In the United States Bankruptcy Court

for the Northern District of Iowa


RONALD JOHN ROEDER and
MARILYN ROEDER
Bankruptcy No. 07-01422S
Debtor(s). Chapter 7

MONSANTO COMPANY and
MONSANTO TECHNOLOGY, LLC
Adversary No. 07-9189S
Plaintiff(s)
vs.
RONALD JOHN ROEDER
Defendant(s)

ORDER RE MOTION FOR SUMMARY JUDGMENT


The matter before the court is plaintiffs’ motion for partial summary judgment on the issues of infringement of U.S. Patent No. 5,352,605 (the “‘605 patent”) and dischargeability of Ronald Roeder’s debt under 11 U.S.C. § 523(a)(6). Hearing on the motion was held March 11, 2009 in Sioux City. Joel E. Cape and A. Frank Baron appeared as attorneys for plaintiffs Monsanto Company and Monsanto Technology, LLC (“Monsanto”). Attorney Donald H. Molstad appeared as attorney for defendant Ronald Roeder. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I).

Monsanto is entitled to summary judgment “if the pleadings, the discovery materials on file, and any affidavits show that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c), made applicable in adversary proceedings by Fed.R.Bankr.P. 7056.

Patent Infringement

Roeder has been a farmer for most of his life. He operated his own farm from 1968 through 2007. For several years he was a grain seed producer. From 1983 to 2006 he also worked as a grain seed dealer for Wilson Seed in Harlan, Iowa.

Monsanto’s claim relates to Roeder’s use of Roundup Ready® soybeans. Roeder has admitted planting saved Roundup Ready® soybeans in the 2003, 2004 and 2005 growing seasons. On June 15, 2004, Roeder signed a Monsanto technology agreement containing terms of use of seed containing Monsanto technology. The parties agree that all Roundup Ready® soybeans are subject to the ‘605 patent and that unauthorized use of Roundup Ready® soybeans constitutes an infringement of the patent. The parties agree further that Roeder’s conduct constituted infringement of the ‘605 patent without regard to his state of mind. Therefore, Monsanto has a claim for damages for patent infringement.

Willful and Malicious Injury

The Bankruptcy Code provides that a Chapter 7 discharge does not discharge debt for willful and malicious injury. 11 U.S.C. § 523(a)(6). Each component of a claim under § 523(a)(6) must be analyzed separately. Barclays American/Business Credit, Inc. v. Long (In re Long), 774 F.2d 875, 880 (8th Cir. 1985). Willful conduct is voluntary, intentional and knowing. Kawaauhau v. Geiger, 523 U.S. 57, 61, 118 S.Ct. 974, 977 n.3 (1998); In re Long, 774 F.2d at 880-81. A creditor must show that the debtor acted with intent to cause injury, which requires proof of a higher level of culpability than negligence or recklessness. Geiger, 523 U.S. at 64, 118 S.Ct. at 978; In re Long, 774 F.2d at 881. “Moreover, knowledge that legal rights are being violated is insufficient to establish malice, absent some additional aggravated circumstances.” In re Long at 881; Osborne v. Stage (In re Stage), 321 B.R. 486 (B.A.P. 8th Cir. 2005).

In the context of a claim for violation of a security agreement, the Eighth Circuit stated that malice is shown if debtor’s conduct is “targeted at the creditor . . . at least in the sense that the conduct is certain or almost certain to cause financial harm.” In re Long at 881. In the case before this court, the harm to Monsanto from infringement of its patent is limited to economic harm. Therefore, the Long standard for proof of malice is appropriate.

Roeder admits that he knew that planting saved Roundup Ready® soybean seed was prohibited. He was also aware that Monsanto received a technology fee from sales of Roundup Ready® soybeans, and that the seed dealer or retailer passed the technology on to the farmer purchasing the seeds. He denies that his conduct was malicious.

Monsanto argues that Roeder’s knowing improper use of Roundup Ready® soybeans establishes willful and malicious injury, citing Monsanto Co. v. Trantham (In re Trantham), 304 B.R. 298 (B.A.P. 6th Cir. 2004). In In re Trantham, Monsanto obtained a pre-petition judgment that Trantham had infringed its patents on technology in cottonseed and soybeans. After jury trial to determine damages, judgment entered against Trantham in the amount of $592,677.89. Trantham filed a Chapter 7 petition, and Monsanto filed a complaint to determine the debt nondischargeable under § 523(a)(6). The bankruptcy court denied Monsanto’s motion for summary judgment and held the debt dischargeable. The Bankruptcy Appellate Panel reversed, holding that the court’s findings in the patent infringement case established both elements of willfulness and malice. These findings included evidence that Trantham, in an effort to conceal the infringement, had sent cottonseed to be delinted using a false name. 304 B.R. at 303.

If one reads the Trantham case as creating a per se rule of nondischargeability for the knowing infringement of a patent, the case appears to conflict with the Eighth Circuit’s standard for proving malice. “[K]nowledge that legal rights are being violated is insufficient to establish malice, absent some additional aggravated circumstances.” In re Long, 774 F.2d at 881. To the extent that the court in Trantham did not establish a per se rule, the procedural posture and facts of Trantham are different from those in Roeder’s case. Moreover, Roeder’s use of seed varied in the three crop years at issue, which may indicate a different intent as to particular crop years. Monsanto has established that Roeder acted willfully, but the issue of malice is a factual issue for trial that prevents the entry of summary judgment for Monsanto.

IT IS ORDERED that the motion for summary judgment is granted in part and denied in part. The court concludes that Ronald Roeder’s infringement of the ‘605 patent was willful conduct. The motion is denied as to all other issues.

DATED AND ENTERED April 1, 2009

William L. Edmonds
Bankruptcy Judge