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VOLUME 19, NUMBER 2, WHOLE NUMBER 219 JANUARY 2002

rules
F ifth Circuit rules USDA without
authority
author down
ity to shut do packing
wn T exas packing
plant f or salmonella contamination
fo
In mid-December 2001, the Fifth Circuit Court of Appeals held that the United
States Department of Agriculture (“USDA”) exceeded its authority when it shut
down a Supreme Beef Processors plant in Dallas after the processor failed three
rounds of tests for Salmonella contamination. Supreme Beef Processors, Inc. v. Dept.

INSIDE of Agriculture, 2001 U.S. App. Lexis 26205 (5th Cir. 2001). This ruling is significant
in that it calls into question the enforceability of certain microbial performance
standards set for meat and poultry plants in USDA’s new system of food safety
inspection known as the Hazard Analysis and Critical Control Point (“HACCP”) rule.
• Supreme Court holds The purpose of this article is to give a brief overview of the HACCP rule and the
controversy stemming from its adoption, to detail the court’s analysis, and to
utility patents may describe reaction to the decision from various interests.
be issued for plants
Background on the HACCP rule
Deemed a “state-of-the-art approach to food safety,” HACCP is a food safety
program that was developed by private industry over forty years ago to produce food
for the space program. Traditionally, industry and regulators have used spot-checks
of manufacturing conditions and sampling of final products for contamination to
ensure a safe food supply. HACCP is a food process control system layered over that
regime that is designed to mitigate risk in food safety by instituting specified
procedures at critical points in the production process. As such, the HACCP
approach is preventive rather than reactive because it prevents problems from
happening in the first place instead of detecting problems after they have occurred.
During the 1980s, there was widespread adoption of HACCP by industry due to
concerns over high-profile outbreaks of deadly pathogens such as Listeria
monocytogenes. Allison Beers, Paul Shread, HAACP Under Siege: Legal Challenges,
Solicitation of articles: All AALA Enforcement Consequences, p. 7, Food And Chemical News (Mar. 2000). In 1985, the
members are invited to submit National Academy of Sciences issued a report recommending that the federal
articles to the Update. Please in- government adopt HACCP for regulation of meat, poultry, seafood, and other food
products. Id. However, this recommendation took over a decade to implement.
clude copies of decisions and leg- Continued on page 2
islation with the article. To avoid
duplication of effort, please no-
tify the Editor of your proposed
article.
orum
F orum selection cclause
lause in Monsanto
technolog
tec hnology
hnolog agr
y ag ruled
reement r enforceable
uled enf orceable
IN FUTURE In an appeal involving several damages actions brought by Alabama farmers who
had purchased and planted transgenic Monsanto cottonseed, the Alabama Supreme

I SSUES Court has held that the forum selection clause in the Monsanto technology agree-
ment signed by the farmers was enforceable. See Ex parte Monsanto Co., Nos.
1001766, 1001916, 1001917 & 10011767, 2002 WL 64734, at *1 (Ala. Jan. 18, 2002)
(not yet released for publication). The farmers had commenced their damage actions
• Farm Bill against Monsanto and other defendants in Alabama. The forum selection clause,
however, recited that the parties to the technology agreement had consented to the
exclusive jurisdiction of the federal and state courts in St. Louis, Missouri,
Monsanto’s principal place of business. Over Monsanto’s objection, the trial court
refused to enforce the forum selection clause on the grounds that it was unfair and
unreasonable and therefore unenforceable. On appeal, the Alabama Supreme Court
overturned the trial court’s decision, holding that the trial court had abused its
Continued on page 6

JANUARY 2002 AGRICULTURAL LAW UPDATE 1
S A L M O N E L L A/CONTINUED FROM PAGE 1

With respect to meat inspection, it was Inspection Service (“FSIS”), the agency HACCP rule held together during the
the outbreak of foodborne illness caused within USDA responsible for food safety initial years of its implementation. Sev-
by E. coli 0157:H7 in Jack-in-the-Box inspection, published regulations requir- eral factors may account for this stabil-
hamburgers that focused the attention of ing all meat and poultry processors to ity. First, FSIS readily put suspensions
the public, Congress, and USDA on the adopt a HACCP system. Pathogen Re- in abeyance, which made plants less likely
shortcomings of traditional methods of duction; Hazard Analysis and Critical to challenge the legality of the HACCP
inspection for meat products. Id. Meat Control Point (HACCP) Systems; Final rule. Beers and Shread at 11. Second, the
and poultry inspections based on organo- Rule, 61 Fed. Reg. 38806 (July 25, 1996). agency sought enforcement actions un-
leptic evaluation alone did not address In order to enforce HACCP, FSIS estab- der the HACCP system only against
microscopic pathogens like E. coli lished pathogen reduction performance plants with egregious problems. Id. If
0157:H7, which are the major cause of standards for Salmonella that slaughter such a plant were to take the agency to
foodborne illness. Beyond the Jack-in- establishments and establishments pro- court to fight enforcement under any
the-Box incident, modernization of the ducing raw ground products must meet. aspect of HACCP, the entity could en-
meat and poultry inspection system was Id. Under that regime, raw meat prod- dure substantial negative publicity. Fur-
also prompted by the development of new ucts may not test positive for Salmonella ther, if the conditions were particularly
and highly consolidated meat and poul- at a rate that exceeds a performance reprehensible, the court would be reluc-
try production methods, widespread standard, or “passing mark,” which is tant to allow it to keep operating. Id.
