The OSU Extension Farm Office team has returned from the National Farm Business Conference in Wisconsin. We gained some fresh perspective on events beyond Ohio’s borders, but are happy to be back in slightly warmer weather. Our colleagues from across the nation presented on a variety of farm management topics, and we had a chance to discuss some of our recent projects. We also toured a number of dairy and agritourism farms, and of course ate lots of cheese curds. The fresh perspective means that it is time for a fresh Ag Law Harvest.
Here’s our latest gathering of agricultural law news that you may want to know:
OSU Extension Ag Law Team featured on Agronomy and Farm Management Podcast. Recently we had a chance to talk with OSU Extension Educators Amanda Douridas and Elizabeth Hawkins, who together moderate the bi-weekly Agronomy and Farm Management Podcast for OSU Extension. We discussed the status of Ohio’s hemp bill and what we expect to happen in the near future with hemp regulation and production. Then we provided an update on the Drewes Farm Partnership v. City of Toledo lawsuit, which grapples with the legality of the Lake Erie Bill of Rights. Click HERE to listen to the podcast, and look for episode 28.
Minnesota focuses new commercial nitrogen fertilizer regulations on drinking water quality. In an effort to protect public drinking water sources, the Minnesota Department of Agriculture has chosen to regulate the commercial application of fertilizer. The state has long regulated the application of manure, but not commercial nitrogen. The regulations focus on two types of geographic areas: regions with vulnerable soil (coarse soils, karst geology, or shallow bedrock) and farms located in Drinking Water Supply Management Areas. These management areas are designated based upon nitrate levels found in the drinking water. Starting in 2020, the state will ban the application of commercial nitrogen in these areas during the fall months and on frozen ground. Farms in any of the 30 Drinking Water Supply Management Areas would have to follow best management practices to start, but if nitrate levels continue to exceed state limits, then the state may impose additional restrictions in an area to reduce nitrogen pollution. For more information on Minnesota’s Groundwater Protection Rule, click HERE.
Federal court puts a hold on Bud Light’s “100 percent less corn syrup” ads. If they missed seeing it live during the Super Bowl, most people in the agricultural industry have at least seen the recent Bud Light advertising campaign that claims the beer uses no corn syrup while its competitors do. Shortly after the initial release of the ad, MillerCoors sued Anheuser-Busch, which makes Bud Light. MillerCoors wants a permanent injunction that would stop Bud Light from continuing its corn syrup advertising campaign, arguing that the advertisements are false and misleading to consumers. The first step to a permanent injunction is often a preliminary injunction, which makes a party act or not act in a certain way only while the case is pending. The judge presiding over the lawsuit granted MillerCoors’ motion for a preliminary injunction in part. The judge ordered Anheuser-Busch to temporarily stop using ads mentioning corn syrup if those ads do not contain language explaining that Bud Light does not use corn syrup in the brewing process. The judge’s act does not ban the ad that premiered during the Super Bowl. Rather it only blocks ads released later that claim Bud Light uses 100 percent less corn syrup than competitors like MillerCoors. Click HERE to view the complaint, and HERE to view the judge’s order.
It’s (mostly) official: USDA’s ERS and NIFA are headed to Kansas City. U.S. Secretary of Agriculture Sonny Perdue announced the USDA’s selection of the Kansas City, Missouri region as the new headquarters for the Economic Research Service and National Institute of Food and Agriculture. The location changed caused a great deal of controversy as some viewed it as a political move. However, the USDA has maintained that relocation will save millions of dollars over the next few years and put the agencies closer to a number of other USDA offices in Kansas City, such as the Farm Service Agency’s Commodity Operations Office. The Secretary reduced some of the controversy by scrapping plans to place the agencies under the USDA’s Chief Economist, who is a political appointee. Before we call the move a done deal, we must note that Congress could stop the plans. The U.S. House of Representatives might block the move via a Department of Agriculture-FDA spending bill currently under consideration. Click HERE to read Secretary Perdue’s press release.
Bayer announces multi-billion dollar hunt for glyphosate replacement. Somewhat buried in a press release titled “Bayer raises the bar in transparency, sustainability and engagement,” Bayer recently announced a substantial investment in its weed management research. Over the next ten years, the company plans to spend 5 billion euros, or roughly 5.6 billion U.S. dollars, to develop weed control products as alternatives to glyphosate. The announcement comes at a time with thousands of plaintiffs across the United States have claimed that the widely-used glyphosate caused their cancer. As we have previously discussed in the Ag Law Blog, the first three juries have in total awarded plaintiffs billions of dollars in damages. Bayer continues to fight the allegations and defend its product, but the press release marks the first time that Bayer has publically announced a search for an alternative to glyphosate. It remains to be seen whether the press release could have an impact in the lawsuits, but Bayer will likely try to keep the press release out of the trials by using court rules of evidence.
