Monsanto Company v. McFarling

Monsanto Company (Monsanto) (plaintiff) developed a patented system of weed control that consisted of genetically modified soybean crops that were resistant to a specified herbicide. The crop seeds were sold under the trade name Roundup Ready and protected by patents. Monsanto authorized certain distributors to sell Roundup Ready. Farmers who purchased the product were required to sign a technology agreement that gave them a license to use the seeds on the condition that the farmer could not save seeds from the purchased seeds and replant saved seeds. In this way, farmers had to repurchase seeds every year, and one bag of seed was sufficient to plant one acre of farmland. The cost of a license was $6.50 per bag of seeds, and the cost of seeds was $19 to $22 per bag. In 1998, Homan McFarling (defendant) purchased Roundup Ready seeds from an authorized distributor, signed the technology agreement, and paid the license fee. McFarling then violated the technology agreement in 1999 and 2000 by saving seeds from his soybean crops and replanting them. The saved seeds had the genetic traits of Monsanto’s patented seeds. Monsanto sued McFarling for breach of the technology agreement and patent infringement. The court found in favor of Monsanto. After various court proceedings and appeals, a jury trial was held on the issue of damages. The jury heard evidence on license fees, the benefits to Monsanto from maintaining its licensing program, and the benefits to farmers from using Roundup Ready seeds. Benefits included an increased yield of soybean crops and lower weed-control costs compared to ordinary, nonmodified soybean seeds. An average farmer saved $31 to $61 per acre through an increased yield of soybeans and lower weed-control costs. The jury returned a damages verdict of $40 per bag of seeds, and based on the finding, Monsanto was awarded approximately $375,000 in damages. McFarling appealed.