transportation, scientific advances, mu- determined based on FSIS’ “calculation
tation and emergence of new pathogens, of the national prevalence of Salmonella Enforcement against Supreme
research, and new ways of detecting and on the indicated raw product.” 9 C.F.R. § Beef processors
tracing foodborne illnesses. Food Safety 310.25(b)(1). If an establishment fails to During the two years following USDA’s
and Inspection Service, Questions and meet the standard on at least three con- implementation of the HACCP regula-
Answers/Hazard Analysis and Critical secutive series of tests, FSIS will deny tion, several plants failed the Salmo-
Control Point (HACCP) Systems, http:// inspection services to that entity. 9 C.F.R. nella performance standard one and two
www.fsis.usda.gov/oa/haccp. § 310.25(b)(3). Specifically, the regula- times. Beers and Shread at 17. But, no
In 1996, after informal notice and com- tions provide that the third failure to plant failed all three sample sets so as to
ment rulemaking, the Food Safety and meet the performance standard “consti- bring about denial of inspection services.
tutes failure to maintain sanitary condi- Id.
tions and failure to maintain an adequate In October 1999, Supreme Beef Proces-
HACCP plan...for that product, and will sors, Inc. (“Supreme Beef”), a meat pro-
cause FSIS to deny inspection services.” cessor and grinder, became the first plant
Id. In effect, denial of inspection services to fail the third set of tests. 2001 U.S.
is fatal to an establishment’s business as App. Lexis 26205 at 7. When FSIS de-
all meat products must pass USDA in- cided to suspend inspection of Supreme
VOL. 20, NO. 2, WHOLE NO. 219 January 2002 spection in order to be legally sold to Beef’s plant, Supreme Beef brought suit
AALA Editor..........................Linda Grim McCormick
consumers. against USDA alleging that FSIS, in cre-
Rt. 2, Box 292A, 2816 C.R. 16, Alvin, TX 77511 In implementing the Salmonella per- ating the Salmonella standard, had over-
Phone: (281) 388-0155 formance standard, FSIS explained the stepped the authority given to it by Con-
FAX: (281) 388-0155
E-mail: lgmccormick@teacher.esc4.com purpose of the standard and its relation gress in the Federal Meat Inspection Act
to HACCP as follows: “The likelihood of (“FMIA”). Id. In addition to the com-
Contributing Editors: Anne Hazlett, Washington, D.C.;
Beth Crocker, Fayetteville, AR. product contamination by Salmonella is plaint, Supreme Beef moved for a tempo-
affected by factors in addition to the rary restraining order to prevent USDA
For AALA membership information, contact Donna
French Dunn, Executive Director, 4115 South Duff
incidence or degree of fecal contamina- from withdrawing its inspectors. Id. at 8.
Avenue, Suite C, Ames, IA 50010-6600. Phone: (515) tion, including the condition of incoming At the district court level, the U.S.
956-4255. animals and cross contamination among District Court for the Northern District
Agricultural Law Update is published by the
American Agricultural Law Association, Publication carcasses during the slaughter process of Texas granted Supreme Beef’s motion
office: Maynard Printing, Inc., 219 New York Ave., Des and further processing. Under HACCP, as well as a request for a preliminary
Moines, IA 50313. All rights reserved. First class postage
paid at Des Moines, IA 50313. establishments will be expected to estab- injunction. Id. On cross motions for sum-
lish controls wherever practicable to ad- mary judgment, the court ruled in favor
This publication is designed to provide accurate and
authoritative information in regard to the subject matter
dress and reduce the risk of contamina- of Supreme Beef, finding that the Salmo-
covered. It is sold with the understanding that the tion with harmful bacteria. The patho- nella performance standard exceeded
publisher is not engaged in rendering legal, accounting, gen reduction performance standards USDA’s statutory authority. Id. The court
or other professional service. If legal advice or other
expert assistance is required, the services of a competent FSIS is establishing for Salmonella are then entered a permanent injunction to
professional should be sought. an important step toward enabling FSIS stop enforcement of that standard against
Views expressed herein are those of the individual and the establishment to verify the ag- Supreme. Id.
authors and should not be interpreted as statements of gregate effectiveness of an estab- On appeal, the Fifth Circuit affirmed
policy by the American Agricultural Law Association.
lishment’s HACCP controls in reducing the district court. In reaching this deci-
Letters and editorial contributions are welcome and harmful bacteria.” 61 Fed. Reg. 38846. sion, the court began its analysis by enun-
should be directed to Linda Grim McCormick, Editor, Industry was vocally opposed to the ciating the Supreme Court’s rule in Chev-
2816 C.R. 163, Alvin, TX 77511.
Salmonella testing standards when they ron U.S.A., Inc. v. Natural Resources
Copyright 2002 by American Agricultural Law appeared in the final HACCP rule. 61 Defense Council, Inc. Id. at 14. Under
Association. No part of this newsletter may be
reproduced or transmitted in any form or by any means, Fed. Reg. 38851. A central point of oppo- that approach, the court’s inquiry con-
electronic or mechanical, including photocopying, sition centered on the question of whether sists of two steps. First, the court looks to
recording, or by any information storage or retrieval
system, without permission in writing from the
FSIS has the legal authority to withhold the plain language of the statute and
publisher. the mark of inspection or to suspend determines whether the agency construc-
inspection privileges for failure to meet tion conflicts with the text. Id. Second, if
established standards of performance. the agency’s interpretation is not in di-
Id. rect conflict with the plain language of
Notwithstanding this uncertainty, the Cont. on p.3

2 AGRICULTURAL LAW UPDATE JANUARY 2002
the statute, the court gives deference to that the performance standard was in- vigilance in meat plants to ensure com-
the agency. Id. Here, the district court valid because it regulates the procure- pliance and the safety of our food supply.”
