’s express language norits legislative history are particularly illumi-nating on this point. The PVPA includes noexpress provision establishing any relation-ship between the PVP and utility patent pro-tection. And the legislative history isambiguous: it contains few references topatent protection, and those referencesspeak to the manner in which patent protec-tion is “presently limited” as of 1970, statingthat “no protection is available to those vari-eties of plants which reproduce sexually, thatis, generally by seeds.”8 Some, like FarmAdvantage, urge that this reference to then-present unavailability be read as definitivelycontemplating future unavailability of utilitypatents for plants. Others read this passageas merely characterizing the state of affairsin 1970. At that time, it was not clearwhether the courts would broadly excludeliving subject matter from the utility patentsystem (the Supreme Court refused to do so10 years later in Chakrabarty); it was notclear whether living subject matter couldsatisfy the utility patent statute’s writtendescription requirement (a subsequent deci-sion to allow deposits of living subject mat-ter facilitated compliance with the require-ment); and plant biotechnology had not yetemerged. A third reading of the legislativehistory is simpler yet: Congress was probablynot referring to the utility patent system atall; it was probably simply referring to theplant patent system and its requirement forasexual reproduction, and making no com-ment whatsoever as to the possibility of util-ity patent protection for plants.

In sum, to resolve the issue of whether thePVPA regime impliedly limits the utilitypatent regime, the Court must look beyondthe language and legislative history of thePVPA. It must look more closely than it didin Chakrabarty at the overall structural dif-ferences between the PVPA and utilitypatent regimes, and assess the significance ofthese differences. It is really this last point—the significance of the differences—that is

the nub of the dispute in the J.E.M. case.That important structural differences

exist would be difficult to dispute. The utili-ty patent regime gives much, but asks much.A utility patent owner enjoys broad rights toexclude others from exploiting the patentedinvention without authorization for 20 yearsmeasured from the application filing date,but inventions are deemed patentable only ifthey are new and nonobvious, and only ifthe patent applicant adequately discloses thedetails of the invention in writing9. For bio-logical inventions, the patent applicant oftenmust also deposit a sample in a publicdepositary in order to satisfy the disclosurerequirement.

By contrast, the PVP regime strikes a verydifferent bargain, giving very narrow protec-tion in exchange for a limited, relatively low-quality disclosure. PVP protection extendsonly to a discrete “variety” (defined in thePVPA as “a plant grouping within a singlebotanical taxon of the lowest known rank”)and its “essentially derived varieties” (definedvery restrictively in the PVPA to extend onlyto two generations of derivation), and theexclusionary rights under the PVP regime aresubject to a multiplicity of limitations thatshield many types of activities from liability:experimentation, noncommercial acts, thesaving of seed for replanting, “developing”rather than “producing” a new variety. Andthe PVP regime elicits only low-quality dis-closure: there is no rigorous patent-style dis-closure requirement, and there is no non-obviousness criterion; varieties are pro-tectable if they are new, distinct, uniform,and stable (all statutory terms of art)10.Indeed, because the US Department ofAgriculture administers the PVP regime, thepatent-examining corps plays no role indeciding whether to grant a PVP certificate.

To decide J.E.M., the Court will need todecide what to make of these differences.One position, aligned with the interests ofFarm Advantage, is that because the PVPregime and the utility patent regime grantdifferent rights in potentially overlappingsubject matter, the two regimes must neces-sarily be incompatible, and utility patentprotection must give way. Some even arguethat the grant of utility patent rights in suchcircumstances exceeds the bounds of theconstitutional prerogative for the patent sys-tem, which must serve the purpose of pro-moting the progress of the useful arts.

The opposing position is that it is com-monplace to encounter intellectual propertyregimes that grant different rights in over-lapping subject matter. Rarely, if ever, dosuch regimes fit together seamlessly. There isno justification in intellectual property the-ory for the proposition that overlap in intel-lectual property regimes—even where the

overlap was not expressly anticipated byCongress—is inherently bad. The question isan empirical one: is there evidence that theoverlap between regimes skews the incen-tives provided by those regimes so far infavor of private rights that technologicalprogress is inhibited? In the case of thePVP–utility patent overlap specifically, andin the case of overlaps generally, the empiri-cal work remains to be done. The Court inJ.E.M. could do great harm by accepting,without empirical support, the propositionthat overlapping intellectual propertyregimes that afford different rights must bedeemed counterproductive.