Ohio House passes amusement ride safety bill. County fair season has officially kicked off in Ohio, and some state lawmakers want to make sure that amusement rides at those fairs are safe. House Bill 189 seeks to heighten Ohio’s amusement ride safety inspection standards and impose additional duties on amusement ride owners. The bill would require the Ohio Department of Agriculture to adopt ride classification rules that identify types of rides needing more comprehensive inspection, along with the minimum number of inspectors and number of inspections for each ride. Further, the bill would require amusement ride owners to keep a manual for each amusement ride, and make it available upon request of an inspector. Amusement ride owners would also have to keep records, including documents and photographs, of all major repairs along with all locations where the owner stored or operated each ride. The bill includes an emergency clause, which would allow it to take effect as soon as the Governor signs it. Lawmakers named the bill “Tyler’s Law” after the young man who died following an equipment breakdown at the Ohio State Fair in 2017. Click HERE for more information about the bill.
Those post cards advising producers of a $1.51 billion settlement in the Syngenta corn seed lawsuits are legitimate, and corn producers seeking compensation from thesettlement must file claims by 11:59 p.m. on October 12, 2018. The settlement is the result of class action and individual lawsuits alleging that Syngenta failed to receive import approval from China before selling its genetically modified Viptera and Duracade seeds in the United States, which led to the rejection of U.S. corn shipments and a lowering of corn prices from 2013 to 2018.
Who can file a claim?
Three types of claimants that were involved in the U.S. corn market between September 15, 2013 and April 10, 2018 may file claims:
- Corn producers, which includes any owner, operator, landlord or tenant who shared in the risk of producing any variety of corn, not just Syngenta varieties. Landlords who operated under fixed cash leases are not eligible.
- Grain handling facilities that purchased, transported, stored, handled and sold any variety of corn.
- Ethanol production facilities that produced, purchased and sold dried distillers' grains from any variety of corn.
How to file a claim?
File electronically through a secure, encrypted portal at www.CornSeedSettlement.com or download a printed form on the same website to file via U.S. mail. Claimants must file using either a federal tax ID number or social security number and must file a separate claim for each Form 578 filed with FSA. Note that the settlement claims administrator states that all claims information is confidential and will be destroyed after the payment of claims.
How much will a claimant receive?
Payments will vary and will depend upon the total number of filed claims. For corn producers, the claims administrator will determine payments based on the following factors: (1) compensable recovery quantity as calculated by number of acres, ownership interest, NASS county yields and predetermined marketing year averages, (2) the year of planting, (3) the producer’s ownership interest, and (4) whether the producer purchased and planted Agrisure Viptera or Duracade seed or a different variety.
When will claimants receive payments?
A claimant might not receive a payment for about a year. A court hearing to approve the settlement will take place in the U.S District Court in Kansas on November 15, 2018. If the court approves the settlement, those who object to the approval can file appeals. Final payments won't occur until the court resolves all appeals, which could take about a year or more.
Must claimants report payments as income?
Class action settlement payments that compensate for the loss of business income should be reported for tax purposes. Claimants should consult with tax advisors to determine IRS reporting requirements.
For more information, an extensive list of frequently asked questions about the Syngenta corn seed settlement is available here.
It's Farm Science Review week! Be sure to visit us in the Firebaugh Building to get your questions answered and pick up copies of our Law Bulletins and a helping of candy corn. We'll be speaking on "Pond Liability" at the Gwynne Conservation Area on Wednesday and on "Estate Planning: Mistakes to Avoid" in the Ask the Experts session everyday.
Here's our gathering of ag law news you may want to know:
Movement on Ohio “Watersheds in Distress” rules. As we have reported on several times this summer, Governor John Kasich signed an executive order on July 11, 2018 directing ODA to “consider whether it is appropriate to seek the consent of the Ohio Soil and Water Commission (OSWC) to designate” certain watersheds “as watersheds in distress due to increased nutrient levels resulting from phosphorous attached to soil sediment.” Since that time, ODA has submitted a proposed rule dealing with Watersheds in Distress. Amendments were made to the proposed rule after evaluating the first set of public comments, and ODA is now resubmitting the rules package. ODA reopened the proposed rule for public comments, but it closed the comment period on September 7, 2018. Information about the proposed rules, as well as how and where to comment, can be found here (click on the “Stakeholder Review” tab and then the “Soil and Water Conservation – Watersheds in Distress OAC 901:13-1” drop down option). A draft of the newly amended proposed rules is available here.