held that USDA had exceeded its author- ment of raw materials, not the imple- USDA to Continue Testing for Salmo-
ity in developing the Salmonella perfor- mentation of pathogen controls in the nella in Meat Plants, U.S. Dept. of Agri-
mance standard under the first step of plant. Id. culture, News Release No. 0267.01 (Dec.
Chevron. Id. Notwithstanding this holding, USDA 18, 2001).
On review, the appellate court first and its amicus supporters argued that To carry out this plan, Veneman indi-
examined the text of the statute that there is no meaningful distinction be- cated that USDA will continue to test for
USDA relied on for its authority to im- tween contamination that arrives in raw Salmonella in grinding plants to verify
pose the standards. Id. at 15. Under the materials and contamination that arises that the plant’s food safety systems are
FMIA, the Secretary of Agriculture is from other conditions in the plant be- meeting required specifications. Id. If a
commanded to: “where the sanitary con- cause Salmonella can be transferred from plant fails two sample sets, USDA will
ditions of any such establishment are infected meat to non-infected meat immediately conduct an in-depth review
such that the meat or meat food products through the grinding process. Id. at 26. of the plant’s food safety systems and
are rendered adulterated,...refuse to al- But, the court noted that the Salmonella identify corrective actions to be taken.
low said meat or meat food products to be standard does not measure the differen- Id. Failure by the plant to address any
labeled, marked, stamped or tagged as tial between incoming and outcoming deficiencies will result in suspension or
‘inspected and passed.’” 21 U.S.C. § 608. meat products in terms of the Salmonella withdrawal of inspection. Id. Further,
The FMIA contains several definitions of infection rate. Id. at 27. Rather, it mea- the agency will take the following ac-
“adulterated.” Section 601(m)(4) of Title sures the final meat product for Salmo- tions: (1) conduct a comprehensive re-
21 classifies a meat product as adulter- nella infection. Id. Because there is no view of current food safety regulations
ated if “it has been prepared, packed, or corresponding determination of the in- and work with interested parties to de-
held under unsanitary conditions coming Salmonella baseline, the perfor- termine if science-based changes are nec-
whereby it may have become contami- mance standard cannot serve as a proxy essary to strengthen the HACCP system,
nated with filth, or whereby it may have for cross-contamination. Id. (2) expedite the placement of 75 new
been rendered injurious to health.” This Interestingly, USDA never asserted consumer safety officers with the pri-
definition is broader than that found in authority for the Salmonella performance mary responsibility of conducting in-
21 U.S.C. § 601(m)(1), which defines a standard under § 601(m)(1). However, depth reviews of plant HACCP plans
meat product as adulterated if: “it bears the court stated that the presence of throughout the country, with particular
or contains any poisonous or deleterious Salmonella would not render a meat emphasis on facilities that fail a second
substance which may render it injurious product “injurious to health” under this sample set or do not meet HACCP re-
to health; but in case the substance is not subsection because normal cooking prac- quirements, (3) review training proce-
an added substance, such article shall tices for meat and poultry destroy the dures for USDA plant inspectors and
not be considered adulterated under this organism. Id. at 16. In fact, beef infected enhance HACCP training to ensure in-
clause if the quantity of such substance with Salmonella is routinely labeled “in- spectors clearly understand their respon-
in or on such article does not ordinarily spected and passed” by USDA inspectors sibilities in the wake of the court deci-
render it injurious to health.” and is legal to sell to the consumer. Id. sion, and (4) conduct a series of public
In defending the Salmonella standard, meetings to gain input from interested
USDA cited § 601(m)(4) as its authority Reaction to the Supreme Beef parties about how to strengthen food
for the regulation. 2001 U.S. App. Lexis decision safety programs. Id.
