A Bumpy Road Ahead for Producers, Buyers and Sellers of Genetically Modified Organisms

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August 9, 2013
Ruth Robinson
SmithAmundsen Agribusiness Alert

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Genetically modified organisms (GMOs) are at the center of numerous ongoing or recently decided lawsuits in the United States. These cases will prove important to the grain industry because genetically modified crops, which are often made herbicide-tolerant, are increasingly common.

For example, in 1997, only 17 percent of all U.S. soybean acreage was herbicide-tolerant, as compared to 2012, where 93 percent of all U.S. soybean acreage was herbicide-tolerant. Due to the prevalence of genetically modified grain, the results of these recently decided and pending suits may impact numerous industries that come into contact with GMO crops, including grain elevator operators.

Possession and Use of Unlicensed GMOs

On May 13, 2013, the Supreme Court issued a 9-0 decision in Bowman v. Monsanto. Vernon Hugh Bowman, an Indiana farmer and the Petitioner in this case, participated in “saving seed,” a process in which a farmer sets aside surplus seed from the previous year to seed the next year’s crop. Bowman saved seeds from a crop he planted using grain from a local elevator; however, because Bowman’s seeds contained the Roundup Ready® trait, making them herbicide-tolerant, the Supreme Court determined that Bowman infringed upon Monsanto’s Roundup Ready® patent. In its holding, the Court extended patent protection to seeds purchased from a local grain elevator, which contained Monsanto’s patented Roundup Ready® trait.

Nearly a month after the Supreme Court decided Bowman, the U.S. Court of Appeals for the Federal Circuit issued a decision in a case involving trace amounts—rather than a full crop—of GMO. In this decision, issued on June 10, 2013, the court upheld the dismissal of a declaratory judgment action brought by farmers and seed sellers against Monsanto. Monsanto made a public announcement assuring that it would not sue growers, seed sellers, or other grain-handling organizations for the inadvertent use of “trace amounts” of its patented GMOs. The court considered Monsanto’s assurance an appropriate reason to dismiss the lawsuit since no danger of patent infringement existed so long as Monsanto honored its promise, which the court judicially bound Monsanto to honor. However, the court recognized that the scope of Monsanto’s promise was only limited to growers and sellers of “trace” amounts of genetically modified seed. It remains undetermined what liability exists for possession of more than a “trace” amount of inadvertently obtained GMO. Further, it is uncertain what amount will be considered “trace”—something less than 1%?

International Implications of the Use and Sale of GMO

On the heels of Bowman v. Monsanto, on May 29, 2013, the United States Department of Agriculture (USDA) announced the unintended presence of glyphosate-resistant wheat—a project started and abandoned by Monsanto nearly a decade ago—in Oregon. In response to this announcement, international markets including Japan, Korea and Taiwan postponed importation of United States white wheat. Prompted by the USDA announcement, Ernest Barnes, a Kansas farmer, filed a complaint in federal court in the United States District Court for the District of Kansas on June 3, 2013. Barnes alleges he suffered harm as a result of the USDA’s discovery of Monsanto’s rogue, experimental wheat. Barnes claims he lost revenue as a result of the drop in the price of wheat and that he suffered economic loss due to the recent unavailability of suitable markets after the genetically modified wheat discovery.

The outcome of Barnes v. Monsanto could have widespread implications for those dealing with grain commodities; a decline in international exportation of grain products could dramatically impact business. In Syngenta Seeds, Inc. v. Bunge North America, Inc., a suit similar to Barnes v. Monsanto and filed in 2011, a grain elevator company refused to accept genetically modified corn containing a specific modification made by Syngenta, an agribusiness involved in the development of GMOs. The elevator company asserted that it was too uncertain whether foreign markets would accept the GMO product. Syngenta then filed suit against the elevator company for refusing the crop. This case was dismissed in early 2013 for reasons unknown at his point, but in the wake of the USDA’s recent announcement, cases like Syngenta Seeds, Inc. v. Bunge North America, Inc. and Barnes v. Monsanto may become more common.

The law surrounding the possession, distribution, and refusal of GMO products remains in flux. As scientific developments and studies surrounding GMOs cause the world grain market to fluctuate, the recent decisions, pending suits, and future cases may prove significant to the agribusiness community.

This article originally appeared in the Illinois State Bar Association's Agricultural Law Newsletter, Vol. 23 #1, July 2013. It is reprinted here by, and under the authority of, the ISBA. Unauthorized use or reproduction of this reprint or the ISBA trademark is prohibited.

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