What is a reasonable royalty?

The work discusses the case Monsanto filed to the Court of Appeals for the Federal Circuit (CAFC) versus Ralph Brothers. The case closed another chapter in Monsanto´s long series of patent battles involving genetically engineered seeds for agricultural crops. Monsanto had a rigorous licensing program in place for its genetically engineered seeds, reaching down to individual farmers who bought the seed. No farmer could use Monsanto´s products without signing a technology agreement that limited the use of the seeds to a single season´s planting and that explicitly forbid saving, replanting, or transferring seed. In violation of the technology agreement, Ralph Brothers actively engaged in an extensive seed-saving, -replanting, and -transfer program. Monsanto brought suit to stop this violation of rights and asked for one royalty for seed saving and replanting and another higher royalty for seed saving. The jury favored Monsanto and awarded royalties. Since the Ralph Brother´s infringement had been willful, the trial court judge tripled the damages amount and added attorney fees and interest for a grand total of US$2.9 million. Ralph Brothers appealed to the CAFC arguing that the jury´s award was plainly excessive. It based its case on the Patent Statute´s provision that in an infringement suit, a patent owner is entitled to a reasonable royalty. The Federal Circuit did not buy the argument and affirmed the $2.9 million award in its entirety. The Ralph Brothers case illustrates the flexibility of a reasonable royalty determination, as well as the power of US patents.