26205 at 15. After reviewing this provi- Prior to the Fifth Circuit’s decision, the On Capitol Hill, several members of
sion, the court concluded that the use of Supreme Beef situation had garnered Congress have expressed their concern
the word “rendered” in the statute indi- substantial attention from a variety of about the court’s decision and their in-
cates that a deleterious change must interests. This may be due in part to the tent to introduce legislation to explicitly
occur while the meat product is being fact that Supreme Beef was a large sup- empower USDA to close down facilities
“prepared, packed or held.” Id. at 20. plier of ground beef for the national school that repeatedly fail to meet minimum
Therefore, a characteristic of the raw lunch program. See Beef Plant That Failed food quality standards. In a recent “Dear
material like Salmonella that exists be- Test Challenges Screening System, The Colleague” communication, Senators
fore the product is “prepared, packed or Dallas Morning News, Dec. 10, 1999 (“Be- Harkin, Durbin, and Schumer along with
held” in a processing establishment can- fore losing the contracts, Supreme Beef Congresswomen Eshoo, DeLauro, and
not be regulated by USDA under § had supplied 14 million of the 90 million Lowey wrote: “We believe that the court’s
601(m)(4). Id. pounds of ground beef purchased since ruling was erroneous and dangerous to
In response, USDA countered that the July 1 for the national school-lunch pro- public health.” In making the case for
Salmonella performance standard at is- gram, according to the government.”). In legislation to their peers, the members
sue in this case serves as a proxy for the addition, Supreme Beef was the first cited a recent New York Times editorial
presence or absence of pathogen controls. plant to feel the true impact of the new where the press stated: “The decision’s
Id. at 21. As such, a high level of Salmo- Salmonella standards. practical impact was to gut the
nella indicates adulteration under § Following the appellate court’s review, government’s power to rely on new scien-
601(m)(4). Id. The court rejected this the debate continues. On December 18, tific methods of policing meat safety that
argument, however, on the basis that 2001, Secretary of Agriculture Veneman make it easier to detect and significantly
Supreme Beef has maintained through- released the following statement on be- limit the invisible hazard of bacterial
out this litigation that it failed to meet half of the Administration: “This ruling contamination.” A Threat to Meat Inspec-
the performance standard not because of does not impair our ability to close plants tion, The New York Times (Dec. 26, 2001).
any condition of its facility, but because it that do not meet the statutory and regu- From the other side, the National Meat
purchased beef trimmings that had higher latory requirements of the law for pro- Association, an intervenor at the appel-
levels of Salmonella than other cuts of cessing meat and poultry. We can and late level, praised the court’s ruling.In a
meat. Id. at 23. When USDA failed to will shut down plants that do not meet news release dated December 11, 2001,
dispute this assertion, the court held that responsibility. We will increase our Cont. on p.7

JANUARY 2002 AGRICULTURAL LAW UPDATE 3
Supreme
Supr Court
eme Cour may
t holds utility patents ma for
y be issued f or plants
By Anne Hazlett

On December 10th, the Supreme Court More importantly, however, Farm Ad- relevant distinction was not between liv-
issued a long-awaited opinion in J.E.M. vantage entered a counterclaim of patent ing and inanimate things, but between
Ag Supply, Inc. v. Pioneer Hi-Bred Inter- invalidity in which it argued that patents products of nature, whether living or not,
national, Inc., 2001 U.S. Lexis 10949. that purport to confer protection for corn and human-made inventions.” Id. (quot-
This case addressed the question of plants are invalid because sexually re- ing Chakrabarty, 447 U.S. at 313).
whether utility patents may be issued for producing plants are not patentable sub- With this precedent in mind, the Court
plants under 35 U.S.C. § 101 or whether ject matter within the scope of 35 U.S.C. turned to the question of whether either
the Plant Variety Protection Act, 7 U.S.C. § 101. Farm Advantage maintained that plant specific statute, the PPA or PVPA,
§ 2321 et seq., and the Plant Patent Act the Plant Patent Act of 1930 (“PPA”) and forecloses utility patent coverage for
of 1930, 35 U.S.C. §§ 161-164, are the the Plant Variety Protection Act (“PVPA”) plants by providing the exclusive means
exclusive means of obtaining a federal are the exclusive statutory means for the of protecting new varieties of plants.
right to exclude others from reproducing, protection of plant life because these 2001 U.S. Lexis 10949 at 14. In consider-
selling, or using plants or plant varieties. provisions are more specific than § 101. ing the PPA, which confers patent pro-
In a 6-2 decision, a majority of the Court Id. tection to asexually reproduced plants,
held that utility patents issued under 35 A district court in the Northern Dis- the Court held that nothing in either the
U.S.C. § 101 to Pioneer Hi-Bred Interna- trict of Iowa granted summary judgment original 1930 text of the statute or its
tional (“Pioneer”) for the manufacture, in favor of Pioneer. Id. at 11. In so doing, 1952 amendment indicates that its pro-
use, sale, and offer for sale of its corn it relied on the Supreme Court’s broad tection was intended to be exclusive. Id.
plants and corn seed products were valid. construction of § 101 in Diamond v. at 15. The 1930 Act amended the general
Chakrabarty, 447 U.S. 303 (1980). Id. utility patent provision to provide pro-
Background Further, the district court reasoned that tection only to the asexual reproduction
Pursuant to 35 U.S.C. § 101, the United in enacting the PPA and the PVPA. Con- of a plant. Id. And, the 1952 amendment,
States Patent and Trademark Office has gress neither expressly nor implicitly which moved plant patents into a sepa-
issued over 1,800 utility patents for removed plants from the coverage of § rate chapter of Title 35 entitled “Patents
plants, plant parts, and seeds. Id. at 7. 101. Id. Specifically, the court noted that for Plants,” was merely a “housekeeping
Pioneer holds seventeen of these patents Congress did not repeal § 101 by implica- measure” that did not change the sub-
for its inbred and hybrid corn plants and tion when it passed the more specific stantive rights or requirements for ob-
corn seed products. Id. Such patents cover PVPA because there was no irreconcil- taining a plant patent. Id. at 16. A plant
the manufacture, use, sale, and offer for able conflict between the two statutes. patent issued under 35 U.S.C. § 161 as
sale of the company’s products. Id. Id. The United States Court of Appeals distinguished from a § 101 utility patent,
With respect to its patented hybrid for the Federal Circuit affirmed this judg- continued to provide only the exclusive
seeds, Pioneer has a limited label license, ment and reasoning. Id. right to asexually reproduce a protected
which provides: “License is granted solely After granting certiorari, the Supreme plant. Id. at 17. Further, plant patents
to produce grain and/or forage.” Id. at 9. Court affirmed. Justice Thomas deliv- required a less stringent description re-
The license “does not extend to the use of ered the opinion of the Court in which quirement than § 101 utility patents. Id.
