By 1990 Skyline Woods was well established with 90 homes built around the country club, and Circo thought the time was right to sell the club to a golf course management company. Unfortunately, the golf pros ran into financial hazards. They ran out of “green,” and the only course of action was for Skyline Woods Country Club to file for bankruptcy in 2004. To pay off debt, the bankruptcy trustee auctioned off the property in 2005. A group of Skyline Woods homeowners tried to buy the club, but were outbid by Liberty Building Corporation, a development company owned by David Broekemeier.

Here’s where things got sticky. The federal bankruptcy court transferred property to Liberty, free and clear of all obligations. Shortly after, Broekemeier met with homeowners and club members to inform them he had no obligation to honor memberships, offering the option to play the course if they paid fees like anyone else.

If that was bad, what happened next was worse. In spring 2006, Broekemeier closed the club, posted “no trespassing” signs, and began cutting down trees to clear land where he planned to build a condominium complex and water park. Teed off homeowners sued Broekemeier in Nebraska State Court, requesting a restraining order to prevent further damage to the land. They claimed implied covenants as homeowners in the golf community guaranteed the only use of land was as a golf course.

They reasoned Broekemeier might own the golf course free and clear, but only free to use it as a golf course. Homeowners added that no matter how you slice it, Broekemeier was well aware of their covenants, as he had also built a golf community adjacent to Skyline Woods. And, like Circo, he marketed the course’s proximity and views to sell lots. And there were rumors that he was going to redirect the golf course toward his neighborhood, leaving Skyline Woods homeowners with views of condos and a water park.

In response, Broekemeier came out swinging with a motion to dismiss the case. His first argument was that the state court had no jurisdiction to interfere with the federal bankruptcy order. Second, even if the State court did have skin in the game, the covenants were unenforceable because they were never recorded. Finally, he said Nebraska law protects bona fide purchasers from restrictive covenants when there is no notice.

District Court Decision—2008:

Round one was won by homeowners. A Nebraska court found that they did indeed have implied restrictive covenants; Broekemeier was aware of the covenants; and finally, the bankruptcy sale of the property did not discharge the covenants because they belonged to homeowners, not the golf course. The court ordered Broekemeier to either reopen the golf course or maintain it in a fashion that would not devalue the property of homeowners. Brokemeier chose the latter.

Round two: After six years of legal turf wars, the golf course never reopened, eventually becoming an eyesore due to lack of maintenance.

Aftermath—2012:

Game over. The land was sold. New owner is spending $7 million to build a premier golf course.

Looking For a Fair-Way The Saturday Evening Post

The transition can be traced to the 1970s when Monsanto developed and patented glyphosate, a broad-spectrum herbicide dubbed Roundup. The herbicide was super effective and widely used by commercial farmers.
In the 1980s Monsanto scientists also developed a genetically modified soybean seed to render it resistant to its Roundup herbicide. The company patented and marketed the seed under the brand name Roundup Ready. It was sold to farmers in combination with Roundup so the crop could be planted directly into untilled soil with no follow-up cultivation. The “no till” seed eliminated the need for pre-emergent herbicides, ploughs, and tillers. Weed control was accomplished in one fell swoop.

Farmers loved it. Adoption of the new system purportedly outpaced that of any other technology in modern farming history—including the tractor, fertilizer, and hybrid corn.

To control its patented technology Monsanto required growers to sign a contract that restricted use of the patented seed to a single crop season, prohibited growers from saving seeds for replanting, and allowed Monsanto to inspect fields for violations. To ensure compliance Monsanto hired investigators to “root-out” seed-saving farms, even using radio ads and telephone “tip lines” to identify culprits who might save or re-use its patented seed. In 2007 Monsanto received a tip that Vernon Bowman, an Indiana soybean farmer, was saving his seeds. The “seed police” were dispatched to gather plant samples from his fields. The move surprised Bowman, a loyal Monsanto customer. He had planted Roundup Ready seeds as his first crop each season from 1999-2007 and hadn’t saved the seeds.

But Bowman did not use Roundup Ready seeds for his late-season planting. To economize, he purchased and used “commodity seeds”—a mixed bag that included some Roundup Ready seeds. This mix did not require a licensing agreement. After planting the commody mix, Bowman sprayed this crop with Roundup herbicide to weed out the non-resistant plants. He understood the survivors were the progeny of Roundup Ready seeds but believed they were no longer patented. Therefore, he saved and planted them the following year without a license. Monsanto took exception to Bowman’s use of its genetic property and sued him for patent infringement.

In his defense Bowman cited the doctrine of patent exhaustion, claiming that Monsanto lost its rights when the patented seeds were sold in the commodity mix. He pointed out that Monsanto’s domination of the soybean seed market in the area created an abundance of regenerated seeds after harvest, making it virtually impossible to avoid Roundup Ready seeds blending into the commodity mix. He argued that buyers purchasing commodity seeds from grain dealers had no choice: They received the special seeds whether they wanted them or not.

Bowman’s point was that Monsanto knew its regenerated crop would be sold to grain dealers for resale, so the license agreement to do so should have included a provision requiring segregation of patented seeds from other seeds if the conglomerate wanted to protect them.

Monsanto countered that its patent was not exhausted when sold in a commodity mix, arguing that growers can purchase seeds in the commodity mix and plant crops but have no right to use their progeny.

In Monsanto’s argument, Bowman did not infringe on Monsanto’s rights by planting the seeds; infringement occurred when he chose to selectively save the Roundup Ready seeds and use them the following season.

Decision:

Bowman’s argument did not overrule the patent law precedent. The fact that a patented technology can replicate itself does not give a purchaser the right to use those copies. The court found for Monsanto and affirmed the award of damages to Monsanto that a lower court had set at $84,456.
—The U.S. Court of Appeals for the Federal Circuit in Washington, 2011

Bean Counter The Saturday Evening Post