WOTUS woes continue. The Obama administration’s hotly contested “Waters of the United States” Rule is back in the news, and this time, where it applies is dependent on where you live. A background on the rule can be found in our previous blog post. The rule basically expanded which bodies of water qualify as “waters of the United States,” which in turn protected more waters under the Clean Water Act. The rule became effective in 2015. Since that time, U.S. District Courts in North Dakota and Georgia have issued preliminary injunctions against Obama’s WOTUS Rule, which means it cannot be carried out in twenty-four states. Additionally, last summer, the EPA and Army Corps of Engineers, under the direction of President Trump, announced their plan to repeal Obama’s WOTUS Rule and replace it with the definition of WOTUS “that existed prior to 2015” until a new definition could be developed. Trump’s rule was published on February 6, 2018, giving the administration until 2020 to come up with a new definition. However, in a ruling on August 16, 2018, in a U.S. District Court in South Carolina, Judge David Norton determined that the Trump administration “failed to comply with” requirements of the Administrative Procedure Act when it enacted its rule. This means that the Trump rule repealing and replacing the definition of WOTUS is invalidated. As a result of Judge Norton’s decision, in the remaining twenty-six states without an injunction, the Obama administration’s version of the rule has been reinstated. Ohio is one of the twenty-six states where the Obama rule currently applies. Will the Trump administration and the EPA respond to Norton’s decision by announcing yet another new WOTUS rule? Follow the Ag Law Blog for any updates. In the meantime, the country remains nearly split in half by which version of the WOTUS rule is carried out.
Regulators, meet “meat.” Under a new Missouri law, it is a criminal offense to misrepresent a product as “meat” if there is, in fact, no meat. Missouri’s revision of its meat advertising laws took effect on August 28th, and has been dubbed by many as the first attempt by a state to regulate what qualifies as meat. Defining meat as “any edible portion of livestock, poultry, or captive cervid carcass,” the law prohibits “misrepresenting a product as meat that is not derived from harvested production livestock or poultry.” Violations are treated as a misdemeanor, with a fine up to $1,000 and possible jail time. The Missouri Department of Agriculture has said that it intends to enforce the law, but that it plans to give affected companies until the start of next year to bring their labels into compliance. Supporters of the law, like the Missouri Cattlemen’s Association, argue that it will provide consumers with accurate information about their food, and also protect meat producers from unfair labeling of plant-based or lab-grown meat alternatives. Opponents have already filed a lawsuit to prevent enforcement, arguing that the law restricts free speech and improperly discriminates against out-of-state producers of meat alternatives. The named plaintiff on the lawsuit is Turtle Island Foods, an Oregon company that does business under the names Tofurky and The Good Foods Institute. The company makes plant-based food products, and is joined in its opposition by the American Civil Liberties Union of Missouri and the Animal Legal Defense Fund. Beyond Missouri, the National Cattlemen’s Beef Association has listed the issue as a top policy priority for this year, and the U.S. Cattlemen’s Association has petitioned the USDA to adopt stricter labeling requirements. As this issue develops, the Ag Law Blog will keep you updated.
USDA taps Commodity Credit Corporation to aid farmers. Readers are no doubt aware of global trade disputes in which other countries have increased tariffs on American agricultural exports. Given the extensive news coverage, the Harvest will not attempt to cover the dispute in depth; however, one point that has been less covered is the tool that the USDA has selected to provide relief to impacted farmers: the Commodity Credit Corporation. What is it? The Commodity Credit Corporation (CCC) is a federal government entity created during the Great Depression in 1933 to “stabilize, support, and protect farm income and prices.” Since 1939, it has been under the control of the Secretary of Agriculture, although it is managed by a seven member Board of Directors. CCC is technically authorized to borrow up to $30 billion from the U.S. Treasury at any one time, but due to trade agreements, that number is, in reality, much smaller. This gives USDA access to billions of dollars in funding without having to go to Congress first. The money can be used to provide loans or payments to agricultural producers, purchase agricultural products to sell or donate, develop domestic and foreign markets, promote conservation, and more. CCC has no staff, but is instead administered through other USDA agencies, largely the Farm Service Agency and Agricultural Marketing Service. On August 27th, Secretary of Agriculture Sonny Perdue announced that USDA plans to tap the Commodity Credit Corporation for up to $12 billion worth of aid to farmers affected by recent tariffs. The Market Facilitation Program will provide direct payments to eligible corn, cotton, dairy, hog, sorghum, soybean, and wheat producers, and the Food Purchase and Distribution Program will purchase up to $1.2 billion in select commodities. For more about the Commodity Credit Corporation, check out its website.
