Say you're a Hollywood studio who spent a couple hundred million dollars on a blockbuster movie. Someone buys it on DVD, and then proceeds to copy the DVD and sell those copies at a profit.
That would be against the law.
Can you make the same argument about buying patented seeds to grow a crop, and then keeping some of that first crop to reap seeds and grow a second crop? A third?
The United States Supreme Court will decide that in a case involving a 75-year-old farmer from Indiana named Vernon Bowman. Monsanto sued Bowman in 2007, claiming the farmer has for years used seeds reaped from a first crop of Monsanto Roundup Ready soybean seeds to grow another crop.
Monsanto said that violates its patent, as farmers sign an agreement when they buy the seeds to only use them once. The resulting crop can be sold for things like feed or oil, not to create another generation of seeds.
From Monsanto's perspective, what Bowman has done is like the farming version of Napster. From the farmer's perspective, to force him to buy new seeds every year is a monopoly, and Monsanto's patent should "expire" after the first crop.
Monsanto won in lower court, but Bowman has appealed, and in a move that caught corporate America off guard, the Supreme Court has agreed to hear the case next Tuesday.
At stake is Monsanto's multi-billion dollar seed industry. The company dominates the soybean seed market with its Roundup Ready seeds, which have been genetically modified so that farmers can spray weed killer on the plants without impacting the soybeans. The seeds are the result of years of development and have helped farmers boost yields, which in turn keeps food prices down.
How long should a company be compensated for something that is difficult to create, but is easy to copy? Monsanto isn't the only party concerned about a potential loss at the Supreme Court.
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Filing briefs with the court on behalf of Monsanto is a broad array of industries, from the Business Software Association, representing companies like Intel and Microsoft, to biotech firms, to other soybean farmers who fear the prices of Monsanto seeds could skyrocket, or the company could pull back investing in innovation.
A loss by Monsanto "would effectively eliminate the incentive to discover and develop new genetically-engineered plants," wrote the American Intellectual Property Law Association in a brief.
"We're also talking about DNA sequences used in vaccine development, biofuel reagents such as algae, and also software," said Cathleen Enright of the Biotechnology Industries Organization. She said investors may be less likely to fund research which could reap lower profits. "It can introduce uncertainty into their business models."
Bowman has his own supporters filing briefs on his behalf, including the Center for Food Safety, which wrote about "Monsanto Company's use of U.S. patent law to control the use of staple crop seeds by farmers." A Facebook page has been set up and a rally planned for Bowman next Tuesday in Washington, D.C.
Monsanto has already been fighting patent expiration issues in Brazil, now the world's largest soybean producer. The U.S. Supreme Court could decide to let the lower court's ruling stand, overturn it, or send it back for a new trial.
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Perhaps there could be some middle ground, where the patent expires after a second crop, but Enright of the biotechnology group noted that would put grain elevators in the difficult position of having to enforce new policies.
In the meantime, both sides have lawyered up preparing for Tuesday's arguments, a day that Cathleen Enright said her group never expected to happen. "We were surprised."
—By CNBC's Jane Wells; Follow her on Twitter: @janewells
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