Asgrow Seed Co. v. Winterboer, Dba Deebees - Oral Argument
Transcript:
Argument of Richard L. Stanley
Chief Justice Rehnquist: We'll hear argument next in Number 92-2038, Asgrow Seed Company v. Denny Winterboer, et al.--
Mr. Stanley.
Where's counsel?
You may proceed, Mr. Stanley.
Mr. Stanley: Thank you, Mr. Chief Justice, and may it please the Court--
This case is here from the United States Court of Appeals for the Federal Circuit.
The dominant issue in this case is how much of a farmer's crop in a protected novel plant variety can be sold as seed under the terms of section 2543 of title VII in the Plant Variety Protection Act.
That act provides exclusive rights to breeders of sexually reproduced plants.
Section 2543 provides specific and limited exemptions from the acts of infringement that are set forth in section 2541 of the same title.
The text of sections 2541 and 2543 can be found at adjoining pages 40a and 41a of the petitioner's appendix in Asgrow's petition for certiorari.
I will use these pages as a reference as needed during my argument.
Unknown Speaker: Will you repeat the pages number again?
Mr. Stanley: Yes.
It's 40a and 41a of the petition for certiorari.
Unknown Speaker: Thank you.
Mr. Stanley: They're also at pages 1a and 2a of the merits brief, but they're not on facing pages.
In construing section 2543, the Federal Circuit held that qualified farmers could sell up to 50 percent of their crop to others for use in reproductive purposes.
In other words, to use it as seed.
Because the language of section 2543 does not support that interpretation, that decision must be reversed.
For proper... in... what the Federal--
Unknown Speaker: May I ask a preliminary question?
2543, the right to save seed crop exemption section, there's a "provided" part of the sentence that says, "provided", and then there's a sentence following that.
Do I understand that Congress has now amended this statute and taken that proviso out?
Mr. Stanley: --All right, on October 6 Congress amended the first sentence of 2543 and removed everything after the word... outside the word provided through the end of the sentence, such that the first sentence now ends after as provided in this section.
Unknown Speaker: And that takes effect not retroactively, but sometime in the future?
Mr. Stanley: Right.
It's a prospective amendment.
It applies to those certificates that are applied for on the effective date of the act, which is 180 days after the day it was passed.
Unknown Speaker: So this case is not moot.
Mr. Stanley: No.
This case is not moot.
The both--
Unknown Speaker: But if it were to come before us under the new statute, it would govern, I suppose.
I mean, there wouldn't be this exception, this proviso.
Mr. Stanley: --Yes.
Under the new statute there is no right to sell saved seed at all by somebody who produces it.
Unknown Speaker: It completely eliminates the socalled brown bag exemption.
Mr. Stanley: It eliminates the right to sell such safe seed under the statute.
Unknown Speaker: Uhhuh.
Thank you.
Mr. Stanley: It probably--
Unknown Speaker: Does it continue to read,
"or for sale as provided in this section. "
or did they take out that, too?
Mr. Stanley: --No, they didn't.
They put the period right at the end of "section".
[Laughter]
Unknown Speaker: Who do you suppose--
--I'm not surprised.
--drafted this statute?
Do we know to whom we owe this debt of gratitude for perfect language?
[Laughter]
Mr. Stanley: I think maybe he intentionally remained nameless.
But basically the job I have today is to--
Unknown Speaker: Before you get into that, just one more question about the amendment.
Is it not true that the two remaining sentences after the proviso has been deleted did allow some sales of seed, so that there still is some room for the sale as provided--
Mr. Stanley: --Right.
The second sentence allows the sale of the protected variety to be used for nonreproductive purposes.
There's a distinction, basically, between... which isn't always consistent, the statute between basically using a variety as a crop and as a seed.
A seed is what is planted, used to reproduce the variety.
When the soybean, the variety at issue in this case, is sold for crop, it's sold to a mealmaker or somebody to be used for consumption purposes--
Unknown Speaker: --It goes into cereal, or beanbags, or something like that.
Mr. Stanley: --Right.
Then... the classic example we've been using is tofu, but that's use of it as a crop.
The saving seed aspect is when you use the soybean for purposes of replanting it on the farm.
In the case of soybeans, the actual soybean is the same, whether it's sent to the mealmaker or to the... you know, to be used for planting.
Other varieties under the act which this act obviously applies to, the distinction of saving seed is an intentional act.
For purposes of that in vegetables, for something like celery or tomatoes, the plant has to be allowed to go to seed.
At that point, the crop aspect, the tomato or the celery stalk, no longer is marketable for consumer reasons.
In other words, the saving of seed is an intentional act, because you had to let the seeds develop to the point where they could be replanted.
Unknown Speaker: But you concede that he can save the seeds--
Mr. Stanley: Right, by--
Unknown Speaker: --for some purposes.
Mr. Stanley: --Right.
That they--
Unknown Speaker: Well, for any purpose.
Can't... doesn't the... don't you concede that a farmer can set aside all the seed he has and decide later what he wants to do with it?
He saves seed because he isn't sure how many acres he wants to plant next year in soybeans, and how much he might need would depend on that, or he might think the price was going to go up, and if he saved the soybeans he'd get more later.
I suppose there are a lot of reasons for saving seeds.
Mr. Stanley: --There's a lot of reasons for saving soybeans.
The reason for saving seed, there's... by itself, the saving of seed is not an act of infringement.
The act of infringement arises when a farmer saves seed and sells seed, and sells seed above the amount that Congress set forth in the statute that was the quantity that he could save.
Unknown Speaker: The statute doesn't come into play until the sale is made.
Mr. Stanley: Right.
Unknown Speaker: And then you have to look at the purpose.
Mr. Stanley: Right.
It's... looking at the purpose at the time of planting is not sufficient.
You have to look at the farmer's purpose at the time of selling.
When a decision is made--
Unknown Speaker: At the time of sale.
Mr. Stanley: --Right.
Unknown Speaker: And the Federal Circuit, in deciding this case, placed a lot of emphasis on the word, marketed, didn't it, in the exception (3), is it, in 2541?
Mr. Stanley: Right.
The Federal Circuit defined the term, "marketing" very narrowly, and construed marketing as being selling, but only selling that involved advertising and sales representative or concentrated marketing aspects.
Unknown Speaker: And do you say the term, "marketing" necessarily includes selling?
Mr. Stanley: Yes.