Bayer reports increasing number of lawsuits against newly acquired Monsanto. Bayer, the German pharmaceutical and life sciences company that acquired Monsanto early this summer, has indicated that there are an increasing number of lawsuits in the United States alleging that its weed killers cause cancer. According to the Wall Street Journal, there were roughly 8,700 plaintiffs seeking monetary damages from Bayer as of late August, a sharp increase from the 5,200 plaintiffs just months earlier. Many of these lawsuits involve cancer patients who claim that Monsanto’s glyphosate-containing herbicides like Roundup caused their cancer. As we reported in a previous edition of the Harvest, one person’s successful lawsuit against Monsanto resulted in a San Francisco jury award of $289.2 million for failing to warn consumers of the risks posed by its weed killers. Monsanto is expected to file motions for a new trial and for the judge to set aside the verdict, and may ultimately appeal the decision. These cancer-related claims come at a time when another Monsanto product, Dicamba, is causing great controversy. Stay tuned to the Ag Law Blog as these lawsuits continue to develop.
Farmers are receiving a lot of attention from law firms these days, from video mailers to offers of free consultations, dinners, hats and more. The purpose of these marketing efforts is to entice farmers away from participating in the current class action lawsuit against Syngenta. Law firms want farmers to exclude themselves from the class action litigation and participate in individual lawsuits their firms would bring against Syngenta. With a deadline of April 1 looming, farmers must decide whether to remain in or step away from the class action lawsuit.
The class action lawsuit, known as “In re Syngenta AG MIR162 Corn Litigation,” is pending before the U.S. District Court in Kansas. It is one of two major lawsuits regarding corn rejected by China in 2013 because China had not yet approved Syngenta’s Duracade and Viptera brands of genetically-modified corn. The lawsuit consolidated hundreds of similar federal court cases that all claimed that Syngenta should be liable for the drop in corn prices that followed China’s rejections because Syngenta stated that it had obtained all necessary regulatory approvals for Duracade and Viptera, but instead released the seed before receiving China’s approval.
Last September, the court certified the litigation as a class action lawsuit, which allows the case to commence on behalf of all class members. Any farmer that fits within the class definitions is automatically included in the lawsuit and does not have to pursue individual litigation against Syngenta. The court established a nationwide class of “producers,” defined as any person or entity listed as a producer on an FSA-578 form filed with the USDA who priced corn for sale after November 18, 2013 and who did not purchase Viptera or Duracade corn seed (farmers who used Syngenta’s seed have different legal claims). The nationwide class is for producers bringing claims under federal law. The court also certified eight state classes for producers bringing claims under state laws, including Ohio. Syngenta appealed the class certification, but the Tenth District Court of Appeals denied the appeal.
Ohio farmers who fit the definition of “producers” are now automatically members of both the nationwide and Ohio classes. This means that every Ohio producer can receive a share of any award or settlement that results from the litigation, with required documentation. However, Ohio producers may choose to exclude themselves from or “opt out” of their classes and bring their own individual actions against Syngenta. The district court required attorneys for the class action suit to notify all potential producers of the lawsuit and of a producer’s right to be excluded from the litigation. A producer must send an exclusion request by April 1, 2017, following the process for exclusion stated in the court’s order, available here.
Pros and Cons of Staying in the Class
A major benefit of remaining in the class action lawsuit is convenience. Class members in the lawsuit have no responsibility for the proceedings, which falls upon the attorneys who represent the entire class. However, convenience comes at the cost of deferring decision making authority and losing a share of the award or settlement to court-ordered attorney fees, although class members may file objections to such decisions. Exclusion from the class gives producers freedom to pursue their own actions, which will likely lead to a stronger role in decision making and the ability to negotiate attorney fees. Exclusion also allows a farmer who may not agree with the litigation on principal to dissociate from the lawsuit.
The court has scheduled “bellwether” cases in the lawsuit, which will go to trial in June. Bellwether cases are chosen to be representative of the class. Allowing these cases to go to trial gives an indication of how the litigation will play out—the strength of each side, how juries react and how the law applies to the situation. Upon completion of the bellwether cases, both sides should be better able to decide whether to settle the lawsuit or continue with litigation.
