POST-SALE RESTRICTIONS ON PATENTED SEEDS: WHICH LAW GOVERNS?

10 Wake Forest Intell. Prop. L.J. 98

Since the agrichemical industry entered the business of creating genetically engineered (“GE”) seeds, farming in America has never been the same. Patents on these GE seeds have been reinforced with so-called “license” agreements that accompany their sale to farmers. Failure to abide the terms of these agreements can land a farmer in federal district court defending a patent infringement lawsuit. Several states have passed legislation relating to the terms of these contracts (known in the industry as “Technology Use Agreements” or colloquially as “bag-tag” agreements). This article explores whether state laws relating to these bag-tag agreements are enforceable, or whether the agreements are, as the industry claims, non-exclusive patent licenses governed by federal patent law. In order to resolve that question, one must first determine whether the transfer of the seeds to the farmer exhausts the patent-holder’s rights in the technology accompanying the seeds. Generally, when someone purchases a patented good she is free to use it, take it apart and rebuild it, and even re-sell it to another without infringing the patent through the “first sale” or exhaustion doctrine. The seed industry, however, characterizes the transfer of patented seeds to the farmer not as a sale, but rather as a license to use the patented genes embodied in the seeds. Are the recently-passed state laws – designed to protect farmers and their private property interests from these potentially over-reaching licenses – preempted by federal patent law? This article explores these timely and important issues.