I’m sure that our readers have heard of the case of McFarling, who was a farmer and purchased seeds from Monsanto.Being a farmer, McFarling was required to abide by a license agreement with respect to the seeds he purchased.Basically, McFarling agreed to only use seeds for a single crop, meaning that was unable to do what farmers have done for thousands of years: save seeds from one crop to replant next season.
This case evidences the power that agreements can have.As with everything in life, Caveat Emptor.McFarling conceded that he violated the terms of the agreement.How often do you read the terms and conditions (T&Cs) of websites, software, medicines, lawnmowers, etc.?If you’re like the majority of us, probably not very often, and if you do it is a cursory review.
While Monsanto seeds are patented, Monsanto leveraged other legal constructs to bind end users of their products.The cost to litigate a patent can be astronomical.Conversely, the cost to enforce a simple license or contract is stepwise cheaper, all things considered.Thus, while patents are indeed important, it is critical for a company to have the correct terms and agreements in place with their customers.There are legitimate reasons one would go through the expense of enforcing a patent.For example, Monsanto may need to prevent another large company from copying their seeds and bringing them to market.Suing a company for patent infringement brings at least the potential to recover meaningful damages.How about suing farmers or other end users? You will rarely see lawsuits directed to end users.Why?As with most everything in the legal world, it all boils down to who has ability to pay.What is the ROI on Monsanto suing a farmer for patent infringement?Probably zero or likely a net-negative.Also, the likelihood of obtaining an injunction in a patent case is low due to Supreme Court meddling in patent law.You are far more likely to get an injunction in a non-patent cause of action like breach of contract.In this case the license enforcement makes sense tactically.Monsanto wanted to enforce its rights against farmers violating their terms without having to resort to costly patent enforcement.Had Monsanto only owned patents, their only avenue to stop farmers from reproducing their seeds or reusing (from year to year) their seeds would be sue the farmers for patent infringement.There are many other patent legal issues undergirding this suit that we will encounter in future articles. Thus, keep in mind that different vehicles or legal constructs can be used for different purposes.A company should have a diverse toolset for dealing with different legal issues that may arise.Having the right assets in place with the right parties can give your company a competitive advantage.
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