The U.S. District Court’s website for the Syngenta class action lawsuit is http://www.ksd.uscourts.gov/syngenta-ag-mir162-corn-litigation/
After several years of debate over voluntary versus mandatory GMO (genetically modified organism) labeling, Congress passed legislation yesterday to create a unified national standard requiring disclosure of information for bioengineered foods. Predictions are that President Obama will sign the legislation soon. Once effective, the new law will preempt state laws that require labeling of foods containing GMOs, such as the Vermont labeling law that recently became effective on July 1. The bill's passage through Congress represented a bi-partisan compromise led by senators Pat Roberts (R-KS) and Debbie Stabenow (D-MI). "This is the most important food and agriculture policy debate of the last 20 years," said Sen. Roberts.
What’s in the bill?
The legislation amends the Agricultural Marketing Act of 1946 to include the following:
Definition of “bioengineered” food, which is food intended for human consumption that contains genetic material that has been modified through in vitro recombinant DNA techniques and for which the modification could not otherwise be obtained through conventional breeding or found in nature.
- The Secretary of Agriculture shall determine the amount of bioengineered substance necessary to deem the food as bioengineered.
- A food that is derived from an animal that consumed feed containing bioengineered substances shall not be considered bioengineered. Thus, meat, poultry, dairy and eggs from animals that have consumed GMO feed will not be subject to the labeling requirements because they cannot be defined as bioengineered.
- Preemption of state food labeling standards. No state or political subdivision may establish requirements for labeling whether a food or seed is bioengineered or contains ingredients that are bioengineered. A food may bear disclosure of bioengineering only in accordance with federal regulations arising from this law.
- Creation of federal mandatory disclosure standard. Within two years of the bill’s enactment, the Secretary of Agriculture must establish a mandatory national bioengineered food disclosure standard and the procedures necessary to implement the national standard.
Choice of labeling. The federal standard must give a manufacturer the option of disclosing information with on-package text, a symbol or an electronic or digital link, such as a QR code. An electronic or digital link must contain access to an internet website or other type of electronic source.
- The USDA must conduct a study to identify potential technological challenges of disclosure through electronic or digital means, and must provide additional options if determined that the proposed technological options do not provide sufficient access to bioengineered food disclosure information.
- The USDA must also develop alternative disclosure options for foods contained in small packages.
Exclusions. The following are excluded from the national disclosure standard:
- Food served in a restaurant or similar retail food establishment.
- “Very small” food manufacturers, to be defined through rulemaking.
- As explained above, meat, poultry, dairy and eggs from animals that consume GMO feed.
- A food containing meat, poultry or eggs if the predominant ingredient would not independently be subject to the standard of if the predominant ingredient is broth, stock, water or a similar solution and the second-most predominant ingredient would not independently be subject to the national standard.
- “Small” food manufacturers. The USDA must define “small food manufacturers” and provide such manufacturers with a grace period of at least one year for implementation of the new standards and the additional option of providing only a telephone number or internet website on a food label to disclose required information.
- Food safety implications. The FDA conducts a pre-market consultation process for foods from genetically engineered plants; foods that successfully complete the process shall not be treated as more or less safe than non-genetically engineered counterparts because of bioengineering.
- Organically produced foods. A food certified as “organic” under the national organic program may be labelled as “not bioengineered,” “non-GMO” or with similar language.
- Enforcement. Failing to disclose a food as bioengineered is a prohibited act, but the rulemaking process will determine whether there will be penalties for noncompliance. The USDA Secretary will have authority to request records and conduct audits and hearings in regards to compliance but will not have recall authority for a food that does not comply with disclosure regulations.
The preemption established in the new law will be effective immediately and the State of Vermont is prohibited from enforcing its GMO labeling law. The USDA, through its Agricultural Marketing Service, will begin the rulemaking process for the national disclosure standard. A few key issues for agriculture to track though out the rulemaking stage will be the determination of "how much" bioengineered substance is sufficient to deem a food as bioengineered; defining the "very small" food manufacturers that will be exempt from the standard and the "small" manufacturers that will have a grace period and simpler disclosure requirements, whether QR codes and other technology options will remain viable due to expected objections that they discriminate against lower income consumers; and penalties for noncompliance. The two year window for rulemaking, however, leaves open the opportunity for future changes such as amending the legislation or prohibiting funding to be used for its implementation. Thus, while we have entered a new stage of the GMO labeling debate, the uncertainty of GMO labeling is not yet fully resolved.
To read the legislation, visit this page.
Ohio State University Extension’s Agricultural and Resource Law Program is excited to announce a new partnership with a group of universities creating a new Agricultural and Food Law Consortium. The Consortium is a national, multi-institutional collaboration designed to enhance and expand the development and delivery of authoritative, timely, and objective agricultural and food law research and information.