Unknown Speaker: Then it's... marketing should be the broader term--
Mr. Stanley: It's marketing--
Unknown Speaker: --not the selling.
Mr. Stanley: --It's marketing... marketing at a minimum includes selling.
It includes selling, but is not limited to selling.
Unknown Speaker: If we agree with you on that, do we have to reverse?
I mean, is that what it turns on?
Mr. Stanley: If you agree with that, that affects the amount of seed that can be saved.
The determinative question here is how much seed can be saved and sold under this statute.
Unknown Speaker: May I interrupt you there?
I'm not sure how you get the amount from that, because if there was no violation of 2541(3), so that the farmer did not sexually multiply the novel variety as a step in marketing, including as a step toward selling, then theoretically his whole crop, I suppose, is subject to sale, is it not?
Now, we might very well say, or a jury might very well say, if he sold the whole crop, well, we know perfectly well he must have planted with that intent.
He must have sexually multiplied with that intent, and they might find a violation.
But in theory, if he did not plant with the intent specified in 2541(3), in theory his entire crop might be subject to sale without violation.
Isn't that so?
Mr. Stanley: No, Your Honor, that's not correct.
Unknown Speaker: Why not?
Mr. Stanley: Because the most that a farmer is going to use on his own farm is that that he would need to replant his farm.
If he's saving seed, particularly where he saves seed in a manner that requires an intentional act--
Unknown Speaker: Sure, but he might have planted a crop and decided at the end of the season that he's decided to get out of farming, so he doesn't... and if the market, let's say, for seed, is higher than the market for meal, he might say, I'm going to get out of the business completely, I'm just going to sell all my seed to my neighbors.
That wasn't my intent when I started out, but that's my intent now.
They can raise the stuff.
Where is that a violation?
Mr. Stanley: --That is a violation because he is selling more than is allowed under the statute.
If I can turn to the language of the statute, the key phrase in this is the phrase, "such saved seed".
The term 7, before the proviso, and one at line 13, after the proviso, and two points about 1) It's a particular and definable quantity of seed.
It is not any seed that is saved.
It's not any saved seed or any seed that's produced and saved.
The second thing is, it means the same thing both before the proviso and after the proviso, such that that term, "such saved seed" has the same meaning at both places in the statute.
The definition of what "such saved seed" means stems right from the opening clause of the statute.
Reading right at the beginning, it says,
"Except to the extent that such action may constitute an infringement under subsections (3) and (4) of section 2541. "
Now, that opening clause does not mean the farmer is free to do whatever he wants except for violating (3) and (4).
What it means is that the farmer can do that such action that is later described in that first sentence, provided that action does not violate (3) or (4).
That action that's described in that sentence is the saving of seed produced by him, and using such saved seed in the production of a crop.
Now, if you read subsection (3), it's an act of infringement to sexually multiply the novel variety as a step in marketing the variety for growing purposes, so if you look at how that's incorporated into the beginning of section 2543, that means, except to the extent that such action may constitute sexually multiplying the novel variety as a step in marketing.
It shall not infringe any right for a person to save seed produced by him and use such saved seed in the production of a crop for use on his farm or for sale as provided.
Unknown Speaker: No, but you've left off the... if saved seed in the production of a crop for use on his farm, you left out the words,
"or for sale as provided in this section. "
Mr. Stanley: Right.
Unknown Speaker: That's critical also, isn't it?
Mr. Stanley: Right.
The such saved seed can be used in the production or for sale as provided.
However, the such saved seed--
Unknown Speaker: And the question, then, is what is provided in this section?
Mr. Stanley: --Well, and also what is the amount of such saved seed.
That is a defined quantity, and the first part before you get to the proviso is what defines the amount of such saved seed, and what defines it is the opening clause.
You can save seed produced on the farm and use it to produce a crop, but only to the extent that it was not sexually multiplied as a step in marketing.
That--
Unknown Speaker: But why do you say it's only in the production of a crop, because in the very next phrase,
"or for sale as provided in this section. "
It seems to me either purpose describes a kind of such saved seed.
Mr. Stanley: --Right, but if such saved seed is a definite amount, you could either use it in the production of a crop, or sell it.
Unknown Speaker: But where do you get the definite amount?
Mr. Stanley: The definite amount comes from the opening clause.
Such--
Unknown Speaker: Because you're reading the phrase to mean, shall not infringe any right to save seed, and use such saved seed in the... (a) in the production of a crop for use on his farm, or (b) for sale.
That's your reading.
Mr. Stanley: --Right.
Unknown Speaker: So that the for sale necessarily relates back to the saved seed, and if that implies quantity, then the amount that can be sold is subject to that quantity.
That's your argument.
Mr. Stanley: Yes.
The such saved... the word "such" is what defines the quantity.
Unknown Speaker: Well, I mean--
Mr. Stanley: The quantity is... if I--
Unknown Speaker: --I think you place a lot of stress on the "except" clause,
"except to the extent that such action may constitute an infringement under subsection (3). "
If I understand your argument, it is that provision which prevents a farmer from saving seed for reproductive... for crop production purposes, other than his own crop.
Isn't that right?
Mr. Stanley: --Well, he's not going to--
Unknown Speaker: Without that "except", he'd be able to save as much seed as he wanted for crop production purposes, for future seeding purposes.
What prevents him from saving an infinite quantity for future seeding purposes is that if he set out with the intention of selling it to somebody else for seeding as opposed to using it for seeding himself, he would be violating the "except" clause.
That is, he'd be violating subsection (3), he'd be multiplying the novel variety as a step in marketing.
Mr. Stanley: --Well, basically a farmer can save for his own use no more seed than he'll need to plant his farm, sexually--
Unknown Speaker: Why is it on the facts of this case there's no dispute that the crop was grown specifically for the purpose of marketing all of it to other... excuse me, not marketing, selling it to other farmers?
There was no pretense that this seed was going to be either used for replanting--
Mr. Stanley: --Right.
Unknown Speaker: --on the farmer's own farm, or was going to be sold for nonreproductive use, that there was an admission that all of it was sold to other farmers.
Mr. Stanley: Right.
All the Asgrow variety, protected variety seed that was produced by the Winterboers minus the amount that was broken and not usable as seed, was sold to others.
I think they saved a small amount for a test plot of less--
Unknown Speaker: And it was sold to others as seed.
Mr. Stanley: --For use as seed for reproductive purposes.