Potential outcomes of J.E.M. v. PioneerThe outcome of the J.E.M. case will dependupon the Court’s assessments of the differ-ences between the PVP and utility patentregimes as noted in the preceding section.Viewed more broadly, the J.E.M. case has ele-ments of the classic tension between judicialactivism and judicial restraint. If it operateson activist impulses, and accepts the propo-sition that overlap between the PVPA andutility patent regimes is problematic, theCourt may be tempted to use the J.E.M. caseto reshape intellectual property protectionfor plants by announcing new, formalrestrictions on patent eligibility for plantinnovation. On the other hand, principles ofjudicial restraint would counsel in favor ofpreserving the existing regime—that is, tol-erating PVP–utility patent overlap—andinviting Congress to reconsider the optimaldesign for intellectual property protectionfor plant innovation.

Formal eligibility restrictions for plants. Ifthe Court decides to fashion rules restrictingthe eligibility of plants for utility patent pro-tection, it is likely to choose either to prohibitoutright any utility patents on “plants”, or tocraft a more narrowly tailored restriction thatwould ban utility patent protection for “plantvarieties”. For the reasons that we discussbelow, both rules would be problematic.

A rule excluding “plants”. The Court mightcreate a new rule that “plants”are ineligible forutility patent protection. The Court shoulddecline to create a “no plants” rule, for threeprincipal reasons. First, such a rule would pre-sumably spring from a theory that patentrights and PVPA rights are incompatible.

Second, we doubt that a “no plants” rulewould actually be effective to remove plantinventions from the utility patent system.Plant inventions need not be claimed as“plants” per se. Patent lawyers might wellcapture the value of plant innovations bydrafting claims to seed, pollen, plant tissue,other plant parts, or breeding methods, asopposed to plants per se. Indeed, the verypatents at issue in the Pioneer case contain a

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range of claims, not limited to claims direct-ed specifically to plants. Where the inventionrelates to plant genetics, the opportunitiesfor drafting claims around a “no plants” ruleare even more abundant: claims to DNAsequences, other gene constructs, or genetictransformation methods immediately cometo mind. The courts and the PTO could thenfind themselves faced with an excess of liti-gation over whether claims drafted in thesealternative formats constitute claims to“plants”.

Recent history suggests that efforts tofine-tune intellectual property protection byrestricting patent eligibility can lead toopportunistic behavior and counterproduc-tive ancillary litigation. In the area of com-puter software, the Supreme Court adopteda “mathematical algorithm” exclusion frompatent eligibility, only to stimulate years oflitigation over patent lawyers’ attempts todraft claims around the exclusion. In currentlaw, the mathematical algorithm exclusionhas all but disappeared in favor of a moreliberal eligibility regime. The same phenom-enon could well occur in the plant area if theCourt decides to implement restrictive rules.

Third, even if courts could fashion aworkable rule for excluding plant inventionsfrom the utility patent system, it might—paradoxically—result in reduced publicaccess to the products of plant sciencesresearch. In the absence of patent protection,plant researchers—and their lawyers—would presumably redirect their effortstoward obtaining or implementing alterna-tive forms of protection. Alternative forms ofintellectual property protection, includingnot only plant variety protection, but alsotrade secret protection, might be moreaggressively employed. Further, major seedproducers might respond to a broad “noplants” rule by accelerating research intogenetic surrogates for intellectual propertyenforcement—for example, genetic userestriction technologies that limit plantreproduction.

It is simply not clear how the widespreaddeployment of these alternatives to patentprotection would affect the incentive to pur-sue and commercialize plant research. Theoverall weakening of protection resultingfrom a transition from patents to fragile sys-tems like PVP and trade secret, together withthe loss of technical disclosures that wouldhave been provided under the patent regime,may result in an overall reduction in invest-ment in plant research. Any increased relianceon genetic surrogates is likely to generate sub-stantial social costs. Patents may well come tolook like the best deal going—or, taken from adifferent perspective, the least objectionable.

A rule excluding “plant varieties”. As analternative to excluding all “plants” from eli-

gibility for utility patent protection, theCourt might decide to exclude only “plantvarieties”. Some may find this approachattractive as a moderate solution, less restric-tive than a “no plants” rule but more restric-tive than current practice.

Despite its superficial appeal, a “no vari-eties” rule is undesirable. It shares with the“no plants” rule the erroneous premise thatthe utility patent and PVP regimes are mutu-ally incompatible. Moreover, it is misleading.Under a “no varieties” rule, a patent claimdrawn narrowly to a specific variety fails todefine patent-eligible subject matter, but apatent claim drawn more broadly to a“plant” may well be considered to definepatent-eligible subject matter, even thoughthe “plant” claim would encompass multiplevarieties. Indeed, this startlingly awkwardresult is the current law in Europe; theEuropean Patent Office, saddled with a “novarieties” rule in the current Article 53(b) ofthe European Patent Convention, confirmedin a major decision that claims drawn to“plants” would avoid the “no varieties”exclusion, even though casual intuitionmight suggest the contrary11.

