Bloomberg News

Monsanto Awarded $1 Billion Against DuPont by Jury

August 02, 2012

Monsanto Co. was awarded $1 billion, the biggest U.S. jury verdict this year, in a patent- infringement trial against DuPont Co. (DD:US) over seeds for growing herbicide-tolerant soybeans.

DuPont fell 1.14 percent to $49.37 today in early New York Stock Exchange composite trading. Monsanto rose 1.2 percent to $87.46 on the NYSE.

The verdict was the fourth-largest jury award in a patent trial in U.S. history, according to data compiled by Bloomberg. The largest patent verdict, for $1.7 billion, was awarded in 2009 against Abbott Laboratories (ABT:US) in a case involving the arthritis drug Humira and was later reversed on appeal.

The panel of five women and three men in federal court in St. Louis began their deliberations yesterday and returned 45 minutes later with the verdict against DuPont, ending a four- week trial.

The trial revolved around Monsanto’s patent for making Roundup Ready crops, a technology at the heart of its $13.7 billion in annual revenue. Farmers have embraced the technology because it allows them to kill weeds with Roundup herbicide while leaving crops unscathed.

The companies are the two biggest in the $34 billion commercial seed market, which includes $13.3 billion of genetically modified seeds.

“This verdict highlights that all companies that make early and substantial investments in developing cutting edge technology will have their intellectual property rights upheld and fairly valued,” Monsanto General Counsel David Snively said in an e-mailed statement.

‘Fundamental Errors’

DuPont said in a statement that it strongly disagrees with the verdict and will appeal it.

“There were several fundamental errors in the case which deprived the jury of important facts and arguments and led to the disappointing outcome,” DuPont said in the statement. “DuPont will appeal at the earliest possible opportunity and expects to overturn this verdict.”

The jury’s finding that DuPont’s infringement was willful means the damages could yet be increased, according to Monsanto’s statement.

Lawyers for St. Louis-based Monsanto argued at the trial that DuPont had no right to make hundreds of lines of soybeans combining the Roundup Ready trait with a similar DuPont technology known as GAT.

DuPont, based in Wilmington, Delaware, countered that Monsanto deceived the government to obtain the patent, rendering it unenforceable.

‘Common Sense’

“You need to use your common sense,” Leora Ben-Ami, a DuPont lawyer, said in her summation. “If they had nothing to hide, why did they hide it. These rules are not made to be broken.”

The Roundup Ready trait is engineered into more than 95 percent of soybeans, largely through licensing agreements, generating $22 billion in revenue in the past eight years for Monsanto and the more than 200 seed companies that license the technology, George C. Lombardi, a partner in Chicago-based Winston & Strawn LLP, told the jury July 10 in opening statements.

Monsanto sued in 2009 to block DuPont from adding the Roundup Ready trait to its GAT soybean seeds, which are engineered to tolerate so-called ALS herbicides and glyphosate, the active ingredient in Roundup. Adding a second glyphosate- tolerance gene to Roundup Ready crops is prohibited by the companies’ licensing agreement, U.S. District Judge Richard Webber previously ruled.

At trial, DuPont claimed Monsanto sued only after it was shown data that the two genes work better than either GAT or Roundup Ready alone. DuPont argued there was nothing wrong with making the combination because Monsanto’s Roundup Ready patent is invalid and unenforceable.

Settlement Offer

Monsanto offered to settle the lawsuit during the trial by giving DuPont the opportunity to license its technology.

“The interesting part of the award was the speed of the decision,” Jeff Windau, a St. Louis-based analyst at Edward Jones & Co., said yesterday in an e-mail. “Obviously Monsanto put forth some compelling evidence.”

He rates DuPont shares a buy and Monsanto a hold.

The patent was initially issued in 1997, based on a 1994 application. In 2003, Monsanto asked the U.S. Patent and Trademark Office to reissue the patent to correct what it said was an inadvertent mixing of patent claims from 1990 and 1994 applications.

DuPont contended Monsanto did that to mislead the patent office so the agency wouldn’t discover it was trying to hide information that might have blocked the patent.

‘Inside the Bag’

“Monsanto didn’t want people to know what was inside the bag, what was inside the seed,” Ben-Ami, a New York-based lawyer with Kirkland & Ellis LLP, told the jury in her July 10 opening remarks. “Monsanto didn’t want people to know how the seed was made.”

She returned to that theme again yesterday in her closing argument.

“When Monsanto went to reissue its patent it was not to correct an error, it was a strategy, an attempt to lengthen its exclusivity,” Ben-Ami told the jurors.

Rebutting, Lombardi asked the panel for $800 million to $1 billion in royalties.

“They should pay the license fee,” he said. “If you infringe, you take over the license. They infringed and they have to pay for it.”

The case is Monsanto Co. (MON:US) v. E.I. du Pont de Nemours & Co., 09-cv-686, U.S. District Court, Eastern District of Missouri (St. Louis).

To contact the reporters on this story: Joe Whittington in federal court in St. Louis; Andrew Harris in Chicago at aharris16@bloomberg.net; Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Simon Casey at scasey4@bloomberg.net


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Companies Mentioned

  • DD
    (EI du Pont de Nemours & Co)
    • $73.29 USD
    • 1.06
    • 1.45%
  • ABT
    (Abbott Laboratories)
    • $46.05 USD
    • 0.28
    • 0.61%
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