Unknown Speaker: And getting back to Justice Scalia's question, or at least the section that he was focusing on, I don't understand why his cultivation of that crop was not a violation of the act under your theory, because this was sexually multiplying a novel variety as a step in marketing, but you told Justice O'Connor that you have to wait till the sale before there's a violation, and I don't understand that.
Mr. Stanley: No, no.
At the time where... one of the questions pointed out that he may wait until the following season to decide what he wants to do with it.
In that situation, you might have to wait till he decides to market it.
At the point where it's clear that he has a contract to sell all his production for seed, or something, at that point there is no amount of seed that can be saved.
However, the quantitative limitation in this case comes out of the fact that such saved seed is that which was sexually multiplied but not as a step in marketing.
Almost by common sense the most that can be is the amount he would need to replant on his own farm.
Unknown Speaker: Why?
Why couldn't he decide to... you acknowledge that vegetable farmers save 5 years' worth, typically.
Mr. Stanley: Right.
Unknown Speaker: Why couldn't the soybean farmer decide that he's... you know, I'm going to save 5 years' worth.
I'll not just plant the crop next year, I'll plant it the year... are you placing stress on the word, and use such saved seed in the production of a crop for use on his farm?
You mean only one crop, only 1 year's worth, is that--
Mr. Stanley: Production of a crop, use such saved seed in production of a crop shows that that's one way the saved seeds can be used, and I think that's the... that it helps limit the amount that can be sold.
Unknown Speaker: --Only 1 year's crop, you're saying.
Mr. Stanley: That can be sold.
You can save... the vegetable farmer can save seed, that the act of saving is not an infringement.
The act of infringement only comes where it's sold, and the sexual multiplication that led to having that seed to sell is a step in marketing that seed.
Now, I need to use a--
Unknown Speaker: You're saying that there is no limitation on saving, the limitation is on save plus sell.
Mr. Stanley: --Saving by itself, without--
Unknown Speaker: He can save as many seeds, either to plant himself or to sell for nonreproductive use.
There's no limitation on saving for those two purposes.
Mr. Stanley: --Yes.
Saving by itself, without more, without intent to market, or without a contract, or without turning around and selling more, if I can use a hypothetical, soybeans generally we've been using 1 acre, or 1 bushel per acre for planting.
The Winterboers have an 800-acre farm.
If they plant... they planted their 265 acres and got 12,000 bushels of soybeans.
Now, they only need 800 bushels to plant those 800 acres on their farm, so the most seed they can save to use on their farm is 800 bushels.
Unknown Speaker: What... even though they have more acreage on that farm?
Mr. Stanley: They have 800 acres.
That's the total acreage they have.
They planted only 265 acres in our variety.
Unknown Speaker: So the most they can save is enough for 800?
Mr. Stanley: For 800, because there's... they can't plant any more.
They only need 1 bushel per acre.
Therefore--
Unknown Speaker: Suppose they're thinking of buying the next farm.
Mr. Stanley: --If they buy... if they buy the next farm and at the time that they're saving the seed, at that point the saving is not a multiplication, but if that plan falls through and they don't have a farm, they can use as much saved seed as they need on their farm, and their farm is still 800 acres.
I mean, you have a situation where you may end up with a factual question if they really had that intent, but it's argued that in the vegetable farmer situation you can save 50 years' worth.
Soybeans cannot be saved beyond 1 year.
They're oilbased, and it's not practical to save them.
Vegetables, you can put them in the refrigerator, save them for 50 years, but the most you're allowed to sell in any 1 year is what you would need to produce a crop on your farm.
The vegetable farmers that appeared as an amicus before the Federal Circuit were not... they were saving for their own use, but they were not selling.
Without the act of selling, the seed certificate owner has no problem.
Unknown Speaker: But if you go out of business after 1 year and you have 4 years' worth of seeds left, you're saying, tough luck, you can't do anything but eat it.
Mr. Stanley: Well, no.
There would be a question on whether or not the person who may be bought your business would cede to your rights in that seed, but you can't--
Unknown Speaker: Oh, but--
--You couldn't sell to--
--you sell it to the developer.
He's going to put up condos.
You couldn't sell them to the neighboring farm.
Mr. Stanley: --You couldn't save more than would be needed for that farm.
That's the way--
Unknown Speaker: Four years worth of seed.
You've got to--
Mr. Stanley: --Right.
Unknown Speaker: --What do you do with tomato seeds--
Mr. Stanley: They may... I mean, you can always get the authorization of the owner.
There may be a situation where it can be explained there, or the owner, if it's of sufficient quality, may well buy it back from them.
There are ways to handle that.
But from the standpoint of how much seed can be sold, anything beyond what they need to produce on their farm... it assumes the rational farmer is going to save no more seed than what he would need to replant his own farm unless he was going to market it.
Unknown Speaker: --Mr. Stanley, am I correct in assuming that the practical difference, at least in the soybean business and barring unforeseen contingencies, between your position and your opponent is that you say he can only sell 1/45th of the seed he produces, and he says he can sell up to a half?
Mr. Stanley: Right.
That's what... for soybeans, for--
Unknown Speaker: In this particular--
Mr. Stanley: --the numbers involved in soybeans.
Unknown Speaker: --And then the second question, if you do have the time to address it before you finish is, could you tell me to what extent you think the court of appeals in its opinion relied, and presumably erroneously, on the sentence after the proviso that Congress has now deleted?
Mr. Stanley: I don't think the Federal Circuit relied on the second sentence, other than to come up with the construction of "for seeding purposes", which I think both parties are agreed modifies, obtained by... from the owner.
I think what the Federal Circuit did, the Federal Circuit went wrong right at the beginning, where they viewed the opening clause of the statute as being, except to the extent such action constitutes an infringement under subsections (3) and (4).
The Federal Circuit used that as an exemption saying that (3) and (4) still apply to farmers and the rest don't.
The key fact here is that "such saved seed" is a defined quantity that means the same thing when it's sold under the proviso, and it can only be that seed that was sexually multiplied, but not as a step in marketing.
Unknown Speaker: Let me ask you a question.
If... suppose we thought the Federal Circuit got it right, except insofar as it defined "marketing".
How does that affect the outcome?
Mr. Stanley: The Federal Circuit's definition of "marketing"--
Unknown Speaker: That would mean the farmer could do what, if we disagreed on the definition of "marketing"?