seed from such crop or the progeny thereof Chief Justice Rehnquist and Justices After determining that the plant patent
for propagation or seed multiplication.” Scalia, Kennedy, Souter and Ginsburg protection chapter states nowhere that
Id. It then prohibits “the use of such seed joined. Justice Scalia filed a concurring plant patents are the exclusive means of
or the progeny thereof for propagation or opinion. Justice Breyer filed a dissenting granting intellectual property protection
seed multiplication or for production or opinion in which Justice Stevens joined. to plants, the Court rejected three argu-
development of a hybrid or different va- Justice O’Connor did not take part in the ments why the PPA should preclude issu-
riety of seed.” Id. decision of the case. ing utility patents for plants. Id. at 18.
Petitioner J.E.M. Ag Supply, Inc., do- First, Farm Advantage argued that plants
ing business as Farm Advantage, Inc. Analysis were not covered by the general utility
(“Farm Advantage”), purchased patented Majority opinion patent statute prior to 1930 because if
hybrid seeds from Pioneer. Id. Although In approaching the question presented they were covered then there would have
Farm Advantage is not a licensed sales in this case, the Court first noted that it been no reason for Congress to have
representative of Pioneer, it resold bags has already interpreted the language of passed the 1930 PPA. Id. In response, the
of this seed bearing the license agree- 35 U.S.C. § 101 as being extremely broad. Court stated that Congress’ actions in
ment described above. Id. Pioneer brought Id. at 12. The text of § 101 reads: “Who- enacting the 1930 PPA merely illustrate
a patent infringement action against ever invents or discovers any new and that Congress may have believed that
Farm Advantage as well as several of its useful process, machine, manufacture, plants were not patentable under § 101—
distributors and customers. Id. There, or composition of matter, or any new and not that they actually were not patent-
Pioneer alleged that Farm Advantage useful improvement thereof, may obtain able. Id. at 19. Congress may have thought
was infringing one or more of its patents a patent therefore, subject to the condi- that plants were not patentable because
by “making, using, selling or offering for tions and requirements of this title.” Id. they were living things and because they
sale” corn seed of the protected hybrids. In Diamond v. Chakrabarty, 447 U.S. at could not meet the stringent description
Id. at 10. 308, the Court held that in using such requirement contained in § 101. Id. But,
Farm Advantage answered with a gen- expansive terms as “manufacture” and these shortcomings were disproved over
eral denial of patent infringement. Id. “composition of matter,” Congress con- time. Id. In fact, plants have always had
templated that patent laws would be the potential to fall within the general
Anne Hazlett is an attorney with the given wide scope. Thus, the Court con- subject matter of § 101, which is a dy-
United States House of Representatives’ cluded that living things, specifically man- namic provision designed to accommo-
Agriculture Committee. made microorganisms, were patentable date new types of inventions that are
under § 101. Id. It explained that “the often unforeseeable. Id. at 20.

4 AGRICULTURAL LAW UPDATE JANUARY 2002
Second, Farm Advantage contended of usefulness or non-obviousness. Id. The clarify, § 101 if it is to have any effect on
that the PPA’s limitation to asexually statute requires only that the variety be the outcome. Id.
reproduced plants would make no sense new, distinct, uniform, and stable. Id. In
if Congress intended § 101 to authorize addition, the PVPA requires less descrip- Dissenting opinion
patents on plant varieties that were sexu- tion and disclosure than § 101. Id. Justice Breyer, joined with Justice
ally reproduced. Id. at 21. The Court In light of these differences, the Court Stevens, wrote a dissenting opinion in
disagreed, stating that this limitation concluded that holders of a utility patent which he argued that the Court’s deci-
merely reflects the reality of plant breed- receive greater rights of exclusion than sion in Chakrabarty should not control
ing in 1930 when the PPA was enacted. holders of a plant variety protection cer- the outcome of this case. Id. at 41. Breyer
Id. At that time, the primary means of tificate. Id. at 33. There are no exemp- disputed the majority’s reliance on
reproducing plants true-to-type was tions under a utility patent for research Chakrabarty because that decision said
through asexual reproduction. Id. Fur- or saving seed. Id. Moreover, a plant nothing about the specific issue before
ther, at the time Congress passed the variety protection certificate does not the Court in this case. Id. In considering
PPA, there was no significant need to grant the full range of protection af- the scope of the utility patent statute’s
protect seed breeding because most farm- forded by a utility patent. Id. For ex- language “manufacture, or composition
ers were receiving seed from the ample, a utility patent on an inbred plant of matter,” Chakrabarty asked whether
government’s free seed program. Id. at line protects that line as well as any those words included such living things
22. In addition, seed companies lacked hybrids produced by crossing that inbred as bacteria—not plants which are the
the scientific knowledge to engage in into another plant line. Id. Under the subject of the specific statutes at issue in
formal breeding that would increase ag- PVPA, however, a breeder can use a this case. Id. at 42.