The Consortium will host its first webinar on Wednesday, November 19, from 2:30-3:30 (EST). The webinar, titled Mandatory GMO Labeling Laws: Overview and Status of Current Legal Issues, will focus on GMO labeling laws, proposals, and initiatives. Details about the webinar, including sign-on instructions, are available on the National Agricultural Law Center website at http://nationalaglawcenter.org/consortium/gmolabelingwebinar/. The program presenter will be Consortium member, Ross Pifer, Director of the Agricultural Law Resource and Reference Center at Penn State Law. The program is designed for a broad audience that includes non-attorneys.
The Consortium is being led by the National Agricultural Law Center, which is a unit of the University of Arkansas System Division of Agriculture in Fayetteville, Arkansas. The OSUE Agricultural and Resource Law Program’s role in the consortium will be to conduct legal research, write articles, and produce outreach material. The consortium will allow us to collaborate on national and regional issues using our strengths to create bigger impact and will allow us to bring our expertise and Ohio’s issues to a national audience. Other universities making up the consortium include the National Sea Grant Law Center at the University of Mississippi School of Law and the Agricultural Law Resource and Reference Center at Penn State Dickinson School of Law.
Right now, an online survey is being conducted asking for input on agriculture and legal issues individuals are dealing with. This survey will help define the Consortium’s long-term research and information agenda. Everyone is asked to participate in the short, anonymous survey. The survey can be found at: http://nationalaglawcenter.org/consortium/.
Catharine Daniels, Attorney, OSUE Agricultural & Resource Law Program
The court's decision was not exactly what a group of farmers, seed sellers, and agricultural organizations was hoping for, but they are nevertheless claiming partial victory against Monsanto in a recent lawsuit centered on genetically modified seed. On June 10, 2013, the United States Court of Appeals denied the group's request for a judgment against Monsanto but at the same time declared that Monsanto would be judicially bound to its promise not to pursue future patent infringement suits against the growers, seed sellers or organizations for "inadvertently using or selling 'trace amounts' of genetically modified seeds."
Several farmers and organizations who grow, use, or sell conventional and organic seeds ("Seed Growers") filed a federal lawsuit against Monsanto in March of 2011. Ohioans in the group include the Ohio Ecological Food and Farm Association. The Seed Growers asked the court to declare some of Monsanto’s patents “invalid, unenforceable, and not infringed.” The Seed Growers claimed they had to forgo planting certain crops and had to take “costly precautions” to avoid contamination by Monsanto's genetically modified "Roundup Ready" seeds. Pointing to Monsanto's history of aggressive patent infringement litigation, the Seed Growers feared they would be sued by Monsanto despite their efforts to prevent unintended contamination. The Seed Growers also alleged adverse health effects and long term environmental impacts from the genetically modified seed. The federal court dismissed the case after determining that no traceable injury existed that the court could address, since none of the Seed Growers had actually been sued by Monsanto.
The Seed Growers appealed the decision to the Court of Appeals for the Federal Circuit. The court of appeals agreed that there was not a current traceable injury to the Seed Growers. But the appeals court also concluded that there was no risk of harm to the Seed Growers because Monsanto had “unequivocally disclaimed any intent to sue appellant growers, seed sellers, or organizations for inadvertently using or selling “trace amounts” of genetically modified seeds.” Even though Monsanto had denied the Seed Growers' request to enter into a written covenant not to sue, the appeals court held that Monsanto's promise to the Seed Growers throughout the lawsuit had the same effect as a written, signed agreement not to bring suit.
How Can the Court Enforce Monsanto's “Promises”?
Monsanto's promise not to sue the Seed Growers came through verbal representations made in the course of the federal court proceedings. How can the court hold Monsanto to such a promise? To do so, the appeals court relied on the unique legal doctrine of "judicial estoppel," which states that under certain circumstances, a party who makes a declaration in a legal proceeding will be bound to that statement and may not contradict the declaration in a future legal proceeding. The appeals court examined three factors that warrant a court's use of judicial estoppel:
- The party’s later position is clearly inconsistent with its prior position.
- The party successfully persuaded a court to accept its prior position.
- The party would derive an unfair advantage or impose an unfair detriment on the opposing party if the court didn't step in to enforce the promise.
According to the court, all three of these situations would exist if Monsanto later sued the parties for patent infringement, which requires the application of judicial estoppel to bind Monsanto to its promise.