Mr. Stanley: --The Federal Circuit's treatment of the term "marketing" in itself is erroneous.
You have to look at the two references to section--
Unknown Speaker: How would that affect the outcome in this case at the bottom line?
Mr. Stanley: --It would affect the amount of seed that could be sold, because the broader the definition of "marketing" to include all selling, if this Court concludes that selling includes all forms of selling, I think the answer comes up to be, you can sell no more than what would be needed to replenish your farm.
Unknown Speaker: Why... if what Justice O'Connor supposes is correct, we disagree with them on marketing, why can't you win your case under 2541(3), that there was a sexual multiplication of novel varieties, a step in marketing, end of the case?
Mr. Stanley: That's what we have done here, but the question in this case is, they're claiming that they are under the exemption in 2543, and in order to determine the meaning of 2543, the scope of it, that's... they're claiming an exemption.
But for the exemption in--
Unknown Speaker: Yes, but I'm just asking you, suppose we think that the CAFC was basically correct except insofar as erroneously defining marketing, what's the bottom line outcome here, if that's our view?
Mr. Stanley: --If marketing has a broader definition than what's at the Federal Circuit, the amount of seed that can be sold by a farmer is less than what the Federal Circuit held.
However, the Federal Circuit--
Unknown Speaker: But more than what you say.
Mr. Stanley: --The reason I'm having difficulty answering that question is, the Federal Circuit, by misconstruing the opening clause of the statute, their definition of marketing is basically out on its own, because it doesn't follow the structure of the statute, of the two references to 2541(3).
Therefore, the Federal Circuit's interpretation in my view is so divorced from the language of the statute that question doesn't solve the problem.
Unknown Speaker: You really haven't answered my question, and if what we think is that the only error made below was in the definition of the term, "marketing", what do we do with this case, and how does it affect the outcome at the bottom line?
Mr. Stanley: I think that the answer to that, I think that at a minimum the case should be remanded at the Federal Circuit to determine that issue, and basically let them resort out the issue under a proper interpretation of "marketing".
I believe that when "marketing" is given its proper interpretation, that our position that you can sell no more than needed to replant a farm is appropriate.
Unknown Speaker: Even given the circuit's opinion and interpretation of the "except" clause in the first few lines of the statute?
Mr. Stanley: I think the Federal Circuit's interpretation of the "except" clause cannot stand any scrutiny at all.
Unknown Speaker: No, what I--
Mr. Stanley: --and I think that's what caused the problem with their interpretation.
If marketing still applies under the Federal Circuit's guideline, that a farmer is still subject to prohibitions against marketing, I think the Winterboers would be liable in this particular case, but I think the structure of the statute would not be solved for all other PVPA varieties.
If I can reserve the remaining moments I have for rebuttal--
Unknown Speaker: --Very well, Mr. Stanley.
Mr. Seamon, we'll hear from you.
Argument of Richard H. Seamon
Mr. Seamon: Thank you, Mr. Chief Justice, and may it please the Court--
I would like to begin by addressing a question that arose previously, which is whether, if this Court disagrees with the Federal Circuit's interpretation of the term "marketing", what the proper disposition of the case should be.
In that event, the case should be reversed, because in that situation, it's quite clear, if the Court rejects the very restrictive definition of... interpretation of "marketing" that the Federal Circuit adopted, respondents' sales of soybeans constituted marketing under any reasonable interpretation of that term.
The Federal Circuit's restrictive definition that would say that "marketing" only involves the use of middle men and extensive advertising isn't compatible--
Unknown Speaker: And you disagree with that.
You think--
Mr. Seamon: --We certainly do.
Unknown Speaker: --that at a minimum, "marketing" is the larger term, and it includes selling.
Mr. Seamon: That's correct.
The way in which "marketing" differs from "selling" is that marketing includes certain activities that lead up to the sale, preparing the goods for sale in the market.
Unknown Speaker: Do you agree with the CAFC except insofar as it defines marketing, or do you think it made other errors?
Mr. Seamon: Our disagreement is not limited to that point, but we... but I do want to emphasize that we think that the Federal Circuit was wrong on that point, and in this case, it's particularly clear that what respondents did violated subsection (3) of section 2541.
They were able to sell over 10,000 bushels of soybeans in a single crop season.
Unknown Speaker: May I interrupt you, Mr. Seamon, to help me with one point?
If one... and I think this is way the Federal Circuit... construes the word "marketing" to embrace all kinds of commercial distribution other than brown bag sales to other farmers if that were a correct reading of the word "marketing", then the Court was right, wasn't it?
Mr. Seamon: I'm not sure that that's right, because the Federal Circuit did make other errors.
Unknown Speaker: They made other errors, but the result would be correct, if one read it that way, and I know you disagree with that reading, and it is kind of counterintuitive, but if you do construe "marketing" as to cover the universe other than brown bag sales, then I think the judgment should be affirmed.
Mr. Seamon: I believe that's correct, but I'd want to do more--
Unknown Speaker: I understand.
Mr. Seamon: --and I'll try to do that in the course of addressing the other errors that the Federal Circuit made.
One of the other errors that we believe that the Federal Circuit made is in its reading of the language that comes immediately before the word 40a and 41a of the petition for writ of certiorari.
We believe that the phrase,
"for sale as provided in this section. "
modifies the word "crop", so that what it allows is a use of the crop for sale as--
Unknown Speaker: Where are you reading now?
Mr. Seamon: --I am reading the language of section 2543 on page 41a, that immediately precedes the italicized word, "proviso"... "provided".
As we read the term,
"for sale as provided in this section. "
it modifies the noun, "crop".
It specifies one of the uses to which the crop can be put.
For that reason, under the language preceding the proviso, there is only one use of saved seed, and that is its use in the production of a crop.
The crop may then be used in two different ways.
It may be used on the farm, or it may be sold as provided in the balance of the section, and we understand, and for that reason we believe that "such saved seed" refers only to such seed as is saved for the purpose of producing a crop.
Unknown Speaker: On his farm.
Mr. Seamon: On the farm.
Unknown Speaker: What if he saves enough seed for 5 years' worth of crops?
Mr. Seamon: We would rely in that case on the term, "a crop" to suggest that--
Unknown Speaker: One season.
Mr. Seamon: --what can be sold is one season's worth of crop.
Now, we recognize--
Unknown Speaker: Do you agree that this is an academic question, because the seeds don't last for more than a year?