Judicial restraint and deference toCongress. The Court, of course, need notaccept the proposition that overlap betweenthe utility patent regime and the PVP regimeis inherently problematic. Instead, the Courtcould—and should—acknowledge thatCongress has created a complicated andoverlapping system of rights under differentintellectual property regimes, and theninvite Congress to reconsider the matter.That is, instead of running the risk of short-circuiting an important policy debate, and acritical empirical investigation, by announc-ing new, restrictive eligibility rules, the Courtshould preserve the status quo and allowCongress to legislate if new legislation isdesirable.

In its famous Chakrabarty ruling, theSupreme Court rejected the argument thatthe passage of the PVPA implies Congress’intent to limit the utility patent system. TheCourt also took pains to emphasize its lim-ited role as adjudicator rather than legisla-tor. J.E.M. v. Pioneer presents the SupremeCourt with an excellent opportunity toreinforce its Chakrabarty decision on bothof these levels. First, the Court should againreject the argument that passage of thePVPA implies exclusions to the utilitypatent regime, and confirm that plants andplant varieties constitute patent-eligiblesubject matter.

Then the Court should defer to Congress.Congress failed to contemplate the prospectof dual PVP and patent protection forplants, so there is simply no legislative recordon whether dual protection is optimal.

Theoretical and empirical research on theeconomics of the patent and PVP regimes asapplied in the seed industry could go a longdistance in assessing optimality. If such stud-ies suggest that the current combination ofregimes provides suboptimal ex ante incen-tives for plant research, Congress shouldconsider legislative reforms. The SupremeCourt would best serve private and publicinterests by deferring to Congress to allowintellectual property policymaking in theplant area to mature on the basis of solidempirical knowledge.

ConclusionsThe J.E.M. case presents the Court with animportant opportunity—but, predominant-ly, it is an opportunity to do great harmwhile achieving little benefit. The Courtcould announce new rules restricting oreliminating utility patent protection forplants or plant varieties, or it can acknowl-edge that Congress has to establish an over-lapping and even disjoint combination ofintellectual property systems for plants, andturn to Congress to determine whether thesystems need tidying. As the Court contem-plates the optimal design for intellectualproperty systems for 21st-century plantinnovation, the Court should take seriouslythe need for empirical study and full legisla-tive public policy debate. It would be unfor-tunate if the Court thwarts such a debate byimposing aggressive new restrictions enroute to deciding the J.E.M. case.

1. Some of the arguments presented here are developedin greater detail in Janis, M.D. Sustainable agriculture,patent rights, and plant innovation. Ind. J. Global Leg.Stud. (in press).

2. Hybrid corn plant and seed. US 5,491,295 (issuedFeb. 13, 1996).

3. Inbred corn line PHP38. US 5,506,397 (issued Apr. 9,1996); Inbred corn line PHN46. US 5,567,861 (issuedOct. 22, 1996).

4. Plant Variety Protection Act, 7 USC §§2321–2583. Anoverview of the entire array of intellectual propertyregimes that might be employed in protecting plantbiotechnology inventions can be found in Kesan, J.P.Intellectual property protection and agriculturalbiotechnology—a multidisciplinary perspective. Am.Behavioral Scientist 44, 464 (2000).

5. Ex Parte Hibberd, 227 USPQ (BNA) 443 (Bd. Pat.App. Int. 1985).

6. See J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l,Inc., 121 S.Ct. 1077 (2001) (Supreme Court’s deci-sion granting certioriari); Pioneer Hi-Bred Int’l, Inc. v.J.E.M. Ag Supply, Inc., 200 F.3d 1374 (Fed. Cir. 2000)(appellate decision); Pioneer Hi-Bred Int’l, Inc. v.J.E.M. Ag Supply, Inc., 49 USPQ 2d (BNA) 1813 (N.D.Iowa 1998) (district court decision).

7. Diamond v. Chakrabarty, 447 US 303 (1980).8. Cong. Rep. 91-1605 (1970).9. See 35 USC §271 (nature of the right to exclude); 35

USC §102 (novelty); 35 USC §103 (obviousness); 35USC §112, 1st ¶ (adequacy of description).

10. For limitations and exclusions, see 7 USC §2544(experimentation); 7 USC §2541(e) (noncommercialacts); 7 USC §2543 (saved seed); 7 USC §2541(a)(produce v. develop). For protectability criteria, see 7USC §§2402(a)(1)–(4) (new, distinct, uniform, stable).

11. G 0001/98, NOVARTIS II/Transgenic Plant, [2000]EPOR 303 (decision of the Enlarged Board of Appealof the European Patent Office).

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