But the Promise is Limited
Monsanto's promise was not to sue "inadvertent users or sellers of seeds that are inadvertently contaminated with up to one percent of seeds carrying Monsanto's patented traits." But what about growers who inadvertently use or sell seed containing greater than trace amounts; i.e. greater than one percent? Despite the appeals court's effort to clarify whether or not Monsanto would assert its patent rights in those situations, Monsanto would not state its position on the issue. Monsanto did make it clear that their view of an inadvertent infringement is quite narrow, stating that an "inadvertent infringer" would not include “those growers whose crops become accidentally contaminated, and who do not treat their fields with Roundup, but who, knowing of the contamination, harvest and replant or sell the seeds.” Thus in situations where growers inadvertently use or sell seed containing greater than trace amounts of Monsanto's seed, it is possible that Monsanto could bypass judicial estoppel and pursue a patent infringement case.
So Was this Really a Victory for the Organic Seed Growers?
While the Seed Growers did not obtain the declaratory judgments they sought against Monsanto, they did receive some protection from future litigation in the form of judicial estoppel. Because the appeals court concluded that the Seed Growers were not at risk of being sued by Monsanto, the court was able to avoid delving into the deeper issues of whether or not Monsanto's patents are valid, whether avoiding contamination is a burden to conventional farmers and whether Monsanto's seed poses health and environmental harms. The Seed Growers have expressed interest in requesting a review of the decision by the U.S. Supreme Court. Even if the case does not make its way to the Supreme Court, it surely isn't the last lawsuit we'll see that challenges genetically modified seed technology.
View Organic Seed Growers et al v. Monsanto here.
Tags: Monsanto, Organic Seed Growers and Trade Association v. Monsanto
Court rules that farmer's replanting of Roundup Ready beans violates federal patent law
Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program
The U.S. Supreme Court today ruled that a farmer's replanting of harvested Roundup Ready© soybeans violates Monsanto Company's patent rights. The ruling leaves in place a former court award of $84,456 against farmer Vernon Bowman for planting and harvesting the soybeans, which he had purchased as commodity beans from a local grain elevator or saved from his prior harvests.
Relying on the theory of "patent exhaustion," Bowman argued that Monsanto's patent rights exhausted after the first sale of the seed and did not apply to later uses or sales. This exception to patent protection allows a purchaser of a patented good to resell the "used" good without violating patent rights. The Court unanimously disagreed that patent exhaustion was applicable in Bowman's case, explaining that the patent exhaustion theory applies to later uses of a good but not to the creation of new and additional goods from a patented good. While Bowman could sell harvested Roundup Ready beans or use them as feed, he could not plant those beans, produce new beans and sell the new beans without violating Monsanto's patent rights. "That is how "to ‘make’ a new product," said the Court, or to "reproduce Monsanto’s patented invention" without compensation to Monsanto. "A patentee retains an undiminished right to prohibit others from making the thing his patent protects," said the Court.
Bowman tried to distinguish the application of patent exhaustion to his case based on the "self-replicating" nature of seed, arguing that the seed, rather than Bowman, controlled the seed's actual reproduction. Monsanto should not be allowed to interfere with natural reproduction, claimed Bowman. The Court again disagreed, rejecting what it referred to as Bowman's "blame the bean" and "seeds are special" arguments and pointing out that Bowman played an active role in the seed reproduction process. But the Court carefully noted that its ruling does not automatically apply to every self-replicating product, as there could be situations where a self-replication might occur outside a purchaser’s control or be a necessary but incidental step in using the item for another purpose.
Many expected the Court to rule in favor of Monsanto based solely on the argument that ruling otherwise would negate the incentive for innovation that Congress intended upon passing the federal Patent Act. The Court was mindful of this argument when clarifying the parameters of the patent exhaustion doctrine, referring several times to the importance of not depriving Monsanto of its monopoly and the rewards of innovation.
What does the case mean for farmers? The Monsanto ruling is not a big surprise but it does send a strong message to farmers, some of whom have likely grumbled over seed patents and limitations on the age-old practice of saving seed. With the Supreme Court's decision, it's clear that the current legal system simply won't tolerate replantings of patented seeds. Instead, the law will support continued efforts by patent holders to monitor what farmers do with patented seed. Replanting of patented seed, whether intentional or accidental, is more than ever a high risk activity.
Read the Supreme Court's decision in Bowman v. Monsanto Co. here.
Tags: Monsanto patent case; Bowman v Monsanto; Monsanto Roundup Ready patent
Monsanto Company must be thinking that determination sometimes yields intended results. The U.S. Supreme Court announced on January 15 that it will grant Monsanto's request for review of a 2007 federal injunction that halted the planting and sale of Monsanto's Roundup Ready alfalfa seed pending completion of an Environmental Impact Statement. The Court's announcement came as a surprise to many who've followed the case, which Monsanto has repeatedly lost in a protracted series of court decisions. Since the 2007 injunction, the Animal and Plant Health Inspection Service (APHIS) has completed the court ordered draft EIS on the proposed deregulation of the Roundup Ready alfalfa seed, and the EIS comment period still remains open until February 16, 2010.