ricultural productivity. Id. at 23. plant that is protected by a plant variety Putting the Court’s holding in
Third, Farm Advantage maintained protection certificate to “develop” a new Chakrabarty aside, the dissent then
that Congress would not have moved inbred line. Id. stated that the words “manufacture” and
plants out of the utility patent provision Finally, the Court noted that the PTO “composition of matter” in § 101 do not
and into a separate plant patent chapter has assigned utility patents for plants for cover plants. That is because Congress
in 1952 if it had intended § 101 to allow at least sixteen years with no indication intended the two more specific statutes,
for protection of plants. Id. at 25. In from Congress or any relevant agencies the PPA and PVPA, to exclude patent
rejecting this contention, the Court stated that such coverage is inconsistent with protection under the utility patent stat-
that this negative inference does not sup- the PPA or the PVPA. Id. at 36. In fact, ute for the plants to which the more
port carving out subject matter from the Congress has even recognized the avail- specific statutes directly refer. Id. at 40.
expansive language of § 101 because § ability of utility patents for plants. Id.at To read the PPA as compatible with the
101 protects different attributes and has 37. In a 1999 amendment to 35 U.S.C. § claim that the utility patent statute also
more stringent requirements than the 119, which concerns the right of priority covers plants would virtually nullify the
plant patent chapter. Id. for patent rights, Congress provided that PPA’s primary requirement that the
Looking at the PVPA, which provides applications for plant breeder’s rights breeder have reproduced the new charac-
plant variety protection for sexually re- filed in a World Trade Organization mem- teristic through a graft. Id. at 49. More-
produced plants, the Court found no evi- ber country shall have the same effect for over, since the utility patent statute would
dence of Congressional intent to deny § the purpose of the right of priority as forbid reproduction by seed, such a hold-
101 protection to plants. The PVPA con- applications for patents. Id. The fact that ing would read out of the statute the
tains no statement of exclusivity. Id. at this amendment was part of the general PPA’s more limited list of exclusive rights.
30. Further, at the time the PVPA was provisions of Title 35 rather than the Id. Similarly, with respect to the PVPA,
enacted, the PTO had already issued plant specific chapter suggests a recogni- nothing in the history, language, or pur-
numerous utility patents for hybrid plant tion by Congress that plants are patent- pose of the 1970 statute suggests an
processes so as to affirm that such mate- able under § 101. Id. intent to reintroduce plants, the subject
rial was within the scope of § 101. Id. matter that the PPA removed, into the
In addition, the Court rejected an ar- Concurring opinion scope of the general words “manufacture,
gument that the PVPA altered the cover- Justice Scalia wrote a concurring opin- or composition of matter.” To the con-
age of § 101 by implication on the basis ion in which he maintained that the only trary, any such reintroduction would
that the statutes are not irreconcilable. ambiguity in § 101 that could have been make the PVPA’s exceptions for planting
Id. at 31. There are differences in the clarified by the PPA is whether the term and research meaningless. Id. at 52.
requirements for, and coverage of, utility “composition of matter” included living
patents and plant variety certificates is- things. Id. at 38. Scalia argued that the Conclusion
sued under the PVPA. Id. In order to PPA, as a newly enacted provision for The Court’s decision in J.E.M. Ag Sup-
obtain a utility patent, a breeder must plants, certainly invited the conclusion ply brings a sharp focus to an important
show that the plant is new, useful and that this term did not include living policy debate in production agriculture.
non-obvious. Id . at 32. Further, the things. Id. at 39. The term “matter,” after On one hand, companies such as Pioneer
breeder must describe the plant with all, is sometimes used in a sense that who engage in costly seed development
sufficient specificity to enable others to excludes living things. Id. argue that they deserve patent protec-
make and use the invention once the Nevertheless, Scalia agreed that the tion that will ensure that they receive
patent term expires. Id. This description Court’s previous opinion in Chakrabarty compensation for up to twenty years once
requirement includes a deposit of bio- prevents the Court from reading the term their seeds are used. Without patent
logical material such as seeds that is “composition of matter” as ambiguous on rights, industry will be unable to protect
accessible to the public. Id. By contrast, the question of whether it includes living new developments from copycats. And,
a breeder can receive a plant variety things. Id. In this posture, therefore, the without such protection, many compa-
protection certificate without a showing PPA should be deemed to amend, not Continued on p. 6

JANUARY 2002 AGRICULTURAL LAW UPDATE 5
P A T E N T S/Cont. from p. 5
nies simply will not invest in creating ers, the J.E.M. Ag Supply decision raises Finally, there is concern that the Court’s
new technology. additional concern with respect to re- ruling could further accelerate an al-
On the other hand, however, issuing search. Some critics contend that the ready rapidly consolidating agribusiness
utility patents on seed may have serious ruling will perpetuate a system that slows industry. To the extent that small seed
consequences for farmers and future re- the pace and diversity of research. companies are now prevented from find-
search. Most notably, the Court’s ruling Melinda Fulmer, Patent Ruling Aids Seed ing new breeding material because of
affirms the ability of seed companies to Biotech Firms, L.A. Times, Dec. 11, 2001. patent protection, the seed market will
sue those who try to save or reuse pro- Public research institutions will be en- become even more concentrated.