Mr. Seamon: --I think, Justice Ginsburg, it depends on the variety that you're speaking about.
It may well be that soybeans have a limited useful life, but other crops--
Unknown Speaker: Unlike vegetables, which you can keep for 5 years, in some cases?
Mr. Seamon: --That's my understanding.
That's correct.
But in any event, it is correct that a farmer can save any amount of seed that he or she wants.
The rights of the owner are only implicated when the saved seed is used in some way, and there are a couple of different kinds of uses that may violate the owner's rights.
One use is in the production of a crop as a step in marketing the crop for sale as seed.
In this case, respondents clearly marketed, used their seed to produce seed for the purpose of selling the resulting seed as seed.
They never had any intention of doing anything else with it, and in fact all of the... all of their production was sold for use as seed.
Unknown Speaker: Well, they had violated it even before the sale, then, hadn't they?
Mr. Seamon: The production itself violated subsection (3), and I would go on to say that even though the proviso specifies that it operates without regard to subsection (3), all the proviso does is to authorize the sale.
It doesn't speak to the question of whether the precedent production of the crop was a violation of the owner's rights.
Unknown Speaker: Very cleverly drafted, it really is, isn't it.
[Laughter]
Mr. Seamon: I won't... I will concede the point.
[Laughter]
The reason that we believe the amount of seed that may be sold under the proviso is limited is essentially because it can be put only to one use in the production of a crop, and is that amount the sale of which is permitted under the proviso.
We think that the primary intent of the proviso was to allow a farmer who has held back enough seed from one year's crop to plant the next year's crop to sell the seed if the farmer's planting plans change.
The Federal Circuit's interpretation of the proviso allows farmers to go beyond that narrow but still very practical purpose and compete directly with the owners of the novel variety, and that clearly could not have been Congress' intent.
Unknown Speaker: What about the second point?
Nobody's even talked about that.
Is that not in the case?
There is a point on which you disagree with petitioners, and that is--
Mr. Seamon: Yes.
Unknown Speaker: --Labeling.
Labeling, right.
Right, whether you have to give notice to the person to whom you sell.
Mr. Seamon: That's correct.
Unknown Speaker: Is that in the case?
Do we have to decide that?
Mr. Seamon: It is in the case.
We suggested in our amicus submission that the issue has not been completely briefed below.
Although it's properly before the Court.
If the Court rules for the petitioner on the question of how much saved seed can be sold under the proviso, it wouldn't be necessary for the Court to reach the second issue, because the second issue only arises assuming that a sale is authorized under the proviso.
If the Court holds these sales were not authorized, it doesn't come up.
If... when a sale is authorized under the proviso, the second question is whether notice has to be provided to the purchaser of the brown bag seed that the seed is a protected variety under the statute.
We find that issue to be a difficult one, although on balance we do agree with respondents that notice isn't required.
I would just--
Unknown Speaker: You say it is not?
Mr. Seamon: --That notice is not required, that's correct.
Essentially, we believe there is a lot of force to petitioner's argument that there are some types of infringing conduct that are so unrelated to the act of selling a crop that authority for the sale doesn't encompass authority to do the further act.
As an example, under subsection (2) of section 2541, it violates an owner's rights to import or export seed, so we would say that it would violate subsection (2) for a farmer to export seed for sale to a farmer in another country, even though the sale was otherwise... met the requirements of the proviso.
Unknown Speaker: Because that's too remote from selling, whereas notice is not too remote.
Why make us draw lines like that?
Why not just say, selling is selling, and you're exempted from that, but all the other requirements continue to apply?
I don't know why exportation is more remote than notice is.
Mr. Seamon: Well, the... the exportation is, indeed, very remote from the act of selling, but what subsection (6) and the notice requirement--
Unknown Speaker: Why?
I mean, you've got to sell to somewhere.
If you sell abroad, it's exportation.
Mr. Seamon: --There is a lot of force to petitioner's argument that sale is one thing and providing notice is another.
The reason that we ultimately, on balance, side with respondents on that point is just that subsection (6) doesn't just talk about giving notice, it talks about dispensing a novel variety.
It contemplates that when the novel variety is dispensed in some form, including by sale, the selling farmer should provide notice to the purchasing farmer that the seed is a protected type.
But it's important in this connection to note that in the proviso itself, Congress required selling farmers to comply with State laws governing the sale of crops, and many of those State laws go to labeling and providing certain information to the farmer in connection with the sale.
We think that because Congress actually gave attention in the proviso itself to the information that purchasing farmers should have regarding the variety, if it had intended purchasing farmers to have the further information that this seed is a protected variety, it would have spoken to that in the proviso itself.
Unknown Speaker: This applies to all State laws, not just State laws regarding notice, so your argument really, if carried to its conclusion, would say all State laws are covered, but none of the things listed in 2541 are covered.
You may answer the question.
Mr. Seamon: It is true that it covers all State laws--
Unknown Speaker: There was a question.
Mr. Seamon: --Most of the State laws governing the sale of seed have to do with the labeling in which... on which the seed is sold.
Unknown Speaker: Thank you, Mr. Seamon.
Mr. Bode, we'll hear from you.
Argument of William H. Bode
Mr. Bode: Mr. Chief Justice, and may it please the Court--
Preliminarily, I'd like to note that the record establishes that the Winterboers had no purpose in mind for their crops when they planted their crops.
That is in the deposition of Mr. Winterboer.
Unknown Speaker: I don't know what you mean by that.
They had no purpose in mind--
Mr. Bode: They had no--
Unknown Speaker: --just went out--
Mr. Bode: --purpose with respect to whether they would sell the seed later for reproductive or nonreproductive purposes.
That purpose wasn't established until later, when market conditions at the time of harvest were revealed.
I'd also like to correct a statement--
Unknown Speaker: --But can that be true?
I mean, didn't they produce enough seed so they couldn't have used it up in 20 or 30 years, and you can't save seed that long.
Mr. Bode: --Well, first of all, you can save seed for years and years, not just 1 year, certainly for 4 or 5 years.
Unknown Speaker: Are you then disagreeing--
Mr. Bode: Secondly, you can always--
Unknown Speaker: --Are you then disagreeing... not knowing much about farming, we were told by one person that the soybean seed spoils in a year or so.
Mr. Bode: --That's incorrect.
