128
Opinion of the Court
and have a low yield; their value lies primarily in their use for making hybrids. See, e. g., U. S. Patent No. 5,506,367, col. 6, id., at 43 (describing the traits and applications of the inbred corn line PHP38 by reference to the qualities exhibited in hybrid plants created with PHP38).
Hybrid seeds are produced by crossing two inbred corn plants and are especially valuable because they produce strong and vibrant hybrid plants with selected highly desirable characteristics. For instance, Pioneer's hybrid corn plant 3394 is "characterized by superior yield for maturity, excellent seedling vigor, very good roots and stalks, and exceptional stay green." U. S. Patent No. 5,491,295, cols. 2-3, id., at 29-30. Hybrid plants, however, generally do not reproduce true-to-type, i. e., seeds produced by a hybrid plant do not reliably yield plants with the same hybrid characteristics. Thus, a farmer who wishes to continue growing hybrid plants generally needs to buy more hybrid seed.
Pioneer sells its patented hybrid seeds under a limited label license that provides: "License is granted solely to produce grain and/or forage." Id., at 51. The license "does not extend to the use of seed from such crop or the progeny thereof for propagation or seed multiplication." Ibid. It strictly prohibits "the use of such seed or the progeny thereof for propagation or seed multiplication or for production or development of a hybrid or different variety of seed." Ibid.
Petitioner J. E. M. Ag Supply, Inc., doing business as Farm Advantage, Inc., purchased patented hybrid seeds from Pioneer in bags bearing this license agreement. Although not a licensed sales representative of Pioneer, Farm Advantage resold these bags. Pioneer subsequently brought a complaint for patent infringement against Farm Advantage and several other corporations and residents of the State of Iowa who are distributors and customers for Farm Advantage (referred to collectively as Farm Advantage or petitioners). Pioneer alleged that Farm Advantage has "for a long-time
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