tected seed in violation of a patent. The couraged to patent more of their research Notwithstanding this difficult policy
decision may also increase seed costs as efforts. They may also redirect the focus debate, the Court’s decision in J.E.M. Ag
companies pass the costs of obtaining of their work from the needs and wants of Supply sends a strong signal that the
patent protection through to their farmer farmers and consumers towards big busi- high court is taking a tough stance on
customers. In this light, the ruling may ness who is willing to buy the rights to intellectual property rights. Should seed
be viewed as punishing farmers by driv- patents or otherwise support public re- companies respond to this decision with
ing up the costs of production. But, in- search projects. See David Dechant, Pio- increased litigation against farmers, look
dustry can also counter that by protect- neer v. J.E.M. Ag Supply May Sprout for the farm community to seek relief
ing the profits of agribusiness firms, the Rude Awakening , http:// from Congress in order to keep plants in
ruling ensures that new, more efficient www.cropchoice.com. In addition, the the public hands.
varieties of plants will keep coming to decision could impact public plant breed-
market. ing in that there will be less sharing of
Beyond the economic impact on farm- information and germplasm.

MonsantoCont. from page 1
discretion by refusing to enforce the fo- forceable under the circumstances be- in previous years. See id.
rum selection clause in the technology cause the farmers had shown that the Characterizing the farmers’ argument
agreement. See id. at *7. forum selection clause was unfair and as an implicit invitation to disregard the
Farmers who purchase Monsanto unreasonable. See id. On appeal to the clause because of their lack of bargaining
transgenic cottonseed, such as Bollgard™, Alabama Supreme Court through power, the court declined to do so. In-
are required to pay a licensing fee and Monsanto’s petition for writ of manda- stead, the court noted its earlier decision
sign a “Technology Agreement.” Id. at 1. mus, the sole issue was the propriety of in another case where it had ruled that
The technology agreement sets forth cer- this ruling. disparities in the size of the corporate
tain conditions and restrictions regard- Because the Alabama Supreme Court parties to such a contractual clause and
ing the use of the transgenic cottonseed. had never reviewed a case involving a the inability of one party to negotiate
It also includes a forum selection clause. dismissal based on a forum selection changes to the contract is not sufficient,
This clause, which appears in the agree- clause, the court first had to determine standing alone, to establish “‘overween-
ment entirely in capital letters, recites the proper standard of review. See id.at ing bargaining power.’” Id. (relying on
that the terms and conditions of the *2. Its analysis of this issue began with and quoting Ex parte D.M. White Con-
agreement are governed by federal and the observation that there was no con- struction Co., No. 1000199 (Ala. June 15,
Missouri law and that the parties con- sensus of the standard of review in simi- 2001)).
sent to the exclusive jurisdiction of the lar cases in other jurisdictions. See id. The court then considered cotton farm-
federal and state courts having geographi- Some courts applied an abuse of discre- ers’ “basic argument” that it would be
cal jurisdiction over St. Louis County, tion standard while other courts used the inconvenient for them and the defen-
Missouri. See id. at *2. Monsanto has its de novo standard. See id. at *2-3. The dants other than Monsanto to have the
headquarters in St. Louis, Missouri. court concluded that the better reasoned trial in St. Louis, Missouri. The farmers
Notwithstanding the forum selection rule, the one followed by the majority of argued that they are full-time farmers
clause, the Alabama cotton farmers in- state appellate courts, was the abuse of and need to be present on their Alabama
volved in Ex Parte Monsanto brought discretion standard. See id. at *3. farms “virtually every day.” Id. at *5. The
their respective damages actions against Having accepted this standard as gov- court dismissed this argument by noting
Monsanto and the Alabama sellers of the erning the dispute at issue, the court that the farmers did not claim the neces-
Monsanto cottonseed in the state circuit turned to Monsanto’s claim that the fo- sity of being on their respective farms
courts for Wilcox and Dallas counties, rum selection clause was neither unfair every day, only “virtually every day,”
Alabama. They resisted Monsanto’s at- nor unreasonable. As to the farmers’ ar- which revealed that there will be days
tempt to dismiss their actions based on guments to the contrary, the court first when they could be in St. Louis for the
the forum selection clause on three considered the cotton farmers’ conten- trial. See id.