The following is a compilation of summaries we've written in the past about the earlier decisions in Geertson Seed Farms v. Monsanto.
The 2007 decisions: Geertson Seed Farms v. Johanns, 2007 WL 518624 (N.D. Cal. Feb. 13, 2007), amended by Geertson Farms, Inc. v. Johanns, 2007 U.S. Dist. LEXIS 21491 (N.D. Cal., Mar. 12, 2007).
The federal district court in California issued its opinion on the deregulation of “Roundup Ready” alfalfa pursuant to the Plant Protection Act on February 13, 2007. Upon receiving Monsanto’s petition for deregulation of the alfalfa seed, APHIS conducted an Environmental Assessment and received over 500 comments in opposition to the deregulation. The opposition’s primary concern was the potential of contamination. APHIS, however, made a Finding of No Significant Impact (FONSI) and approved the deregulation petition, thereby allowing the seed to be sold without USDA oversight. Geertson Seed Farms, joined by a number of growers and associations, filed claims under the National Environmental Policy Act (NEPA) as well as the Endangered Species Act and Plant Protection Act. In regards to NEPA, they argued that the agency should have prepared an EIS for the deregulation.
Addressing only the NEPA claims, the court agreed that APHIS should have conducted an EIS because of the significant environmental impact posed by deregulation of the alfalfa seed. A realistic potential for contamination existed, said the court, but the agency had not fully inquired into the extent of this potential. The court also determined that APHIS did not adequately examine the potential effects of Roundup Ready alfalfa on organic farming and the development of glyphosate-resistant weeds and that there were “substantial questions” raised by the deregulation petition that the agency should have addressed in an EIS. Concluding that the question of whether the introduction of the genetically engineered alfalfa and its potential to affect non-genetic alfalfa posed a significant environmental impact necessitated further study, the court found that APHIS’s decision was “arbitrary and capricious” and ordered the agency to prepare an EIS. The court later enjoined the planting of Roundup Ready alfalfa from March 30, 2007, until completion of the EIS and reconsideration of the deregulation petition, except for those farmers who had already purchased the seed. In May of 2007, the court enjoined any future planting of the alfalfa. An order by the court in June, 2007 required disclosure of all Roundup Ready planting sites.
The 2008 appeal: Geertson Seed Farms v. Johanns, 2008 U.S. App. LEXIS 18752 (9th Cir. Sept. 2, 2008)
In continued litigation over the planting of genetically modified alfalfa, the Ninth Circuit Court of Appeals upheld a permanent injunction against further planting pending completion of an Environmental Impact Statement (EIS) by the U.S. Animal and Plant Health Inspection Service (APHIS). In Geertson I, the District Court for the Northern District of California ordered an injunction on a challenge of APHIS’s approval of the “Roundup Ready” seed brought by alfalfa seed farms, farm organizations and environmental groups. The USDA, Monsanto and Forage Genetics appealed, arguing that the injunction was overly broad and the district court failed to hold an evidentiary hearing prior to the injunction order. According to the appeals court, the district court correctly applied the traditional balancing test, and an evidentiary hearing after two earlier hearings was not required because the injunction had a limited purpose and duration—until completion of the EIS. Judge Smith issued a dissent, citing serious concerns with the scope of the injunction and claiming the court created a new exception to the evidentiary hearing requirement.
The 2009 requests: Geertson Seed Farms v. Johanns, 570 F. 3d 1130, 2009 U.S. App. LEXIS 13884 (9th Cir. Cal., 2009).
In the three year old Geertson Seed case, the Ninth Circuit refused a rehearing request on the injunction that halted planting of Monsanto’s Roundy Ready alfalfa. Geertson Seed Farms v. Johanns, --- F.3d ---, 2009 WL 1782972 (9th Cir. 2009). Monsanto had appealed the injunction issued by the trial court, which required completion of an Environmental Impact Statement by the USDA’s Animal and Plant Health Inspection Service (APHIS) before further planting of the alfalfa seed, but the court of appeals upheld the order last September in Geertson Seed Farms v. Johanns, 541 F.3d 938 (9th Cir. 2008). Monsanto then sought panel rehearing and rehearing en banc. In June, the majority denied the rehearing request and prohibited any further rehearing petitions, despite a sharp dissent on the appeal that had criticized the majority for creating a new exception to the need for a full evidentiary hearing prior to issuing an injunction.