Unknown Speaker: And you're saying it saves... you can save it and still retain its quality for how long?
Mr. Bode: That is correct.
Unknown Speaker: For how long?
Mr. Bode: Four to five years.
Unknown Speaker: Four to five years?
Mr. Bode: Yes.
The only effect is the germination rates deteriorate to some extent over time.
Unknown Speaker: But is it not true that the amount of seeds they produced was far in excess of enough for a crop for four or five... far in excess of four or five crops?
Mr. Bode: That is correct, Your Honor.
Unknown Speaker: So then is it not patent that they had a purpose in mind that they would sell some of it to their neighbors?
Mr. Bode: No, Your Honor, because they could sell all of their harvest for consumption purposes.
Now, the other point... and I want to elaborate on that--
Unknown Speaker: I just don't understand that answer, because you say they did produce enough seed they couldn't use it all for their own production, even in 4 or 5 years, and they didn't do it inadvertently, did they?
I mean, they didn't grow the amount inadvertently?
Mr. Bode: --Justice Stevens, that ties in with the interpretation now propounded of this text by Asgrow.
This was an interpretation that was not discerned and argued by Asgrow before the Federal district court, or the Federal Circuit panel, and it wasn't discerned by 9 of the 10 amicus... amici parties below.
Unknown Speaker: Well, that may be, and it may not be controlling, but it just is clear, it seems to me, that they must have contemplated selling some of their seed at the time they planted this crop.
Mr. Bode: They contemplated selling their seed either for reproductive or nonreproductive purposes.
Unknown Speaker: Right.
Mr. Bode: The point is this, and it's a point that was broached by Justice O'Connor, in the Monsanto brief below, which invented this interpretation which is now adopted by Asgrow and presented before this Court, there are two premises that are necessary as a matter of textual analysis.
The first is that "marketing" has to equal "selling", and the second is that "crop" has to be limited to the amount of seed to plant an ensuing crop.
By way of an example, if a farmer plants 1 acre and harvests 45 bushels of soybeans, then under the recently found interpretation of this text by Asgrow, it can save only 1 bushel, but what happens to the other 44 bushels?
Unknown Speaker: They said you could save any amount but couldn't sell any amount for sexual multiplication purposes.
Mr. Bode: Their analysis requires that the term 1 bushel.
In fact, Your Honor, Monsanto in its brief makes this statement
"If saved seed does equal harvested seed, then the right to save seed would be unlimited in scope, as long as a farmer were selling to another farmer. "
That's admitted by Monsanto, whose--
Unknown Speaker: You can--
Mr. Bode: --argument was adopted.
Unknown Speaker: --You can sell seed to make oil out of, can't you, to be consumed?
Mr. Bode: Absolutely.
Unknown Speaker: But that's not reproductive.
Mr. Bode: Absolutely, and let's assume that in our example 45 bushels of soybean are harvested.
Then the issue is, how many can be sold for reproductive purposes, and the statute tells us that.
It tells us that so long as the primary farming occupation is the sale of the soybean for nonreproductive purposes, the farmer can sale... can sell the seed for growing purposes.
Note, if Asgrow's new interpretation is correct, that phrase, that phrase or that test, whether... what is a farmer's primary growing occupation, would be written entirely out of the act, because under our example, only 1 bushel--
Unknown Speaker: Well, it now has been written out of the act.
Mr. Bode: --It has been now by Congress, prospectively only.
Unknown Speaker: Well, on your view, then, if a farmer made 51 percent of his income from growing melons, and he devoted the remainder of his farm to growing soybeans, he could be in the brown bag business with 100 percent of his soybean crop because he would still be predominantly in the business of... or the predominant source of his income would be that of farming rather than selling.
Mr. Bode: Yes.
We believe that the Federal Circuit correctly parts... parses the statute, and it correctly interpreted the primary farming occupation be satisfied when a farmer sells the majority of his or her crop for nonreproductive purposes.
Unknown Speaker: I'm puzzled.
I thought that you lost at least in part in the Federal Circuit because your view of this was, as long as it's a farmer selling to another farmer, you're home free, as long as most of what both buyer and seller do, grow crops to sell the product, but the Federal Circuit cut you back and said... what percent did they allow?
Mr. Bode: 50 percent or more.
Unknown Speaker: So you were arguing 100 percent.
Mr. Bode: No, we were not, Your Honor.
Unknown Speaker: You weren't?
Mr. Bode: No, Your Honor.
Unknown Speaker: What were you arguing?
Mr. Bode: First of all, we had agreed for purposes of the appeal that the primary farming occupation of the Winterboers, the test was satisfied.
As we note in footnote 3, the Winterboers sold more than 50 percent of each of the protected varieties for nonreproductive purposes.
Therefore, the Winterboers have satisfied the primary farmer occupation test as laid down by the federal Circuit.
Unknown Speaker: I thought... correct me on this.
I thought the Federal Circuit had made the primary farming occupation test specific to each crop.
Mr. Bode: That is correct--
Unknown Speaker: Is that correct?
All right.
Mr. Bode: --And I want to--
Unknown Speaker: And was that your position from the beginning, so that you conceded even in the district court that you were in violation of the statute in part?
Mr. Bode: --It was never conceded.
It wasn't an issue before the appellate court because both parties stipulated that Winterboers satisfied the primary farming occupation, and they do under the test now established by the Federal Circuit, because the Winterboers with respect to each of the two varieties of seed never sold for growing purposes more than 50 percent of the crop, so the sales of the Winterboers are protected--
Unknown Speaker: Mr. Bode--
Mr. Bode: --according to the Federal Circuit test.
Unknown Speaker: --I don't understand what you said just before we got into this discussion that under petitioner's interpretation the limitation to primary farming occupation is irrelevant.
Why is that so?
Mr. Bode: Because under petitioner's interpretation, only the most trivial amount of seed could be sold for reproductive purposes, in our example, just 1 bushel.
Therefore, there would never be any occasion to inquire whether the farmer... primary farming occupation test was satisfied, because in every instance, the farmer would have sold the majority of his or her crop for nonreproductive purposes.
Their interpretation writes out of the act the primary farming occupation test.
Unknown Speaker: Only if... only if you apply that provision cropbycrop, rather than across the board.
Well--
Mr. Bode: I think--
Unknown Speaker: --Go ahead, answer Justice Scalia's question.
Mr. Bode: --Justice... yes.