grounds, only one of which was reached tion that the clause was unenforceable The proper question, according to the
by either the trial court or the Alabama because they had no choice but to pur- court, was not whether the farmers would
Supreme Court. More specifically, the chase Monsanto’s technology and there- be inconvenienced. Instead, the proper
farmers’ contentions that their tort claims fore had not freely entered into the tech- question was whether the chosen forum
were not covered by the terms of the nology agreement. See id. at *5. Monsanto was convenient for the trial of the actions
technology agreement and that the fo- countered this argument by pointing out involved. Id. Finding that the farmers’
rum selection clause was an enforceable that it did not control 100% of the cotton- damages actions were based upon their
attempt to limit the jurisdiction of Ala- seed market; there were conventional allegations that Monsanto’s technology
bama courts were left unresolved. See id. cottonseed varieties available for pur- had resulted in their crop losses, the
at *4. Instead, the trial court ruled that chase; and, in fact, some of the farmers court pointed out that most of the wit-
the forum selection clause was unen- had purchased conventional cottonseed C ont. on p. 7

6 AGRICULTURAL LAW UPDATE JANUARY 2002
Salmonella/Cont. from p.3
NMA wrote: “This decision will serve praised the ruling. In a December 12, teen-month study that will review the
food safety by focusing USDA on regula- 2001 news release, AMI wrote: “We are scientific basis for criteria for food and
tory activities that are relevant to sanita- gratified— but not surprised—that the food ingredients. As part of this study, an
tion, as the law requires. The Salmonella court has affirmed that the Salmonella oversight committee will define the rela-
standard was both arbitrarily enforced performance standard is scientifically un- tionship between public health objectives
and unscientific. It really made no sense supportable as a measure of plant sani- and a HACCP-based approach to food
at all.” Appeal Court Affirms Supreme tation. It is our hope that USDA will safety; define the terms “performance
Beef Decision, National Meat Assn., http:/ withdraw the standard and rely upon the standards” and “criteria” as related to
/www.nmaonline.org. Further, NMA ex- advice of its National Advisory Commit- food products and processes; and recom-
plained: “Despite the fact that this stan- tee for Microbiological Criteria for Foods mend guidelines for determining the type
dard was fatally flawed from the begin- in developing a new, meaningful, scien- of data that should be used in developing
ning, NMA believes that microbial stan- tific standard.” Appeals Court Upholds food safety criteria, including microbio-
dards do have a place in HACCP. The Lower Court Ruling that USDA Salmo- logical performance standards. Perhaps
appropriate ‘next step’ for USDA would nella Performance Standard is Invalid, the conclusions reached in the NAS study
be to initiate rulemaking to develop sci- American Meat Institute, http:// and its corresponding report to Congress
entifically sound microbial performance www.meatami.com. will remove this important food safety
standards.” Id. Amidst this dialogue, the National issue from on-going litigation.
Similarly, the American Meat Insti- Research Council of the National Acad- —Anne Hazlett, Washington, D.C.
tute, which helped fund the appeal, emies of Sciences is completing a four-

MonsantoCont. from page 1
nesses and documents referring to the In granting Monsanto’s petition for
transgenic technology are located in mandamus and thus permitting enforce- P osition
Monsanto’s headquarters in St. Louis. ment of the forum selection clause, the
Thus, when measured by convenience to Alabama Supreme Court ultimately con- Announcement
the trial of the damages actions, St. Louis cluded that Monsanto’s technology was Law: Professor, Agricultural
was not inconvenient. See id. at issue in the farmers’ damages actions. Law (rank open), Department of
The court also addressed the farmers’ This, in turn, meant that Monsanto would Agricultural and Consumer Eco-
contention that the forum selection clause need to rely on witnesses and documents nomics, University of Illinois at
should not be enforced because their busi- located at its headquarters in St. Louis, Urbana-Champaign. Business or-
nesses do not deal on equal terms with Missouri. St. Louis, therefore, was not an ganizations, commercial law, taxa-
Monsanto and their level of sophistica- unreasonable forum in this case; the farm- tion and tax policy, natural re-
tion is not equal to Monsanto’s. Id. at *6. ers had failed to carry their burden of sources, land use, or other area of
The court rejected this argument by stat- showing that the forum selection clause agricultural law. Qualifications:
ing that it has never required equal levels was unfair or unreasonable; and the trial JD, superior law school record,
of sophistication between the parties as a court had abused its discretion in ruling excellent research and writing
prerequisite for enforcing a forum selec- that the farmers had met their burden. skills, legal research experience,
tion clause. See id. Moreover, reasoned Id. at *6-7. and enthusiasm for educating at-
the court, the evidence contradicted the —Beth Crocker, NCALRI Graduate torneys and the public on legal
farmers’ argument that they were unso- Fellow issues affecting farmers, agri-busi-
phisticated. In this regard, the court noted This material is based on work supported nesses, and rural communities. The
that some of the farmers were corporate by the U.S. Department of Agriculture full announcement is at http://
entities engaged in commercial agricul- under Agreement No. 59-8201-9-115. Any www.ace.uiuc.edu. UIUC is an
ture, with operations in multiple coun- opinions, findings, conclusions, recom- AA-EOE.
ties, and one had been in the farming mendations expressed in this article are
business for 75 years. Id. The critical those of the author and do not necessarily
question, according to the court, was not reflect the view of the U.S. Department of
the relative levels of sophistication be- Agriculture.
tween or among the parties, but rather
the proper question was whether the
parties signing the forum selection clause
were “business-oriented.” Id.
Finally, the court considered the farm-
ers’ argument that Monsanto’s use of
Alabama courts was inconsistent because
Monsanto brought suits in Alabama to
collect debts, yet was seeking enforce-
ment of the forum selection clause here.
Id. The court found little weight in this
argument, observing that there was a
vast difference between debt collection
cases and the tort claims being made
under the technology agreement here. Id.

JANUARY 2002 AGRICULTURAL LAW UPDATE 7