Justice Scalia, regardless of whether the analysis is cropbycrop, that provision is written out of the statute by the interpretation of Asgrow, because you never have an occasion to inquire what the primary farming occupation would be, because under the interpretation that they now press before this Court, you'd only sell 1/45th, you only could sell 1/45th of your crop.
Unknown Speaker: Where is the term primary farming occupation found in the statute?
Mr. Bode: Your Honor, it's found in the proviso in the first section, and it says, provided without regard to section 2541, subsection (3), a farmer whose primary farming occupation is the growing of crops for nonreproductive purposes may sell to other farmers similarly situated for reproductive purposes.
Unknown Speaker: But he--
--How do we know who that is?
Is it the farmer when you look at the entire farm and see the whole production of the farm and ask how much is sold--
Mr. Bode: We--
Unknown Speaker: --for reproductive purposes?
Mr. Bode: --Justice O'Connor, we accept the strict interpretation, the strict reading of the primary farming occupation test by the Federal Circuit.
That is, it's a test that's applied variety by variety, based upon the majority of the sales made.
Unknown Speaker: Even under their reading, that definition would at least limit the class of eligible purchasers, though.
You say it would be totally useless, but not as to defining--
Mr. Bode: That is correct.
That is correct, Your Honor.
I'd like to... I'm not sure that I have properly explained the crucial consequence of accepting that "saved seed" means the whole harvest.
You see, under Asgrow's interpretation, they must conclude that "saved seed" means only the amount of seed to plant the next crop.
Because otherwise, when a farmer later makes the election to sell to other farmers, assuming he's qualified to do that, unless 1 bushel in our example, unless it means that, then the farmer would be able to sell the whole harvest, except to the extent that he would be bound by the primary farming occupation test.
And that's admitted by Monsanto at page 10 in their brief, and that's the argument that now Asgrow propounds before this Court, and it's interesting to note in the motion for summary judgment submitted by Asgrow before the Federal district court, they admit that 6 on their brief.
And where do we get that result textually?
By the phrase, or for sale as provided in this section.
There are two sales provided in the section.
In the first sentence, there's the sale from farmer to farmer for reproductive purposes, and the second sentence, the sale for consumption.
Those are the two sales provided by Congress.
Unknown Speaker: --You've lost me.
What are the two sentences?
You consider the proviso a separate sentence?
Mr. Bode: No.
That's in the first sentence.
Unknown Speaker: Okay.
Mr. Bode: So the first sentence provides for sales by farmers for reproductive purposes.
Unknown Speaker: Yes.
Mr. Bode: And the second sentence provides for sales by--
Unknown Speaker: A bona fide sale for other than reproductive purposes, that's the sentence you're--
Mr. Bode: --For consumption.
Unknown Speaker: --Mr. Bode--
Mr. Bode: So we can see that as a matter of textual analysis, "saved seed" must include the whole harvest.
Unknown Speaker: --Mr. Bode, Judge Newman called this an ungainly statute, and I suppose that's a proposition that everyone would agree with, and if we are of the mind that there's more than one plausible reading to this statute, your way is plausible, Asgrow's way is plausible, the district court's way, how do we decide which is the one that Congress meant?
Mr. Bode: Well, first of all, I would disagree, Justice Ginsburg, that Asgrow's interpretation is reasonable.
I don't think it is.
I think it's very, very contrived and resultsoriented.
Unknown Speaker: Then let's just stay with Judge Rader and Judge Newman.
Mr. Bode: I think that the--
Unknown Speaker: If we think both of their interpretations are reasonable interpretations, interpretations that the words of this ungainly statute will bear, then how do we decide?
Mr. Bode: --Justice Ginsburg, the unanimous Federal Circuit panel had a very straightforward and reasonable interpretation, and I think that's an interpretation that should commend itself to this Court.
In that respect, I'd like to return to this--
Unknown Speaker: That doesn't answer my question if we think they're both reasonable.
The Federal Circuit--
Mr. Bode: --I think--
Unknown Speaker: --did divide 6 to 5 whether to hear this en banc, did they not?
Mr. Bode: --I would suggest, then, that the... that this Court should defer to the Federal Circuit for other reasons.
Among those reasons is--
Unknown Speaker: If we... to accept your position, must we say, Judge Newman's interpretation is wrong, that there is a right interpretation of the statute, and it's your interpretation?
Mr. Bode: --I think you should defer to the Federal Circuit panel, Your Honor, because that is the interpretation that was understood by the farming industry for the last two decades.
That's the interpretation that was issued by the director of the Plant Variety Protection Office.
Unknown Speaker: But if we should think that Judge Newman's interpretation is a plausible interpretation, then you say one thing we might take into account is what the farming community thought the statute meant.
Anything else?
Mr. Bode: Yes.
I think the Court should consider that the balance between the rights of farmers and breeders struck by Congress appropriately reflected the limited showing that an applicant must make to obtain a certificate.
An applicant need not show that this new variety promotes agriculture, science, or the arts, or that it's novel, or that it's not obvious, or that it has utility, even, the customary showings that have to be made for a patent.
Rather, the most inconsequential change of a morphological aspect of a plant, such as the color or shape of its leaves, qualifies the applicant for a certificate.
When we appreciate that, that's not unreasonable for Congress to have retained for farmers their ancient right to sell seed to other farmers.
Unknown Speaker: Well, what do we do if we think that the Federal Circuit's definition of marketing was wrong, that it does include selling?
Mr. Bode: I have two responses to that, Justice O'Connor.
First, if you look at the test, the proviso at the... and the first phrase of the proviso says,
"without regard to 2541 subsection (3). "
so whatever bundle of activities comprise marketing, Congress accepted farmertofarmer sales from those infringing acts.
But I suggest that the reading of the Federal Circuit is very reasonable.
Let me explain why.
Unknown Speaker: I don't understand your point.
Don't you think "without regard to", it means "despite"?
Don't you think "without regard to" means "despite"?
Mr. Bode: No, I don't.
I think it means--
Unknown Speaker: No?
Mr. Bode: --without regard to these infringing acts, sales can be made, that you can make sales, if you're qualified, to another farmer for growing purposes without encroaching any right established by 2541, subsection (3), and that's marketing.
Unknown Speaker: That's despite.
Despite... right, okay.
Mr. Bode: But I think here's the... what the Federal Circuit did is very reasonable.
The Federal Circuit interpreted that term, "marketing", to mean coordinated and extended marketing activities.
The separate use--
Unknown Speaker: Well, I just asked you, what if we disagree with that, and I have not heard an answer.
Mr. Bode: --It has no consequence.
You can still uphold the Federal Circuit, because whatever bundle of rights comprise "marketing", farmers are excepted from them by the first phrase of the proviso in the section.
That is, that without regard to those infringing acts--
Unknown Speaker: Yes, but--
Mr. Bode: --the farmer can make these sales.
Unknown Speaker: --that's assuming that the definition of 2541(3), right, which I'm not sure it does.
Mr. Bode: It does not, and that's why the interpretation of the Federal Circuit was reasonable.
Coordinating activities by agribusinesses and wholesalers is prescribed, but not the limited marketing activities of farmers incidental to farmertofarmer sales.
For example, a farmer could put out a seedforsale sign on his property and entertain telephone inquiries about the nature of the seed he has for sale.
That might be a marketing activity, but it wouldn't be the concerted and extended activities, the use of middle men, that's prescribed under the Federal Circuit's opinion, and under the Fifth Circuit's opinion in Delta Pine.
Therefore, that's a way of rationalizing every phrase in the section, making every phrase operative, and it comports fully with the Federal Circuit's interpretation, extended, coordinated selling activities involving the multiplication of seed for growing purposes is prohibited, and a farmer cannot enter contracts with farm cooperatives and cotton gins and wholesalers to multiply seed for that purpose, but a farmer can engage in these incidental activities, incidental selling activities associated with selling seed to another farmer directly.
Unknown Speaker: Mr. Bode, you made an argument a little earlier, I've been trying to figure it out, based on the sentence... I guess you say it's the second sentence, a bona fide sale for other than reproductive purposes made... I think you said that under the petitioner's interpretation that becomes redundant, was that your point, but why--
Mr. Bode: That's our point.
What happens--
Unknown Speaker: --Why isn't it redundant under yours as well?
I mean, it seems to me this is just an unnecessary assertion in the statute that so long as you don't expect it to be used for reproductive purposes, you're not going to be held liable, but that would apply to a sale of more than 50 percent by, you know, your interpretation as well, wouldn't it?
Mr. Bode: --We concede that wording is superfluous, and it's an artifact of the--
Unknown Speaker: Under anybody's interpretation.
But really... really, you were saying that the first limitation is controlled by "such saved seed", and in this second sentence that Justice Scalia is now focusing on, they do not use the phrase, "such saved seed".
Mr. Bode: --That is correct.
Unknown Speaker: So the equivalency you seek between the two sentences is absent.
Mr. Bode: But as provided by the phrase, "or for sales provided herein", and in petitioner's brief, they concede before the Federal district court the saved seed encompasses seed sold under the second sentence.
Unknown Speaker: Well, it encompasses, but is not limited to it, that's the point, and that was the point you were trying to make, and I think the argument fails because of the absence of that phrase in the second sentence.
Mr. Bode: We disagree, again, because the specific phrase, or for sale as provided in that section, but more broadly, because of this problem... this problem, Justice Kennedy What is the farmer to do with the other 44 bushels?
Unless the farmer is exempted from those infringing acts in 2541, which is provided in the first sentence, there's very little he can do with it, so if the farmer is to sell--
Unknown Speaker: Well, that's not true with soybeans.
That's not true--
Mr. Bode: --seed under the second sentence, he has to be relieved of many or most of the infringing acts.
Unknown Speaker: --He can sell them for soybean--
Mr. Bode: For soybean consumption.
Unknown Speaker: --May I ask you one--
--And that's what most people do, for heaven's sakes, they grow soybeans to sell as crop.
I mean, the brown bag thing is really kind of a smaller exception, isn't it, if you look overall?
Mr. Bode: It is.
The Winterboers operate on the fringe of the market.
They're selling to farmers who are willing to buy seed that's perceived to be inferior.
Generally, farmers aren't going to trust their livelihood to unproven seed without the imprimatur of a recognized seed company.
Unknown Speaker: What is the difference in the price?
They're selling it as brown bag seed.
What would they get for it, as opposed to they're selling it as soybean for nonreproductive use?
Mr. Bode: The record here discloses that the Winterboers received approximately eight dollars and fifty cents 8.50 for their soybeans, whereas Asgrow was charging 15 to 16 dollars a bag.
Unknown Speaker: But if they were selling it... if the Winterboers were selling it to sell to animals or for human consumption, what would be the price they would--
Mr. Bode: Approximately 5 to 6 dollars a bag.
Unknown Speaker: --So they get much more selling it as seed.
Mr. Bode: They get essentially the amount which represents the labor added for the cleaning activity that's necessary prior to selling it for reproductive purposes.
Justice Kennedy, if I might, if you look in that second sentence again, you'll see there's a notice provision.
In other words, it springs into life a notice provision if sales are made outside of the bona fide charter.
I might suggest to you that--
Unknown Speaker: That's obtained by the authority language?
Mr. Bode: --Yes.
I might suggest to you that under the Asgrow's interpretation, that phrase is superfluous.
It certainly contradicts their interpretation, and it's consistent with our interpretation that that--
Unknown Speaker: Is the phrase you're focusing on "obtained by authority"?
Mr. Bode: --Yes.
If there's... it's in the last sentence.
The phrase that--
Unknown Speaker: Oh, the last sentence.
Mr. Bode: --It's the phrase that states--
Unknown Speaker: "A purchaser who diverts seed from such channels-- "
Mr. Bode: "# shall be deemed to have notice. "
You see, that's consistent with our interpretation, because there's no notice required.
Why?
Because the first sentence exempts that infringing act with respect to seed sold for reproductive purposes, seed sold in the second sentence.
If that weren't so, then you would... you would have no purpose for that last sentence.
It would... it would be meaningless.
Unknown Speaker: --Well, I'm not sure that that's so.
I'll study that.
But the third sentence could also apply to the first sentence, could it not?
Mr. Bode: That's my point.
The first sentence and the second sentence and the third sentence are all one, unified section.
There's no independent, separate crop exemption, as Asgrow suggests at page 5 of its brief, and therefore it's inapplicable to this case.
Chief Justice Rehnquist: Thank you, Mr. Bode.
Mr. Bode: Thank you very much, Your Honor.
Chief Justice Rehnquist: The case is submitted.
